- Realtors blame wealthy parents for overheated housing market
- But warn that ‘mom and dad’s bank’ may be their children’s only chance to buy
Forget sky-high interest rates: Real estate agents in the country’s most overheated markets are blaming “mom and pop’s bank” for rising home prices.
Sydney real estate agent Amir Jahan says wealthy parents are more than willing to overpay to help their adult children buy their first dream home.
“They are emotional buyers. Young people who get help from wealthy parents will say, ‘I love this house,’ and their parents will help them get it,” he told news.com.au.
The 28-year-old real estate agent insisted it was “100 percent” emotional buyers, backed by “boomer” money, who were driving up house prices.
He said wealthy parents often spend $1.5 million on a house that is otherwise worth only $1.3 million because their children “have fallen in love with the house.” He blamed them for driving up prices for everyone.
According to Mr Jahan, house prices in the Sydney housing market have been so high for so long that many buyers are no longer deterred by the high prices.
“It’s become normal,” he told the website. “Four years ago in Parramatta, people panicked when we told people a two-bedroom apartment was for sale for $500,000.
“Now we tell them the same apartment costs $650,000, and they’re surprised it’s not more.”
Sydney real estate agent Amir Jahan blames ‘mum and dad’s bank’ for rising prices
Mr Jahan says ’emotional’ young buyers are convincing their parents to overpay for their dream home
Mr Jahan bases his views on rising house prices on an interview with Daily Mail Australia in which he talks about their experiences of buying a home.
They said first-time homebuyers helped by their parents did not drive up prices. Instead, they blamed downsizing for aggressively overbidding for the small houses and apartments once seen as starter homes for young Australians.
Mr Jahan’s warning comes amid shocking new data showing the national housing market has hit record levels of unaffordability, with most homes in the country simply unaffordable for the average Australian.
Proptrack’s latest report, released Saturday, found that it takes an average of five years to save money for a down payment on a home. What’s more, buyers with an average household income of $120,000 nationwide can afford just one in every 10 homes on the market.
According to leading real estate agent Mat Steinwede, the Instagram generation has become accustomed to instant gratification – and their parents are paying for it.
Unfortunately, he added, prices had now become so high that this was the only way for young first-home buyers to purchase a property before it became increasingly out of reach.
Mr. Steinwede said he recently 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 out of reach for the average Australian home buyer
“I’ve just helped him buy his first house. He couldn’t have done it on his own, not with the amount of money you need for a deposit plus stamp duty. It’s become too difficult,” he told news.com.au.
However, he said it is important to ensure that young adults share in the financial burdens that come with buying a home so they learn the importance of investing wisely.
He said his son learned an important financial lesson by being responsible for half the payments on his new home.
“Every time he pays a mortgage, it’s like he’s putting $400 in the bank. Otherwise, he’s wasting his money,” Mr. Steinwede said.
“He’ll look back and be glad he did it.”
“It’s a good lesson for him. If you buy a car, its value goes down and you pay interest and repayments, but if you buy a house in 10 years, its value can double.”
