Want to raid retirement savings for a home deposit? Think again
Alarming new modelling shows that property prices could drastically rise across Australia if first home owners are granted access to their super for house deposits.
Within the current cost-of-living crisis, initial housing deposits are posing a significant roadblock to prospective first home owners, prompting discussion on whether Australians should be allowed to draw from their super in sourcing an initial deposit.
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Recent modelling undertaken by the Super Members Council (SMC) has evinced that property prices could rise by nearly $75,000 across Australia’s five largest capital cities if first home owners are allowed to withdraw their super for a house deposit.
Acknowledging the posing of superannuation as a potential “solution” to the affordability issue, the SMC modelled a scheme that would facilitate this scenario and allow first home buyers to take $50,000 from their super for a deposit. Within this model, the scheme achieved virtually the opposite outcome in spurring an insurmountable housing demand within capital cities that quickly overwhelmed the $50,000 that first home owners could withdraw from their super.
The projected price increases for properties within the model ranged from the smallest increase of $70,000 in Melbourne all the way to $86,000 in Perth, meaning the price hikes across all Australian capital cities easily dwarf the proposed $50,000 super injection.
Super Members Council CEO, Misha Schubert, was sympathetic in stating that she understood the desire for Australians to own their own home at any costs, but to enact this scheme would simply see to a price hike for houses that would require higher and longer mortgages that would only make house prices even more expensive and out of reach for the average Australian.
Further deliberation on the scheme only succeeded in raising even more problems that would spell further difficulty outside of the real estate sector entirely.
The modelling showed the example of a 30-year-old couple who withdrew $35,000 each from their super, resulting in the said couple retiring with about $195,000 less in today’s dollars.
SMC argued that this decrease in super would in turn, lead to higher age pension costs, resulting in higher taxes being shouldered by every Australian.
“Breaking the seal on super leaves people poorer in retirement and costs every Australian taxpayer more from higher age pension costs,” remarked Schubert.
Economists such as Retirement Income Review author Mike Callaghan and OECD secretary-general Mathias Cormann have echoed the SMC’s judgement that using super for housing deposits would result in inflated property prices.
It’s also been seen in international studies and a Mercer study of its Global Pension Index that early access to retirement savings in no way correlated to higher rates of home ownership.
While curbing the challenges surrounding first-time home ownership with access to super may be ill-advised, Schubert reaffirmed the SMC’s commitment to investigating a safe and accessible avenue for meeting minimum house deposits.
“The Super Members Council works with parliamentarians and policymakers across the full breadth of the Parliament to ensure super policy is stable, effective and equitable,” Schubert said.
“We produce rigorous research and analysis to help inform policy development that protects and promotes the interest of the 10 million everyday Australians we represent.”
