(Australian Associated Press)
Our pay packets are growing at a snail’s pace while the cost of property, particularly in Sydney and Melbourne, remains eye-wateringly high.
So it’s little wonder many young Australians are thinking laterally in their efforts to get into the property market.
Sharing the purchase of property with friends or family is a growing trend among first home buyers.
Some 9.2 per cent of first home buyers co-bought their property with a friend or family member last year, compared with 7.9 per cent two years earlier, according to Mortgage Choice, which surveyed more than 1,000 first home buyers from Australia’s capital cities.
Almost two thirds of the respondents who co-purchased property bought with family members while the remainder chipped in with friends.
Some co-buying arrangements involve all owners living in the purchased property, while other times only some or none of the owners live in the house and it is rented out.
Mortgage Choice chief executive John Flavell said while first home buyers aged in their 20s and 30s make up most of the co-buying cohort, some divorcees in their 40s also co-purchase.
“Most people would prefer not to co-purchase but in the absence of any other mechanism then it’s not surprising we’ve seen a step up in co-purchasing,” he said.
Mr Flavell advised potential co-buyers to ensure all parties have adequate income protection insurance, an updated will and an agreement covering issues such as how long they plan to hold the property for and what would happen if one party wants to sell their share.
“Everybody goes into these arrangements with the very best of intentions … but make plans assuming some of the worst things can happen and then if they do you’re not going to find yourself in a difficult situation,” he said.
Start-up coHome, which is planning its official launch for the new financial year, offers to help co-buyers arrange their home loans and legal contracts.
Chief executive Josh Littin said young people who are priced out of the market want alternative ways to buy so they are not left behind.
“There is a mindset shift for Australians; pretty much most people you talk to probably (aged) from 40-plus think it’s a terrible idea to buy with friends but it’s a reality that a lot of the younger generation are facing,” he said.
“The average Australian cannot buy the average home in Sydney and Melbourne.”
Figures released by the Australian Bureau of Statistics on Wednesday confirm limp wages growth.
The 1.9 per cent annual rate of wage growth recorded in the three months to March continues the record low hit in the December quarter and is the lowest rate of growth seen since records began in 1998.
Meanwhile, house prices have grown by an average of 13.6 per cent over the last three years, while incomes rose by just 4.4 per cent, according to recent figures from Moody’s Investors Service.