Beset by lending restrictions, dwindling government grants, and exorbitant property prices, young Aussies wanting to buy their first homes are rapidly turning to a stable source of finances: their parents.

More parents are taking advantage of record-low interest rates to refinance their properties. They’re doing this to help their adult children purchase their first homes amid skyrocketing house values.

Research and consulting firm Digital Finance Analytics estimates that the number of Australians getting help from their parents has increased to more than half of first-time home buyers from just three percent six years ago.   

Australia’s housing rally favours baby boomers. This is locking out young adults from the housing market and is compounding an inter-generational shift of wealth. To make things worse, rising property prices throughout the country has made it harder for young Australians to afford their own homes.

As the number of bank loans to first-time home buyers dwindles, the average slice of cash handed to adult children by parents eager to hoist them onto the housing ladder has almost quadrupled in the past six years. The downside is a bloated market that the Reserve Bank of Australia fears might become even more inflated.

First-time home buyers are "being infected by the notion that property is about wealth building, rather than somewhere to live," said Martin North, Principal at Digital Finance Analytics. This notion "may be tested if interest rates rise later, or property prices fall from their current illogical stratospheric levels."

Sydney, where values have risen more than 90% since the end of 2008, remains the priciest city in the country. The UBS Global Real Estate Bubble Index recently ranked Sydney the fourth riskiest city for housing bubbles among the world’s top financial centres.  

The property boom, which is being driven in part by demand from foreign investors, is turning some homes into cash dispensaries. More than two thirds of homeowners who refinanced homes worth more than $750,000 did so to obtain capital for various reasons, including helping their children. Near the start of 2010, average financial assistance from parents totaled about $23,000. Today, that number has jumped to $80,000.