Super is not to help first-home buyers

I GUESS all the doubters have been put firmly in their place this week by the grand poobah of finance and housing, no less — the Reserve Bank.

Generation Y and the millennials are not just a bunch of avocado-eating “want it now” softies, after all.

They do have it harder than their predecessors when it comes to buying property but, take a breath and count to three, parents don’t help them out with a deposit.

According to research from the Reserve Bank, the extreme rise in property prices during the past seven years means it is much harder to save a deposit than previously.

The average deposit during the past seven years was equivalent to 75 per cent of disposable annual income of aspiring homebuyers, compared with 52 per cent during the previous seven years. Yikes!

In dollar terms, the difference is $28,000 compared with almost $70,000. Double yikes!

And although the RBA used its latest analysis to say high levels of household debt aren’t as bad as everyone seems to think, the information also clearly shows just how rapidly house prices have inflated.

And for the record, household debt — the ratio of debt to income — has jumped from 100 per cent to 160 per cent in the past 14 years. Which means for every $1 we each earn, we owe $1.60. Triple yikes!

Regardless of your view on household debt levels, alarm bells should be ringing about having so much debt hitched to assets that have gone through such a rapid period of price inflation.

As history tells us, when the crunch comes there is a high risk that resale values could fall just as rapidly.

But hey, we know all this, right?

So with our eyes wide open, let’s get back to those firsthome buyers; more specifically, let’s address the parents and families of those firsthome buyers.

According to the research, home buyers who are helped with a deposit by family and friends are twice as likely to come back looking for more handouts.

About 23 per cent of home buyers who were helped with a deposit also needed more financial help in the years after their purchase.

This compares with just 11 per cent of home buyers who weren’t helped with their deposit.

So, parents, grandparents, uncles and aunts, no need for any family squabbles of guilt about saying no to helping stump up a home deposit — because the Reserve Bank says so.

If you can’t make your own deposit, you’re less likely to manage your ongoing finances.

Adding to these sometimes fraught family dynamics at the first-home buyer life stage is also the increasingly attractive pool of superannuation millennials’ parents now have.

Retirement is not the green light to withdraw a lump sum and give it to the kids.

Yes, we know you want to help them, but handing over this money now is only going to mean those same kids are going to have to support you later — or will they?