- Real estate agents blame wealthy parents for overheating housing market
- But they warn that “the bank of mom and dad” may be their children’s only chance to buy.
Forget spiraling interest rates, real estate agents in the country’s most overheated markets are blaming the “bank of mom and dad” for skyrocketing property prices.
Sydney real estate agent Amir Jahan said wealthy parents were only too willing to pay extra to help their adult children buy their first dream home.
“They are emotional buyers. Young people who are helped by their wealthy parents will say, ‘I love this property’ and their parents will help them get it,” he told news.com.au.
The 28-year-old agent insisted it was “100 per cent” emotional buyers backed by baby boomer money who were driving up property values.
He said affluent parents often shell out $1.5 million for a home otherwise worth just $1.3 million because their children had “fallen in love with property” and blamed them for driving up prices for everyone.
Mr Jahan said property values in the Sydney market had also been so overheated for so long that many buyers were no longer surprised by the inflated prices.
“It’s become normal,” he told the website. “Four years ago in Parramatta, when we told people that a two-bedroom unit was selling for $500,000, people would get nervous.
“Now we tell them that the same apartment costs $650,000 and they are surprised that it is not more.”
Sydney real estate agent Amir Jahan blames the ‘bank of mum and dad’ for rising prices
Mr Jahan says “emotional” young buyers convince their parents to overpay for their dream home
Mr Jahan’s view on rising house prices comes after young buyers spoke to Daily Mail Australia about their experience trying to access the property market.
They said first-time buyers receiving help from their parents were not causing inflated prices; instead, they blamed those seeking smaller homes for aggressively bidding on the small houses and units once considered starter properties for young Australians.
Mr Jahan’s warning comes amid shocking new data which revealed the national housing market had reached record levels of unaffordability and the vast majority of homes across the country were simply unaffordable for ordinary Australians.
Proptrack’s latest report, published on Saturday, found it took an average of five years to save for a deposit on a home, and buyers with the country’s median household income of $120,000 could only afford to buy one in 10 properties listed on the market.
Leading real estate agent Mat Steinwede said the Instagram generation had grown accustomed to instant gratification and having their parents pay for it.
Unfortunately, he added, prices were now so high that it was the only way young first-home buyers could get into the property market before it spiraled even further out of reach.
Mr Steinwede said he had just helped his 25-year-old son buy a house because he knew it was too difficult to expect him to do it alone.
The vast majority of homes are now unaffordable for the average Australian buyer.
“I’ve just helped him buy his first home. I couldn’t have done it on my own, not with what it takes for the deposit plus stamp duty. It’s become too difficult,” he told news.com.au.
However, he said it was important to ensure young adults had a share in the financial burden of buying a home to teach them the importance of investing wisely.
She said her son was learning an important financial lesson by being responsible for half the payments on his new home.
“Every time you pay a mortgage, it’s like you’re putting $400 in the bank. Otherwise, you’re wasting your money,” Steinwede said.
“You’ll look back and be glad you did it.”
“It’s a good lesson for him. If you buy a car, its value goes down and you have to pay interest and fees, but if you buy a property in 10 years, it might double.”