When two young graduates enter the housing market earning equal salaries but receive different levels of family support, the financial gap can grow quickly. A scenario modelled by accounting firm William Buck shows that a $100,000 gift for a home deposit not only accelerates home ownership but can lead to $2 million more in retirement wealth, even with identical incomes throughout their careers.
The scenario centres on two 24-year-old university graduates, Sarah and Adam, who both start $97,000 law jobs in Sydney, known for its housing affordability challenges. Sarah’s parents give her $100,000 towards a deposit, helping her enter the market early. Adam, saving alone, takes eight additional years to buy. That delay significantly alters the course of his financial future.
The model assumes moderate conditions with 4.5% annual house price growth, 2.5% inflation, 6% mortgage rates and standard living expenses. Over a 40-year working life, Sarah benefits from buying sooner. She is able to move properties earlier, upgrade sooner and retire with $1.4 million more than Adam. Her overall assets grow to $11.18 million, while Adam ends up with $9.82 million, despite working the same job and earning the same salary.
The consequences go beyond financial figures. Experts say homeowners with debt often opt for job stability instead of risk-taking through entrepreneurship or career changes. Delayed purchases can also reduce mobility, pushing people further from major economic areas into places with fewer employment options. This not only limits personal wealth but can slow national productivity.
The housing gap reflects deep structural problems, not just personal advantages. For decades, policy has favoured property investors over owner-occupiers. Currently, only 19.2% of Sydney homes are considered affordable for a median income earner. Just 3.8% of properties within 10 km of the CBD are within reach, and while government-backed buyer schemes exist, navigating them can be complex. Those with financial knowledge or access to advice often benefit most.
Institutions such as AMP and the Grattan Institute point to a deeper issue, which is a significant housing supply shortfall. Limited availability, long construction timelines, strong demand and restrictive planning rules are tightening the market and keeping prices high. Although around 190,000 homes are being built each year, Australia’s population is growing by 400,000 annually. The housing shortage is now estimated at 200,000 dwellings and is continuing to grow.
Long-term change will take more than increased grants or small tax changes. Urban planning reforms are needed urgently. Cities like Sydney must allow for more housing in desirable areas. That means changing zoning laws and encouraging development in existing high-demand locations, not just expanding urban fringes.
