As a parent, watching your children grow into adults is a journey filled with pride, joy, and sometimes a touch of anxiety. One of the most significant milestones in their adult lives is entering the property market.
However, in today’s economic climate, this step can seem like a challenging, if not impossible, task for many young adults.
The rising property prices, stringent lending criteria and the challenge of saving for a deposit while managing everyday expenses have created a perfect storm of obstacles for first-time buyers.
Here’s where parents like us can make a big difference. Our emotional and practical support can make a world of difference in helping our adult children master the complexities of property ownership with ease.
But what does this support look like?
How can we guide without overstepping, assist without fostering dependency and share our wisdom without imposing our views?
These are the questions we’ll explore, drawing from my experiences both as a property consultant and as a parent who has helped her own children through this process.
Your Role As A Parent
Supporting our adult children often requires us as parents to walk a tightrope.
On one side, there’s our natural instinct to protect and provide; on the other, the need to foster independence and allow our children to make their own decisions.
Guide your children by creating an open, judgement-free communication environment. Offer advice when asked, but let them lead the decision-making process.
Encouraging financial literacy is a vital part of empowering your children. Help them understand the full costs of home ownership beyond the purchase price—things like property taxes, maintenance and insurance. Teach them to research market trends, analyse property values and identify potential growth areas.
While our life experience is valuable, it’s important to acknowledge that the property market is complex and ever-changing. Encourage your children to seek advice from professionals such as mortgage brokers, financial advisors and property lawyers.
Sometimes, our children need to hear advice from someone other than their parents to fully understand and feel comfortable with the process.
Financial Support
Financial assistance is one of the most significant ways parents can support their adult children in the property market. However, this is an area that requires careful consideration and clear communication to avoid misunderstandings or strained relationships down the line.
Here are some ways you can provide financial support:
- Gifting: You might choose to gift a lump sum to help with the deposit. Remember, most lenders require a statutory declaration stating that the gift is not a loan.
- Loans: You could offer a loan with more favourable terms than a bank. If you go this route, it’s essential to have a formal agreement in place.
- Co-signing: By becoming a guarantor on your child’s loan, you can help them secure better terms. However, this comes with significant risks, as you’re equally responsible for the loan.
I experienced the importance of financial guidance firsthand with my son.
He wanted to take advantage of the First Home Owner Grant when preparing to buy his first property. Knowing that he could secure additional funds due to his stable employment, I encouraged him to consider what he felt comfortable borrowing rather than simply what the banks were willing to offer.
We focused on finding a property that matched his needs without stretching his finances too thin. He purchased a loft-style apartment and made some clever renovations, like creating a study nook under the stairs. It not only added functionality but also increased the property’s value, showing him that with a strategic approach, even a smaller budget can go a long way.
Identifying Opportunities in the Market
Another valuable skill we can help our adult children develop is the ability to spot opportunities in the property market. This involves looking beyond the obvious choices and understanding the importance of market trends that can significantly influence property values.
Market trends, such as new transport links, schools, and hospitals, often play a crucial role in determining the future potential of an area.
For instance, a suburb might currently be overlooked, but if there are plans for major infrastructure projects, like new roads or rail lines, the area could see a substantial increase in property value over time.
It’s essential to stay informed about these developments, as they can turn a seemingly average location into a prime investment.
In my practice, I’ve always stressed the importance of these trends to my clients. For example, I worked with a young client who was initially focused on buying a small apartment in Glebe, a trendy inner-city area.
However, after we discussed his long-term goals and explored different options, I suggested he consider nearby suburbs where he could get more value for his money. He ended up purchasing a three-bedroom house just a short drive away from Glebe. While the house needed some cosmetic updates, it was on a good-sized block and had great potential due to planned infrastructure improvements in the area.
With some minor renovations, like converting a half bathroom into a full one, the property’s value increased significantly within a year. This experience shows how understanding market trends and thinking beyond the obvious choices can lead to excellent investment outcomes.
By teaching our children to research these trends and think long-term, we’re not just helping them with their current purchase—we’re equipping them with skills that will serve them well in all their future property decisions.
Avoiding Pitfalls
To help our adult children get around the real estate market, we must be aware of the common challenges and help them avoid potential pitfalls. Here are some key areas to watch out for:
- Imposing personal preferences: What worked for us or what we consider ideal might not align with their needs, lifestyle, or future plans. Remember:
- Listen to your child’s preferences and priorities
- Offer advice based on practical considerations rather than personal taste
- This is their home, not yours
- Neglecting long-term implications: Encourage your children to think about:
- Potential changes in their career or family situation
- The long-term costs of owning the property (maintenance, taxes, potential special assessments)
- Future developments in the area that could affect property value
- Rushing the process: The fear of missing out, especially in a hot market, can lead to rushed decisions. Remind your children that taking their time is okay, even if it means missing out on a property.
- Overextending financially: It’s tempting for first-time buyers to stretch their budget to get a “better” property. Help your children:
- Create a realistic budget that accounts for all costs of home ownership
- Recognise the value of keeping an emergency fund in place.
- Consider potential changes in income or expenses in the near future
I experienced the importance of timing and clear-headed decision-making firsthand with my daughter.
My daughter and her husband were renting when she became pregnant with their first child. Like many parents-to-be, she was eager to buy a home before the baby arrived.
However, understanding the pressures and emotional fluctuations that come with pregnancy, I advised her to wait. Buying a property is a significant decision, and I knew that ‘baby brain’ could affect her ability to make such a major commitment with a clear mind.
It was best to hold off until after the baby was born, allowing her time to adjust to motherhood and assess her family’s needs more clearly. This would give her the clarity to choose a home that truly suited their growing family.
Conclusion
Supporting your adult children in entering the property market is a delicate balance of offering guidance, sharing experiences, and allowing them the freedom to make their own decisions.
By building strong financial foundations, staying ahead of market trends, avoiding common pitfalls, and encouraging professional guidance, you’re setting them up for success—not just in their first home purchase but in their overall approach to life’s big decisions.
If you’re looking for personalised advice on how to best support your children through this exciting journey, I invite you to book a consultation with me. Together, we can explore the options available and ensure your children are equipped with everything they need to make informed, confident choices in the property market.
