First homebuyers have had a tough time getting into the property market, as prices rise and it becomes more difficult to save a deposit. The latest ABS figures put first homebuyer participation at 12.3%, equal to the lowest share on record.
The solution? Young people are considering splitting the bill (and the risk) by buying property with a friend, according to the latest independent research commissioned by Slater & Gordon Conveyancing Works.
The survey found more than one third of 18-24 year olds, and just under a quarter of 25-34 year-olds, would consider buying a property with a friend.
In contrast, those aged 45 or over were much less likely to buy a property with a friend, but more likely to buy a property with a family member other than a spouse.
“That more of the baby boomers would consider buying with a family member probably reflects the fact an increasing number of parents recognise their children are fast being priced out of the market and are willing to help them out,” said Slater & Gordon Conveyancing Works Solicitor Robert Kern.
“Capital city prices increased by 10.9 per cent between March 2013 and March 2014 and recently the International Monetary Fund warned Australian homes were the third most expensive of 24 countries.
“So it’s no surprise young people are willing to consider buying a property with someone other than a partner to get their foot in the door.”
Even though buying property with family members is becoming more common, investors should be cautious about the potential pitfalls, said Kern.
“Down the track it’s quite possible one of the owners will want to sell or can’t cover the mortgage, or even just wants out of the contract.
“That’s why it’s important you consider all of the potential scenarios up front and actually have mechanisms for one or both of the parties exiting the contract written into it.
“Without them, the worst case scenario is that the Supreme Court will step in and appoint an independent trustee.
“This can be a stressful, long and expensive process, so some people choose to include alternative dispute resolution avenues, such as mediation, in the contract as well.”
Findings of the survey include:
- 37.85 per cent of 18-24 year olds and 23.65 per cent of 25-34 year olds would consider buying a property with a friend
- Only 9.14 per cent aged 55+ would consider buying property with a friend
- 60.75 per cent of 18-24 year olds and 53 per cent of 25-34 year olds would consider buying property with a family member other than a spouse
- 37.7 per cent of 45-55 year olds and 37 per cent of Australians aged over 55 would consider buying a property with a family member other than a spouse
- 58 per cent of 18-34 said they did not know the difference between joint tenants and tenants in common, compared with 48 per cent in the 45-54 age bracket and 45.5 per cent over 55
- 58 per cent of Australians said they would not feel confident working through the legal documents themselves when buying or selling
- 54 per cent of 18-24 year olds, 52.4 per cent of 25-34 year olds, 57 per cent of 45-54 year olds and 64.5 per cent of Australians over the age of 55 said they would not feel confident working through the legal documents themselves when buying or selling