The Y generation are being encouraged to leave home by government grants and their parents.

With more than a quarter of Sydneysiders aged 20 to 34 still living at home, it's only natural that parents might start helping their children buy first homes.

And they've never had such a good financial excuse, with the first-home buyers grants so generous, interest rates at a historic low, rents so high and credit so tight.

After seeing the grants push first-time buyers into decisions, then persuade those who weren't actively thinking about buying into putting down deposits, this is now the third wave of buyers: those pushed into it by generous or frustrated parents.

"Parents can see it's a great time to help their children into good-quality first homes," says Stockland's NSW regional manager of apartments, Ben Rodwell. "I think a lot of them now are having conversations with their kids that it might be a good time to consider moving out."

But that freedom might be short-lived. Some of those buying with their parents' help, either with the deposits or by having a guarantor, are later living as part of the "boomerang generation". This generation moves back home to live cheaply and comfortably and rents out apartments for an income.

"I've told my parents not to turn my bedroom into a gym yet," says charity call-centre fund-raising manager Aaron Smith, 20, who's just bought a $450,000 one-bedroom apartment in Stockland's new mixed-use development The Village, at Balgowlah, 12 kilometres north of the Sydney CBD.

"My mum went guarantor for me and my brother to buy apartments there but I'm not too sure what I'll be doing in future. You like to keep your options open."

Mum and dad to the rescue

Up to half of all first-home buyers are now being helped by their parents, estimates the head of project marketer CB Richard Ellis Residential (NSW), David Milton. "This is particularly the case with off-the-plan stock, where parents will either top up their children's deposit or go guarantor on a deposit bond," he says.

"They are mindful that this is a rare opportunity for their kids to get a toehold into the Sydney property market and often rue the fact that such generous government incentives didn't exist for them."

Certainly, the first-time grant of $7000 plus the buyers' supplement of $3000 for new homes from the NSW Government, the federal boost of $14,000 for new homes and $7000 for existing homes and the cut to stamp duty by up to $17,999 are viewed as huge incentives to buy.

"Mum and dad have really been encouraging me to buy. They've been the driving force," says Sharmila Peres da Costa, 31, who works for the social security appeals tribunal. "I'm the youngest of three and they wanted me to have that security before they retire."

Da Costa has just bought a $535,000 two-bedroom apartment at The Waterfront at Homebush Bay, with her parents acting as guarantor. "They're always happy to have us around but they encourage us to be independent," she says.

The Waterfront has achieved record sales during the past three months, with exchanges on 80 apartments, almost all of which to first-home buyers. "And the majority of those have had financial assistance from their parents," sales boss Jim Keats says. "Each time, the parents have been heavily involved in selecting the most appropriate apartment."

It was a similar story for accountant Olivia Bannister, 26, who, with her partner, Dane Cameron, 25, has just bought a two-bedroom-plus-study apartment in Meriton's Riverview at the Peninsula in Rhodes. "Mum and dad went guarantor for us," she says. "We had quite a hefty deposit ourselves but their help meant we could avoid mortgage insurance, which can be quite expensive."

It's a trend catching on all over Sydney. In the eastern suburbs, where parents might be expected to be affluent and able to give their offspring a hand, they're digging deep.

"Where they can, they are," says real estate agent Pauline Goodyer of GoodyerDonnelley. "We're finding that because of tighter credit and loans taking longer to get approved, parents are giving a bit of assistance. We don't have a lot of new apartments in the area but demand is high from first-home buyers for older apartments within their price bracket."

Money too tight to mention

The difficulty for would-be first-home buyers and their parents is that credit is now much harder to obtain since the economic crisis. With a 10 per cent deposit demanded often and the entry point into the Sydney apartment market sitting about $350,000-$400,000, many young people need at least $35,000, with the government grants still leaving a gap.

"That's where the parents are often stepping in," says financial planner Andrew Bowring of Maven Financial. "I would get two calls a week now from my clients wanting to help their child buy property."

It makes perfect sense for parents, when possible, to help their youngsters. "It really is happening a lot," says the principal of Quakers Hill-based personal mortgage adviser Smartline, Aaron Sainsbury. "In the past you could borrow 95 per cent to 100 per cent of the price of an apartment but now a lot of lenders will only lend 90 per cent.

"If parents are happy to help, the first-home buyer can save themselves about $15,000 in mortgage insurance premiums and there are probably a lot of mums and dads out there eager to shoehorn their children out of home."

But the importance of doing research into the property market and looking at repayment figures can't be overlooked, Bowring says. He believes rising demand for first homes, fuelled by the grants, is inflating prices artificially. If at some stage repayments become too arduous, maybe because of interest rate rises, and the property has to be sold, young people could be left with large debts if the sale of the property doesn't match the price originally paid.

"Parents might be OK for one-off help but they mightn't be able to help with the mortgage repayments for the next 10 years," Bowring says.

"That could mean a lot of stress and if the person ends up defaulting on the mortgage, it could give them a bad credit history or even bankruptcy, which is a stigma that could stay with them for life."

BROOKE'S SASSY BUY IN TAMARAMA

When fashion buyer Brooke McCleary found her ideal first home after a year of searching - a pretty art deco apartment in Tamarama - her mum was quick to step in to help, offering to go guarantor on the deal.

"I got more serious about looking when the first-home owner grants went up," says Brooke, 25, who buys for her mum's boutique, Sassi, in Griffith in country NSW.

"Interest rates are so low as well and rents are quite expensive, so it made good sense."

The one-bedroom-plus-study apartment, bought through GoodyerDonnelley, means she can also rent out a bedroom in the future if money becomes tight.

Brooke's mum, Claudia, was delighted at her choice.

"I know my daughter and if she didn't have a good head on her shoulders, I wouldn't have done it," she says. "But I know she has a sense of responsibility and if it all gets too much, we can always sell the property. As a parent, you have to think of these things."

Australian Property Monitors shows one-bedroom apartments in the block cost about $570,000.