Owning your home has long been considered the Australian dream, but the changing property market is helping to ensure that it remains just that for many young people. Even with initiatives such as First Home Owner Grant schemes, housing ownership remains unaffordable to many.
Figures from the Australian Bureau of Statistics show that Australia’s property prices have rebounded since the dark days of 2008 by a staggering 69%. Furthermore, the International Monetary Fund reports that Australia rates as 6th in the world for the highest house price-to-income ratios – up one place from last year. It is due to this lack of affordability that many younger prospective home buyers are asking their parents for assistance in fulfilling their homeownership dreams.
While parents who buy a house for their children do so with the best of intentions, there are hazards that may befall the unwary. These include:
It’s not all doom and gloom though. There are ways for parents to assist their children to enter the property market that can also help to deliver valuable life lessons. These include:
There is a range of legal issues to be considered before entering into these arrangements. The rights and responsibilities of each party should be clearly and formally documented and address key decisions. These include, but are not limited to,
Helping out your kids might seem like a good idea, but it is important that professional advice is sought first. Your financial adviser and mortgage broker can help you to explore the available options to ensure that you find the solution that best suits your family’s circumstances. Call us on 1300 707 955 to get in touch with a finance specialist and one of our in-house financial advisers.
www.moneysmart.gov.au Managing your money