The Real Estate Institute of Australia (REIA) is calling on the government to allow first time buyers to use their superannuation to buy a home.
The proposal, which was also floated by Later Economics chief executive Nicholas Gruen at last week’s tax forum, has already been implemented in Canada to great success, the REIA said.
“With the number of first time buyers participating in the housing market declining considerably over the past two years, it is crucial that we look at ways to assist this group to enter the market,” REIA acting president Pamela Bennett said.
“There is proof that the scheme is working in Canada and we should be drawing on this success to assist first time buyers in Australia.”
The Canadian Home Buyer’s Plan has been in operation since 1992 and allows first time buyers to withdraw up to CAD$25,000 from their retirement savings plan to purchase or build a home.
According to the REIA, the scheme has proven popular, with nearly 1.4 million Canadians withdrawing money from their retirement savings to participate in the plan between 1992 and 2004. During this period, over 12 per cent of first time buyers aged 25 to 44 used the scheme.
The REIA said that, in Australia, the average age of first time buyers is in the early 30s, with 55 per cent of recent first time buyers aged 18-29 years, and 34 per cent were 30-39 years.
“There has been some speculation that first time buyers in Australia would not have enough in their superannuation for the deposit on a home. However, in 2007 the median superannuation balance for those who were 25-34 was $28,999 and $63,600 for Australians aged between 35-44,” Ms Bennett said.
The REIA said the Canadian scheme does not disadvantage the retirement plans of first time buyers. Under the plan, funds withdrawn from retirement savings need to be repaid over a 15 year period so as not to impact the ability to enjoy a comfortable retirement.
“The Canadian Home Buyer’s Plan is the perfect example of this proposal in action and REIA would like to see it implemented in Australia as a solution to overcome the problems faced by first time buyers,” Ms Bennett concluded.