Certain suburbs of Sydney have shocked the nation with their impressive inheritance figures, with the average family set to leave a staggering $3.75 million to their children, making it the largest in the country. The figure comes from a new Seer Data and Analytics study commissioned by Charities Australia, which covers several affluent areas including the eastern Sydney suburbs of Rose Bay, Vaucluse and Watson's Bay.
In addition to these high-estate areas, families in Lindfield and Roseville in Sydney, as well as the North West, Eastern suburbs, Inner West and some suburbs on the North Shore, have average estates of more than $3 million. The wealth of families in these areas greatly influences the local real estate market, creating a market structure that is supported by inheritances and cash gifts from family members.
The Seer Data & Analytics study reveals a remarkable phenomenon: large amounts of wealth left by parents to their children are often used to purchase a home. This situation significantly changes the living conditions of first-time homebuyers. According to Digital Finance Analytics, the percentage of first-time buyers receiving financial assistance from their parents soared to 59 percent this year, up from just 3 percent in 2010.
According to Digital Finance analyst Martin North, this trend is fueling a "two-speed real estate market," in which those with family wealth can pay higher prices, driving up overall home prices, while those without such financial support are excluded. Not only does this phenomenon exacerbate the polarization of the market, but it also puts many young homebuyers under tremendous pressure to purchase a home.
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Since 2021, Seer Data & Analytics estimates that billions of dollars of wealth have been transferred between generations in some suburbs. More wealth is expected to pass to younger generations by 2030. This wealth transfer has been particularly pronounced in the North Shore and eastern suburbs, further reinforcing high home prices in these areas.
Mortgage brokers are also witnessing this trend. Ashley Bieser from Mortgage Choice Concord says most first-time buyer couples have a deposit of between A$100,000 and A$200,000, which is clearly not enough in Sydney's hot real estate market. "A little help from parents can make a big difference," she says, citing the example of one couple who recently received a cash gift of A$600,000 from their parents for a home purchase.
This phenomenon is not confined to high-income families; a recent study by Finder.com.au revealed the current home-buying dilemmas faced by those who are neither high-income nor affluent. The survey revealed that nurses, creatives, teachers and many others have little hope of being able to afford a Sydney home. According to Finder's research, it would take each of these professionals more than 53 years after leaving school - longer than their entire careers - to scrape together a 20 percent down payment on a home.
Sydney is the only city in Australia where this situation exists. The study assumes that these professionals earned the national average salary for their industry at each stage of their career and purchased the property on their own. The model also takes into account inflation, the cost of living and the time it takes to gain qualifications in each industry.
This phenomenon reveals deeper issues in the Sydney real estate market. Inheritances and family cash gifts significantly support the market, giving families with family wealth a distinct advantage when purchasing a home. In contrast, average-income families who do not have this support face almost insurmountable barriers to homeownership.
