Par­ents pay the price too

Money Magazine Australia - - THIS MONTH -

Mil­len­ni­als look­ing to make head­way into the prop­erty mar­ket are not the only ones feel­ing the pinch. Spare a thought for their par­ents who, by de­fault, are post­pon­ing their re­tire­ment plans to sup­port their off­spring for longer while they bat­tle Aus­tralia’s hous­ing af­ford­abil­ity chal­lenge.

The younger co­hort, un­able to de­ploy in­de­pen­dent means to get on the hous­ing lad­der, are in­creas­ingly re­liant on their par­ents to help them flee the nest. As such, baby boomers are be­com­ing ac­cus­tomed to the “new nor­mal” of dip­ping into their sav­ings, of­ten in the form of home eq­uity, to fund their chil­dren’s fu­tures.

Some are stump­ing up the de­posit, or us­ing their own home as col­lat­eral. Oth­ers are sub­si­dis­ing mort­gage re­pay­ments and, in­creas­ingly, more par­ents will ex­tend the fam­ily home, re­pur­pos­ing the garage or re­mod­elling out­build­ings to pro­vide their off­spring with some sem­blance of in­de­pen­dence, even if it’s just an il­lu­sion. We may even see a higher adop­tion of the Euro­pean prac­tice of the in­ter-gen­er­a­tional house­hold.

We are cer­tainly en­ter­ing the era of the “cubby house syn­drome”, one that lends new mean­ing to the term “fam­ily money” and one that will see par­ents and their off­spring des­tined to stay on very good terms

– for the very long term.

Lisa Claes, CEO in­ter­na­tional, CoreLogic

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