A growing number of Australian parents are stepping in to help bankroll their children’s first homes, but the old assumption that the money would one day be repaid is rapidly disappearing. The “bank of mum and dad” describes financial support parents provide to adult children to buy a home, whether that help comes as a cash gift, a guarantor loan, co-ownership, or even rent-free housing to make saving a deposit easier. Increasingly, though, the support is being handed over as a lump sum with no expectation of repayment, turning what used to be assistance onto the property ladder into what looks more like the gift from mum and dad.
The scale is significant. Digital Finance Analytics estimates parents are collectively pouring around $35 billion into property purchases in Australia. In 2024, UBS surveyed 1000 Australian adults about whether they had given money to or received it from family in the previous 12 months. About half said yes, mostly for everyday expenses. Mortgage interest payments were the second most common reason for family funds, while home purchases ranked third. The amounts are also growing, with most contributions exceeding $100,000 and many surpassing $200,000.
A symptom of a market out of reach
Experts say it’s a worrying sign of the times that young adults increasingly can’t get onto the property ladder without parental help. They argue that the shift toward large financial gifts is an unhealthy indicator of a housing market that has bolted far ahead of income growth, and that first-home buyers should be able to service a loan based on their earnings without sliding into severe hardship.
Affordable housing advocate and property investment adviser Ian Ugarte says the trend points to a deeper housing problem. “In the 1970s, the median house price was roughly three to four times the average annual income,” Ugarte said. “By the 1990s, it had moved closer to five times income, and by the early 2000s, it was about six times,” Ugarte said. “Today, in many parts of Australia, we’re seeing price-to-income ratios sitting between eight and 12 times the household income, depending on the city. That means what used to take three to five years of salary [to save] now takes closer to a decade or more for many first-home buyers,” he said.
That affordability squeeze changes behaviour, he says, with young adults staying home longer, delaying family formation, or leaning on parents. “When affordability stretches that far beyond income growth, it forces behavioural change. Young adults stay at home longer, delay family formation, or rely on financial assistance from parents,” he said. “That’s why the so-called bank of mum and dad has become one of the largest lenders in the country. It’s not because families want to do this – it’s because the system is pushing them toward it.”
For many parents, the money is seen less as a loss and more as a forward inheritance, particularly if they believe their children may otherwise miss out for good. “They recognise that if they don’t assist now, their children may struggle to ever enter the market,” Ugarte said. He adds the effect on retirement varies, but for households with strong superannuation balances and significant home equity built over decades, contributing to a deposit or offering guarantor support may not materially change their long-term lifestyle.
Keeping it equitable — and protecting yourself
Mortgage broker Rebecca Jarrett-Dalton, founder of Two Red Shoes Mortgage Brokers, says parents who can contribute towards a deposit are giving their children a valuable start, but they need to think ahead about how that help will be viewed within the family. She urges parents to consider how to balance a gift to one child when there are other siblings, and how quickly a one-off decision can create future expectations.
“We see issues arise when there’s a breakdown in any relationship – such as the kids’ relationship, and the gift becomes part of the financial assets,” she said.
Jarrett-Dalton also points to co-purchasing arrangements as another area where problems can arise, especially if circumstances change. To reduce risk, she says parents should consider legal advice and ensure the right documents are drawn up. “Parents also need to protect their own assets and consider their own financial planning, such as pension funds, because the gift can have an impact when it comes to considerations around Centrelink,” Jarrett-Dalton said.