Keiran Mannion had been saving since she was 14 but her $88,000 wasn't enough for a home in Sydney. Photo / Supplied
Keiran Mannion has been saving for her own home since she was 14 and scored her first job at McDonalds.
During university, she worked four jobs including at a couple of cafes, and since graduating has taken up a role in PR.
The 25-year-old saved a whopping $93,000 but it still wasn't enough to buy a property in Sydney.
"I know a lot of people my age travel a lot and I haven't done a huge amount of travel so that's probably an area of a sacrifice," she told news.com.au.
"I did have a Europe trip planned last year and that was a nice boost to savings as I was able to get a refund for flights and trips."
Despite her five-figure savings, Mannon had to turn to Australia's ninth largest lender – the bank of mum and dad to make her home ownership dream come true.
Parents are chucking in on average more than $94,000 to help their kids into the property market, which is an increase of nearly 20 per cent in the past 12 months, analysis from Digital Finance Analytics (DFA) found.
The bank of mum and dad is bigger than well-known lenders such as HSBC, AMP and Bank of Queensland, with around $35 billion in loans, according to DFA.
Matching her savings
For Mannion, her parents gave her $75,000 towards a house deposit and combined with her savings she had $158,000 in total, with $13,000 left over to deck out her home and keep an emergency pot of savings.
"In Sydney it's incredibly tough to do it yourself otherwise. If I wasn't able to have the support of my parents I definitely wouldn't have been able to purchase in Sydney and I would have had to look further afield," she said.
With property prices skyrocketing, particularly in Sydney where the median house value jumped by $52,000 in March alone when Mannion was searching, she said the experience of buying a home was "overwhelming".
"I'd find places within my budget and go and look at them and a couple of days later they would sell for $105,000 to $158,000 more," she said.
"It was very stressful and very competitive. Every open house we went to had a queue out the door and around the corner. It was definitely an overwhelming time."
But she ended up finding a two-bedroom, two-bathroom unit in Caringbah in Sydney's south, which she purchased for $702,000 – finally realising her dream 11 years after she started saving for it.
"It feels great. I feel very accomplished and very proud I was able to do it but also very thankful I was able to have the support of my parents to be able to do it as well," she said.
"Some of my friends are actually homeowners themselves, but the overwhelming response is at the age of 25 it's quite a feat to be a homeowner in the Sydney market."
She is unlikely to stop there either, with plans to either buy a property interstate as an investment in the future or upsize once she was outgrown her apartment.
Affordability issues warning
David Hyman, CEO of online loan platform Lendi Group, said anecdotally there were many stories where the bank of mum and dad had helped support the home-ownership journey for first home buyers, such as matching savings for a deposit or interest-free personal loans.
But he warned that while the bank of mum and dad may help individuals get onto the property market earlier, at scale it could create more inequality and greater affordability issues over the longer term.
"Some parents are in the position to help their kids get into the property market because they themselves have done well or accumulated equity but borrowing money from your parents does not come without risks for both parties," he said.
"Although parents want to give their kids a leg up to get into the market, perversely, the bank of mum and dad could also be inadvertently influencing the inflation of property values, and therefore making housing less affordable by pulling forward a cohort of first home buyers into the market sooner."
He added there are other forms of support available, such as government initiatives like the First Home Loan Deposit Scheme, with another 10,000 places released on July 1.
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