Sydney couple Mark and Alana recently bought their four-year-old daughter a one-bedroom property to set her up for the future. (Source: Supplied)
A Sydney couple have revealed why they decided to buy their four-year-old daughter a $1 million property rather than wait decades to give her an inheritance down the track. While it’s a unique example, property experts say more parents are helping their kids get onto the property ladder as prices continue to skyrocket.
Northern Beaches couple Mark and Alana recently bought a one-bedroom apartment for their young daughter, Willoughby. The couple, who both work in sales for cybersecurity firms, said they wanted to create a sort of “insurance” policy for their daughter and try to set her up for the future now.
“I wanted to try and do something now so that no matter what happens to me, there will be something for my daughter one day,” Mark told Yahoo Finance.
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“Think of it like buying insurance. You buy life insurance and all these other kinds of insurance. This is like buying insurance for my daughter’s future.
“I know that this thing’s going to be rented and paid for one day and so that security is what we needed for our daughter.”
The home is in the new Willoughby Grounds development, which is set to be completed in August. The couple previously lived in Willoughby, with their daughter named after the lower North Shore suburb, so they took the apartment as a sign.
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The apartment is in Willoughby, which is the suburb the couple named their daughter after. (Source: Supplied)
Mark said he didn’t grow up with a lot of money himself, and his parents did not help him buy his first property and would not give him an inheritance when they passed.
The 45-year-old said this will be the main inheritance they pass down to their daughter. He said he would prefer to give her a financial leg when she needs it rather than waiting.
“I hate the word inheritance. Waiting for someone to die is the old way of thinking,” he said.
“Let’s say I live until 80. What will my daughter want to do with money when she’s already made her own life and everything?
“A lot of people might disagree, but I think [you should be] giving people the help when they need it, versus one rainy day when you pass away.”
The couple is an example of a growing trend of parents who are stepping in to help their kids enter a surging property market.
Mozo research found parents were gifting $74,040 on average to their kids to help with home loan deposits. Three in four parents who help their kids don’t expect to be repaid.
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Australian Seniors research, meanwhile, found seven out of 10 parents over 50 intended to leave their children an early inheritance to help them get ahead.
Ray White’s Tim Abbott said he was seeing parents help their kids with deposits as property prices continued to increase. (Source: Supplied)
Ray White Lower North Shore director Tim Abbott told Yahoo Finance while it wasn’t the norm for parents to fully buy their young kids a property, many parents were helping their kids get a head start by contributing to their deposits.
“If people are lucky enough that their families can assist them in getting into the property ladder, it’s certainly a benefit,” he said.
“The cost of construction and the cost of property just keeps going up, so if they can secure something and they’ve got the ability to secure something and get into the market, then it’s going to pay off for them financially over the long term.”
Abbott said some parents were keen to help their kids get into the market now, before things get more expensive.
“[They want to] overcome a bit of that escalation in price, or just lock something in today’s market with further growth getting more unaffordable as time goes on for the younger ones,” he said.
Mark said the couple planned to rent out the property until Willoughby is older, with the apartment estimated to bring in $850 a week in rent.
She can then use the apartment as she sees fit, whether she wants to live in it, or sell it and use it to pay for university, a car or her first home deposit.
While the couple realised they are lucky to be in a position where they can buy a property for their daughter, the 45-year-old said it wasn’t easy.
“My wife and I have to find an extra $2,500 a month between us to cover the difference of the mortgage and rent. That’s not easy for any family,” Mark said.
“But it’s easier to us to make that sacrifice now, than it is in 16 years from now. Now’s the time we can actually do things in our life to make more money versus then.”
While their daughter will no doubt be extremely thankful for her parents’ decision in the future, for now, Mark said she has a typical four-year-old reaction to the news.
“We talked to her about these things, but does she remember it? Sometimes she just gets confused about what happened at daycare the day before,” he said.
“But her reaction is good, and then it fades very quickly.”
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