Families in one cluster of Sydney suburbs will pass down a staggering $3.75m to their kids, on average, making it the area with the largest inheritances in the country.
A new Seer Data and Analytics study, commissioned by Philanthropy Australia, showed the area in question incorporated the suburbs of Rose Bay, Vaucluse and Watsons Bay in Sydney’s east.
It comes as experts warn Sydney’s housing market is increasingly being propped up by the financial muscle of inheritances and cash gifts from family members.
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Those with parents in Vaucluse will get the country’s biggest inheritances, on average.
The large sums parents are leaving their children are often being diverted into home purchases and significantly altering the landscape for first-time homebuyers, research showed.
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According to Digital Finance Analytics, the proportion of first-home buyers receiving parental financial aid has soared to 59 per cent this year, a dramatic increase from just 3 per cent in 2010.
Digital Finance Analyst Martin North said the situation was spurring “a two-speed property market” where those with access to family wealth can pay more and bid prices up.
“Those without this leg-up are being excluded,” he said.
Digital Financa Analytics’ Martin North said there was now a two-speed market: those who were getting help from family and those who weren’t.
The Seer Data and Analytics estimated that billions of dollars in wealth has already been transferred across generations in individual suburbs since 2021 and billions more was forecast to be handed down to younger generations by 2030.
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This wealth transfer is particularly prominent in suburbs across the north shore and eastern suburbs.
It is hard for those who don’t get help to buy a home.
Mortgage brokers are witnessing this trend first-hand.
Ashley Bieser from Mortgage Choice Concord reports that most first-home buyer couples have savings of around $100,000 to $200,000, insufficient in Sydney’s heated market.
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“A bit of help from mum and dad can make a big difference,” she said, noting that one client, a couple, recently received $600,000 in cash gifts from each set of parents to put towards a home purchase.
Finder.com.au research recently revealed the climate currently facing those with neither high incomes or rich families.
Bricklayers were among a group of tradies who would find it harder to buy a home.
It showed nurses, creatives, teachers and many others were among those who stood no hope of ever being able to afford a Sydney house.
Upon leaving school, each of these professionals would take well over 53 years – longer than their whole career – to scrounge together a 20 per cent deposit for a house purchase, the Finder study revealed.
Sydney was the only city in Australia where such a situation existed. The comparison group’s analysis assumed the person earned the national average wage in their industry at each stage of their career and purchased on their own.
The modelling also factored in inflation, living expenses and the time taken to acquire a qualification in each industry.