NEWS

Gen Y Can't Afford To Buy A House Until Their Parents Die

One quarter of young people relying on an inheritance to buy property.

21/08/2017 1:51 PM AEST | Updated 21/08/2017 1:58 PM AEST
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Forget giving up avocado toast or almond milk lattes -- many young Australians are turning to a different method of saving up enough to buy a house.

The death of their parents.

Gen Y Aussies are now being forced to rely on a death in the family before they can crack into the property market. A survey by law firm Slater & Gordon found 26 percent of Australians aged 16-34 said would need to rely, or already had relied, on an inheritance before they could buy a home.

These figures from Gen Y contrast against just eight percent of baby boomers, those aged above 55, who said they needed an inheritance to buy property.

Housing affordability is a key issue in Australia at the moment; it has been demonstrated in survey after survey after survey, in decidedly average cottages selling for nearly $4 million, in unrenovated homes going for far above the reserve, in weatherboards flatly described as "tired" going for more than $1 million.

Recent figures show even average families are being priced out of Australia's cities.

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The grim findings from Slater & Gordon, based on a survey of 1000 people, found that 23 percent of all NSW residents were now relying on an inheritance to get into the market. In Queensland, that number was just 11 percent, the lowest of any state surveyed.

Elsewhere, 13 percent of Victorians, 14 percent of South Australians and 15 percent of those in Western Australia had fingers crossed for a good showing in the will of a family member.

"There's no question that Australia's housing market is tough at the moment, especially in capital cities, with a significant proportion of the next generation priced out," said Slater and Gordon associate Lara Nurpuri.

"What we're increasingly seeing in some situations is children counting on an inheritance from their family to give them the deposit they need to break into the market. However, we're also seeing some people who count their chickens before they've hatched and don't get as much as they were expecting, while some even ask for an early inheritance."

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Nurpuri said lawyers had been seeing cases where this has created tension within families, as beneficiaries bicker over their slice of the inheritance.

"We have seen many instances where this has prompted family members to challenge their siblings or other relatives for a bigger piece of the pie, or created tensions that have led to estrangements where inheritances are reduced or children are cut of wills completely," she said.

Elsewhere in Australia's property market on Monday, a Chinese crackdown on foreign investment is being tipped to cause big waves Down Under.

China's State Council issued rules last week on overseas investment by Chinese companies, placing property development and hotels on the 'restricted' list.

Chinese companies purchased nearly 40 percent of all residential property development sold in Australia in 2016, in figures from a report by Knight Frank, so any moves to restrict property purchasing overseas will likely have big flow-on effects in Australia.

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