The Australian dream of owning a home is becoming increasingly challenging due to rising property prices. To give you an idea of the change in affordability over the years, let’s look at Sydney’s property market:
In 1970, a house in Sydney could be purchased for $18,700. By 1980, the average house price had risen to approximately $76,500. The average price more than doubled by 1990, reaching $184,600. In 2000, it took about $312,000 to buy a dwelling in Sydney, and by 2010, the figure had risen to $575,900. Today, the average Sydney house price stands at $1.6 Million.
If you’re thinking about purchasing a property valued at $1.6 million, you’ll require a 20% deposit, totalling $320,000. Furthermore, there are additional expenses to take into account, such as:
Stamp Duty on Property: $71,055.00
Mortgage Registration: $165.40
Transfer Fee: $165.40
Total Government Fees: $71,385.80
This implies that you would need to secure a loan of $1,280,000. To comfortably manage the repayments on a property with a median value, our estimate indicates that an annual income of $300,000 would be necessary.
What $1.6 Million Buys in Sydney’s Eastern Suburbs
If you’re looking at properties with a median sales price of under $1.6 million in Sydney’s Eastern Suburbs, you may consider areas like:
Bondi: $1,365,000
Bondi Junction: $1,135,000
Randwick: $1,120,000
Maroubra: $966,000
Getting Help from Family or Inheritance
A survey by the Australian Housing Monitor found that 70% of people in households making up to $103,999 per year believe they can only buy a house if they inherit a lot of money.
In the 1980s, about 15% of first-time homebuyers got money from their parents. Today, it’s nearly 40%. This has made the “Bank of Mum and Dad” one of the country’s biggest lenders, even surpassing big banks like AMP and HSBC in 2021, as reported by Digital Analytics.
On average, kids receive about $92,000 from their parents to buy homes. Besides helping with the initial deposit, Finder reports that 7% of parents assist their children with mortgage payments and another 7% act as guarantors for their children’s home loans.
Figures released by the AFR in late 2023 show that the Bank of Mum and Dad has put more than $2.7 billion into the property market in the past year, with around 15% of borrowers seeking financial support from their parents.
If you intend to either lend or borrow from the Bank of Mum and Dad, it’s advisable to consult with an independent financial advisor or lawyer.
