Banking on mum and dad: Most prospective home buyers are relying on inheritance, survey finds

Two-thirds of prospective Australian home buyers believe the only way they will be able to afford a property is if they receive an inheritance from their parents, a nationwide survey has revealed, showing people believe soaring house prices are now a major threat to the economy.

Compiled for the Australian Housing Monitor, to be launched on Thursday by progressive think tank Per Capita, the survey shows that 85 per cent of non-home owners hope to buy their own property, but just 24 per cent think they will ever have the financial resources to do so.

Two-thirds of prospective home buyers believe they will need an inheritance to buy their home.

Peter Rae

Issues around housing have intensified with rental vacancy rates in most capital cities at or below 1 per cent, and house prices doubling over the past decade while Australians are among the most indebted home owners in the developed world due to super-sized mortgages.

The monitor is based on a survey of almost 5000 people and includes questions last posed in an Australian National University survey on housing conducted in 2017.

Despite a softening in the national property market over the past 12 months, Australian housing is among the most expensive in the developed world. Median-priced houses are approaching 10 times household income in many capital cities.

The monitor found the combination of soaring prices and the tightening rental market has left many Australians fearful they will never own a home.

Seventy-six per cent of renters believe they will never be able to afford a home and two-thirds say they won’t be able to save a deposit for a mortgage.

Almost two-thirds of respondents said continued house price increases would be bad for the economy with a similar proportion agreeing that the phenomenon was widening wealth inequality.

Among people earning less than $104,000 a year, 70 per cent believe the only way they will be able to afford a house is if they receive a large inheritance. Before 1980, about 15 per cent of home owners had received a loan or gift from a family member, but this had climbed to almost 41 per cent in 2020.

Even among those earning over $104,000, more than half (53 per cent) say they will need an inheritance to buy a home. Less than 24 per cent of this group say they can get into the property market without assistance from the bank of mum and dad, with the rest unsure.

Key findings of the Australian Housing Monitor

  • 85% of non-home owners hope to buy a home; only 24% expect to be able to do so
  • 76% of renters say they will never be able to afford a home
  • Almost two-thirds of people without a mortgage believe the only way they will be able to afford a home is if they receive a large inheritance
  • In 1980, 15.3% received a loan or gift from a family member to help buy a home; in 2020, this reached 40.8%
  • 62% of people agree that continued growth in house prices is bad for the economy
  • Almost three-quarters of people believe governments should build more social housing
  • 56% of people believe housing policy favours older, wealthier people

The director of the Centre for Equitable Housing at Per Capita, Matt Lloyd, said Australians were worried by the problems caused by ever-increasing house prices but open to policy reform.

“The Australian Housing Monitor shows that many people believe that the ‘great Australian dream’ of home ownership is under threat,” he said.

“However, we also found a significant and broad appetite for reform in the housing policy space. Survey respondents were overwhelmingly in favour of increasing the construction of public housing, limiting sudden rent increases, and tax reform to better balance the interests of owner-occupiers and housing investors.”

The monitor, which is expected to become an online database for policymakers and interest groups, will be released on the last day the federal government struggles to win Senate support for its $10 billion Housing Australia Future Fund before parliament goes into its pre-budget recess.

The housing fund is meant to provide $500 million a year in returns to get 30,000 social and affordable homes built over the next five years, and will also provide $200 million to repair housing in remote Indigenous communities, $100 million for crisis accommodation for women and children escaping domestic violence, and $30 million for housing for veterans.

Without support from the Coalition, the government needs the Senate crossbench to back the fund. But the Greens are seeking a series of changes, including an additional $5 billion a year for social and affordable housing, and a national agreement to cap rent increases for two years.

Prime Minister Anthony Albanese, who said the government had a mandate for the housing fund, accused the Greens of being obsessed by the political debate over housing affordability rather than delivering an outcome that would benefit Australians.

“You cannot have credibility … saying we don’t think $10 billion is enough, we want $20 billion, therefore we will oppose $10 billion. It’s absurd! To vote for zero rather than to vote for progress,” he told parliament on Wednesday.

Anthony Albanese has accused the Greens of playing politics over its stance on the government’s housing future fund.

Rhett Wyman

But Greens housing spokesman Max Chandler-Mather accused the government of setting an “incredibly low bar” to deal with a crisis that was afflicting hundreds of thousands of Australians.

He said the government needed to substantially improve its housing future fund to make a real dent in the problems that were apparent in every part of the country.

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