I bought my first home in Australia aged 26. How? A combination of privilege and inheritance | Nicole McKenzie

Young people don’t lack the motivation or financial skills to buy a house, they simply lack the money. Parental support often is the only way

“I’m basically just waiting for my parents to die,” says Gemma. She is not wishing death on anyone, just realistic about her ability to buy a house, and inheritance may be her only option. Gemma is a single 36-year-old living in Adelaide on a modest salary, and the money she has saved won’t be enough to secure her a deposit on a property anywhere nearby. Even with the support of the 5% deposit scheme, rising house prices and high interest rates mean mortgage repayments would be unmanageable.

Despite facing similar challenges, in 2021, aged 26, I bought my first home. How? A combination of privilege and unfortunate circumstances. The deaths of my father and grandfather left me, an only child, with an inheritance sufficient for a house deposit. Additionally, my husband comes from a middle-class background and thanks to a mum-funded scheme, managed to renovate two houses for profit. With our money combined, we had a 20% deposit for a $555,000 house and money left over to renovate. In Adelaide, this bought us a three-bedroom 60s house on almost 700 sq metres of land. We bought our house in what would kindly be described as an “up-and-coming” suburb, yet two years later there is nothing similar available for the price we paid.

To buy a house as an average young Australian you need privilege and parental support or inheritance. A recent survey showed 72% of 18- to 34-year-old Australians feel they will never be able to buy a house. A 2023 report by the University of Sydney revealed that 25- to 34-year-olds who enter the property market, usually do so with considerable family support, whether financial (monetary gifts or inheritance) or in-kind (rent-free accommodation, daily expenses paid for, parents acting as guarantors, etc). The ANZ senior economist Felicity Emmett said, “whether you’re able to buy a home and become a first-homeowner increasingly depends on what sort of job your mum and dad had, and I suppose the question is, ‘Is that really, as a society, what we want?’”

Sallie, a 38-year-old publicist, bought her Melbourne apartment in 2017, aged 33, using a payout from her mum’s life insurance. She says, “There is no way I could have afforded to buy the place without that life insurance money, and my borrowing capacity still wasn’t great because of the low-paying industry in which I work.”

Lucy, a 29-year-old emergency call-taker and musician, bought her first home in Geelong last year. To save for a 15% deposit, Lucy lived rent-free in her parent’s home for three years. Even with this initial support, she finds meeting her rising mortgage payments difficult – in the eight months since buying, her mortgage has increased by $208 a week. Lucy describes 2023 as the most difficult year of her life, “I’m working overtime every week, selling my possessions, and cutting back on all non-essentials to pay my mortgage and bills.”

Young people don’t lack the motivation or financial skills to buy a house, they simply lack the money. Research suggests the increases in house prices and cost of living have made home ownership increasingly challenging, with low-income households “unable to keep pace with market changes through their saving and budgeting strategies”. The hill is only getting steeper and young people’s ability to climb it is hugely dependent on their circumstances.

In 2021, Australian property values rose almost 10 times faster than wages. In 2001, median house prices were just 4.5 times median wages, but in 2022 house prices were 8.5 times median wages. The time it takes to save a deposit is at a national high, with ANZ estimating the average Australian household saves for more than 11 years to reach a 20% deposit (make that 14 years if you’re in Sydney). Saving for a deposit on a single income is almost impossible … but not according to some banks. In a vain attempt to make home ownership look achievable, NAB shares some infuriatingly unhelpful tips for a single person earning $60,000 to save a deposit in only two to three years. They just need to sell their car, move back home and find a $300,000 flat within a reasonable commute to the CBD. Simple!

I didn’t post about buying my home on social media. Sharing the news without an explanation of the funds felt misleading, wrongly implying that two young arts professionals could easily buy a large home. They couldn’t. I’m telling the truth now so those who are struggling to enter the market have some perspective. But it does nothing to help them buy, or even to secure (and hold on to) a decent rental in this precarious housing market.

I don’t know any young Australians on average salaries who have completely self-funded their property purchases, and those I spoke to reiterate this sentiment. So, when I see a young person buy their first home, I wonder, “Are your parents rich or dead?”

• Nicole McKenzie is a freelance writer based in Adelaide

Nicole McKenzie

The GuardianTramp

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