The Bank of Mum & Dad – intergenerational transfers and first-time homeownership in Australia

Abstract Around 70 per cent of Australian households reside in owner occupied housing though ownership rates have begun to fall, especially for younger cohorts. Owner occupied housing generally represents the largest single asset in the household wealth portfolio and plays an important role in retirement planning and wealth accumulation. There is some anecdotal evidence that transfers from parents, often termed the ‘Bank of Mum and Dad’, are an increasingly important mechanism to facilitate entry into homeownership. In this paper we consider transfers in the form of bequests and inter vivos gifts from parents and examine the relationship between transfers, wealth inequality and entry into first-time homeownership. The empirical analysis indicates that bequests and inter vivos transfers hasten entry into homeownership, potentially alleviating some important liquidity constraints faced by households.