Getting into the property market young is often recommended. It allows young adults to start paying off their own place instead of throwing their money away on rent, and it gives them a place to start on the property ladder, from which they can work their way up later on in life
Given the outrageous house prices in Australia’s cities – in particular Sydney and Melbourne – perhaps it’s no wonder that some are stepping on that property ladder as young as five.
Yes, five years old. Sydney property lawyer Dion Vertzayas recently bought an inner-city apartment for his five-year-old son Dean. Now we’re not talking about some crazy Home Alone situation, Dean won’t move into the apartment for a few years yet.
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“When he is at university he can have it as his place, and he can commute from there to wherever he wants to study or work,” Vertzayas senior said.
The one-bedroom Potts Point apartment cost $710,000 and will be a surprise for Dean’s sixth birthday next month. A slight step up from the Transformers many six-year-old boys get for their birthday.
“There is only limited stock in Sydney,” Vertzayas pointed out. With the housing market on the rise, who knows how much Dean’s apartment will be worth when he moves in around 2025.
Falling back on parents’ help
For the first time, the median house price in Sydney rose past the $700,000 mark, hitting $722,718 for the September quarter, according to Australian Property Monitors data. The median unit price also increased to $515,035.
The data also showed that there were 693 auctions scheduled in Sydney last weekend, and 1356 in Melbourne. As further evidence of each city’s red hot market, Saturday’s clearance rate in Sydney was 83.2%, while Melbourne recorded 76.9%.
The number of properties going up to auction increased a massive 30% on last year in both cities. With this kind of market, and with the first home owner grant being scrapped last year, many first time buyers are having to rely on their parents for help.
Potts Point agent Nuri Shik from Laing+Simmons said, “The government used to assist first home buyers, now it is parents who have stepped in to fill the gap.”
“It’s the best way to get in to the market because if they [young people] wait until they’ve saved their money, they could be priced out even further.”
Generous Parents
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A parent’s work is never done. It’s not just 18 years of cooking, cleaning up, bailing out, providing for, educating, and taxiing around, kids often continue to need their parents’ help well after they become legal adults.
According to McCrindle Research, nearly one in four (23%) Australians aged 20-34 continue to live in the parental home. In Sydney and Melbourne, that number is even higher, with 27% choosing to stay at home rather than fly the nest.
For those parents who want their children to leave home sometime before retirement, they often have to help out with their kids’ home-buying dreams. Vertzayas is one such parent. The parents of 23-year-old Sydney uni student Claudia Crause are another.
Crause bought a two-bedroom terrace in uber-cool Surry Hills for $1,094,000, $119,000 over the $975,000 reserve. But she did not do it alone, she had the help of her very supportive parents.
“We knew we had to contribute and try and make this happen for her,” Claudia’s dad Ron Crause said. “Even though the market is hot, I don’t think it’s going to get any easier in the future.”
Ray White Surry Hills agent Teresa Natoli said she had noticed a growing a trend of young adults obtaining the help of their parents when buying a house.
“The kids are coming first and if they like it, they bring their parents to have a look at it after,” she said. “The market is a bit harder, so the parents are there to give them that little bit extra if they need it.”
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