Rising house prices and stamp duty push buyers to seek family help
There is a sharp increase in first-home buyers relying on guarantor loans backed by parents in New South Wales, according to new figures from Loan Market.
According to the brokerage, the proportion of first-home buyer loan pre-approvals in NSW involving parental guarantees has more than doubled over the past year – from 5% to 11%. In these cases, parents are using the equity in their own homes as security.
“More young Australians are leaning on their families, not because they want to but because they have to,” said Loan Market chief executive David McQueen (pictured).
He also noted that broader cost-of-living pressures are making it increasingly difficult for younger buyers to save for a deposit. Since 2020, Sydney rents have surged by 44%, grocery prices are up 27%, and car insurance costs have climbed by more than 40%.
At the same time, Loan Market reported a 31% year-on-year increase in investor lending, suggesting seasoned buyers are regaining confidence and returning to the market.
The firm argues that current stamp duty thresholds no longer reflect property market conditions. Full exemptions in NSW only apply to properties under $800,000, while partial concessions extend up to $1 million. However, Sydney’s median house price is now $1.47 million, and the median unit price stands at $820,000 – already above the exemption cap.
McQueen pointed out that a couple purchasing a unit at the median price could face stamp duty charges of nearly $33,000 – on top of their deposit and other upfront costs. Some buyers are turning to interstate markets and choosing to rent out their properties as a strategy to enter the market and build equity. However, the firm said this reflects systemic challenges rather than consumer preference.
The brokerage is calling for the full exemption threshold to be lifted to $1.5 million, which it says would better match today’s market conditions. It added that lending standards would remain intact, including a 3% serviceability buffer.
“First-home buyers keep the market moving,” McQueen said. “When they step in, others can upsize, downsize or move where they need. When they’re shut out, it slows everything down.”
Loan Market also highlighted the role of mortgage brokers in helping borrowers navigate guarantor loans responsibly, often with a view to removing the parental guarantee as soon as practical. The group emphasised that while many first-home buyers have family assistance, not all do – and even those who do may see parents sacrifice retirement or financial goals.
In addition, the firm suggested extending stamp duty concessions to downsizing retirees, arguing that such a move could free up larger homes for growing families and help ease supply pressures.
With stamp duty reform under discussion for years, Loan Market said the upcoming budget represents a chance for the government to act.
“It’s time to support the parents who’ve been carrying the load, and the next generation trying to find their place in the market,” McQueen said.
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