From Domainfax:
While other 70-year-olds may be planning exotic cruises or luxurious overseas holidays, state government veterinarian Colin McQueen continues to clock in at the Ararat export abattoir as he works to pay off the last of the three homes he bought in Melbourne’s inner northern suburbs for his adult children.
…A recent survey by REST Industry Super found that an incredible one in three retirees in Sydney, Melbourne and Perth and one in five in Brisbane and Adelaide were looking to give their adult kids money to help them get onto the property ladder.
“Not only is it difficult for young people to save a deposit for a property, when they buy one they can be paying up to $1000 per week in after-tax income as interest on their mortgage,” McQueen says. “This makes them very vulnerable to a sudden spike in interest rates, which is going to be a likely consequence of our current ponzi-like system of money-creation-as-debt.”
…For most families, unaffordable housing means adult children are living with their parents for longer. But as the McQueen’s example shows, that is not the only option. While you may not be able to go to the lengths they have gone to, there are a number of ways you can help your children buy their first home.
The McQueens have financed their children’s homes through a combination of capital gains, some inheritance money and drawing down from their superannuation. The properties are in Stephanie’s name, and the children are tenants, paying minimum rent.
It is also a great way to over-leverage the inter-generational balance sheet. Now the kids entire inheritance is locked into a grotesquely unbalanced property portfolio and if Mr McQueen’s “ponzi” comes apart when one goes they all go.
But Domainfax couldn’t help itself, with another headlining article this morning:
Those who receive a gift of $5000 or more from a parent are much more likely to own a home than others. But the trend for parents to give their children handouts to help break into the property market is increasing the level of wealth inequality.
New modelling by economists from Sydney University and RMIT University shows about one in 20 Australians receive funds from their parents specifically for home ownership each year.
These “inter vivos transfers” – made during a parent’s lifetime – were found to have “large impacts” on home ownership rates.
Basically this entire publishing has become untrustworthy on anything economic. If you want to know why then look no further than this video from The Business last week in which Domain CEO and largest Fairfax shareholder Anthony Catalano outlines why it makes up 70% of Fairfax value.
Do not view after eating.
