That home may seem out of reach but here's some advice if you're on the property hunt for the first time.
First home buyers are going to great lengths to get on to the property ladder.
Lauren Bush, 28, an admin assistant, couldn’t afford to buy her first home on her own. Despite this, at the end of November, she had managed to get a leg on the property ladder.
She joined forces with her younger brother, 24, to halve the costs – and their parents stood guarantor – so they could buy a $665,000 three-bedroom house in Condell Park, in Sydney’s south-west.
Some home buyers are grouping together as friends and family to purchase their first property. Photo: Courtney Keating
Currently using the home as an investment, she said they bought it as a potential first home for her and her fiance with the property being near good schools and transport.
“Neither of us wanted too much risk or commitment, and it was a good way for our parents to help us both,” Ms Bush said.
“We have looked for a property for about a year and had agreed that we would go 50/50 on everything.”
Lauren Bush, 28, decided to buy with her younger brother to get a foot on the property ladder.
This strategy, also known as “co-buying”, is becoming an increasingly popular way for young home buyers to get on the property ladder.
Mortgage Choice spokeswoman Jessica Darnbrough said it had also seen an increase in first-home buyers co-buying with friends and family – from 7.9 per cent of first home buyers in 2014 to 9.2 per cent in 2016.
“Given that property prices have risen fairly consistently across most markets in Australia, it is little wonder why we have seen an increase in the number of first home buyers who are buying property with their friends and family,” she said.
A recently launched company, called coHome, promises to help young Australian homebuyers do just this – by providing a platform to help co-ordinate the co-buying process. When it surveyed 350 people in the Millennial age bracket, it found 60 per cent would consider joint ownership with friends or family.
“Over 35s would probably never [co-buy] but the reality is we’re in a sharing economy and it’s just a conceptual hurdle,” chief executive of the site Josh Littin said.
“Buying alone isn’t the only option.”
He pointed to cities overseas, such as Vancouver, where the concept is taking off.
In Australia, it’s likely co-buying will become more popular, with RateCity research finding one in seven Gen Ys requiring three incomes to afford repayments on a first home and 50 per cent needing help from their parents.
These “staggering” results found that most people wouldn’t be able to buy on their own, RateCity data insights director Peter Arnold said.
“A double income doesn’t cut it for a lot of young would-be homebuyers now. House prices are on the rise, as is cost of living, so it’s really hard to save for a deposit,” Mr Arnold said.
“That’s why the bank of mum and dad has never been so popular … While not all parents will be wealthy enough to contribute financially towards the deposit, many are helping out in other ways by going guarantor on the home loan and buying together as ‘co-borrowers’.”
But there are some downsides to the strategy.
Firefly Wealth certified financial adviser Adele Martin has had several clients buy with family members, but in some cases the outcome wasn’t ideal.
One client, who bought an investment property with his father, later decided he wanted to purchase his first home.
“Now he is buying his home, having that investment property impacts his ability to borrow,” Ms Martin said.
“Even though he only has a loan on half of it, the whole loan is assessed against him.”
For many, it’s also a case of carefully planning for the worst-case scenario upfront, when relationships are amicable.
In one situation, a couple bought a holiday home with their brother and sister-in-law. But when one of the couples broke down and had to sell their part of the property, the other couple were unable to afford to buy their share, she said.
They had to sell, much earlier than they’d hoped.
“Have that conversation – it could be that [someone] passes away, gets separated or divorced … have a strategy and be upfront with a solicitor to help you facilitate it,” she said.
ME head of home loans Patrick Nolan said the attractions of co-buying include increasing the borrowing capacity of the home buyers, potentially avoiding lender’s mortgage insurance and sharing the ongoing costs of maintenance, rates and insurance.
“With property values remaining strong, the trend of co-buying looks set to gain momentum. It could be just the solution that allows young buyers to climb the property ladder while bringing families and friends closer together,” Mr Nolan said.