A national real estate body has come out in support of a proposed initiative to give first home buyers access to their superannuation to purchase property.
The Real Estate Institute of Australia has shown its support for the proposed initiative that will allow first home buyers to access their superannuation funds to purchase property.
“One of the biggest hurdles young people have in buying their first home is saving enough money for a deposit and the transaction costs. With rising house prices, the dream of owning a home is becoming difficult to attain,” Malcolm Gunning, president of the REIA said.
“Surveys show that not only are aspiring home buyers saving for longer but are also using debt to meet their deposit requirement including personal loans and credit cards,” said Mr Gunning.
“With first home buyers finding it increasingly difficult to enter the housing market, home ownership in Australia is declining after four decades of stable levels,” he said.
The plan was thrown around by government members in budget discussions; the initial suggestion being that first home buyers should be allowed to access their superannuation fund to afford a deposit for a home.
“Many young people already have a partial deposit, access to their super would make the difference but they aren’t allowed to make the decision to access what is after all their own money until they retire,” said Mr Gunning.
“Too much attention has been focused on the accumulation of a nest egg through superannuation. Superannuation and home ownership are both components of a retiree’s ‘nest egg’ and not competing products. By buying earlier in life retirees have every prospect of having a higher equity on retirement and a larger ‘nest egg’ on downsizing,” he said.
The plan has since been rejected as a possibility by Treasurer Scott Morrison, but not before it gained a large amount of backlash among opposition members. The plan was largely suggested to be a ‘band-aid’ for the housing affordability crisis, not a solution.
Mr Gunning disagrees with these suggestions, saying that allowing first home buyers to access these funds may ‘reverse the trend of falling home ownership’ and address the issue of long-term renters who may require rental assistance in later years.
“Accessing super is not a radical idea. The use of retirement savings for a first home purchase has already proven to be successful in Canada, New Zealand and Singapore,” said Mr Gunning.
“It is ironic that superannuation funds that invested in residential investment property have provided the best returns for their members over the last 20 years yet don’t want to see individuals investing in their superannuation contributions in real estate. What is the difference between investing in someone else’s home through your super fund and using your super contributions to invest in your own home?” he said.