More than one in four Gen Ys turn to their parents for financial assistance when saving for a home loan deposit, as house prices rise and wage growth stagnates.
Data from comparison site finder.com.au found that 26% of Gen Y (those aged 18-34) accepts financial help from their parents when saving for a deposit, while 12% of Generation X (those aged 35-54) accepts financial help from their parents because they’re saving for a home loan deposit.
Interestingly, one in 10 Baby Boomers (those aged 55-74) still receive financial support from a parent due to saving for a home loan deposit.
The fact that new homebuyers find themselves turning to their parents to get them over the line is no surprise, given Australian house prices continue to climb. According to CoreLogic RP Data Home Value Index results, the annual rate of growth saw a slight rebound in April, with dwelling values up 7.9% over the past twelve months.
Capital city dwelling values have been trending higher now for the past 35 months, recording a cumulative increase of 25.3% between the end of May 2012 and April 2015.
But as house prices continue to rise, wage growth has remained stagnant. Figures from the Australian Bureau of Statistics reveal that annual wage growth fell to a record low of 2.3% in the twelve months to March, the lowest annual growth in 18-years since the Bureau has produced the Wage Price Index.
This means wages are barely keeping up with inflation. The headline CPI stood at 1.3% in the March quarter, according to the Australian Bureau of Statistics. However, underlining inflation – the rate of inflation that is predominantly due to market forces, removing any highly volatile price movements – was 2.3%.
Speaking about the latest wages data, Savanth Sebastian, economist for CommSec said the weak wage outcomes are “certainly not a positive” for household budgets.
However, he said that rising house prices are lifting wealth levels, which will continue to support spending. So with strong house price growth and weak wage growth, it is no wonder that more and more Gen Ys are turning to their parents for help getting onto the property ladder sooner.