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House prices reshape the nuclear family

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Forget the dream of having two kids, a border collie and a white-picket fence; new research shows the rising cost of living is reshaping the traditionally "standard" family structure.

The report, by policy research house the McKell Institute, revealed that house prices are putting greater pressure on Australians and forcing people to have fewer children, later in life.

More buyers under the age of 35 are having to rent or even live at home with their parents for longer to save for a deposit as a result, it found.

"This cohort is increasingly renting or even, quite unlike previous generations, now exhibits a trend towards living at home with their parents for longer. When this cohort does form households, they do so later and then proceed to have fewer children because of it," the report read.  

First-time buyers are getting older too, according to the research, with buyers entering the property market now in their mid-30s. In 2008, only 38 percent of Australians under 35 owned their own home, compared to 44 percent in 2001.

The findings are supported by the Australian Bureau of Statistics data, which showed that while the number of families with children is projected to increase to 2.6 million by 2026, couples without children are set to represent the largest and fastest increase of all family types in Australia. By 2026, childless couples are projected to account for more than 44 percent of all Australian families, according to ABS data.

Damian Smith, chief executive of RateCity, said there's nothing bad that can come from entering the housing market later with a larger deposit.

"While a bank offering you a loan on a smaller deposit is tempting, it's probably not the wisest course of action," he said.

Despite this, more lenders are offering home loans to people with smaller deposits than in the past, according to RateCity data.

The main lever banks use to stimulate the market is called loan-to-value ratio (LVR). In simple terms, LVR means the amount a lender will let you borrow compared to the value of the property. There are about 2760 individual home loan products in RateCity's database. Over time, the LVR's that these loans offer is a really good barometer for how hungry lenders are for business.

Smith said the biggest risks in low-deposit loans are taken by the borrower, not the lender.

"It’s important to understand these risks, because in the heat of the moment — seeing the ideal house, for example — the logic of numbers can sometimes be swept away," he said.

"When you're looking at your dream home, it's hard not to stop and think about costs over the next 20 or 30 years — but the payoff from saving longer, and owing less when you do buy your first home, it almost always worth the wait."