Co-opting superannuation savings to fund housing deposits would drain retirement funds and supercharge an already heated housing market, according to new research.
House prices would rise between 7.4 and 10.3 per cent and add $260 per fortnight to mortgages on median-priced capital city homes, a study commissioned by the Super Members Council (SMC) found.
The study investigated the impacts of the Coalition’s proposed policy, affirmed in the recent budget reply, to allow first home buyers to withdraw 40 per cent of their super (capped at $50,000) to fund a housing deposit.
SMC pointed to the New Zealand housing market as evidence of the negative impacts of using super for housing.
After the country introduced a super for housing scheme, prices rose at twice the rate of Australian increases and led to a seven-percentage point drop in home ownership among under 30s.
SMC CEO Misha Schubert said a vast body of expert evidence was crystal clear that early withdrawals of super for house deposits would just push up house prices further and faster – pricing more Australians out of owning their own home.
“Raiding retirement savings for house deposits would just unleash a supercharged price hike in house prices, not create more new home buyers,” Ms Schubert said.
“That would mean home buyers in future would have to pay higher repayments on bigger mortgages for longer, worsening housing affordability and cost-of-living pressures on younger Australians,” she said.
Purpose of super must be protected
IEU-QNT Branch Secretary Terry Burke said superannuation was established for a key purpose: to provide funds for retirement.
“Allowing young Australians to drain their future retirement funds and fuel an already-heated housing market is a recipe for disaster,” Mr Burke said.
“Action on housing affordability should not come at the expense of secure retirements,” he said.
Mr Burke said the LNP’s proposal to leverage young people’s housing aspirations to dismantle superannuation was shameful.
“The Coalition has a track record of attacking superannuation, including freezing increases to the minimum super rate for years and allowing millions of Australians to drain their super during the pandemic without any checks or balances.” He said.
“Their latest thought-bubble on super is another shameful entry in that record.
“The Coalition cannot be trusted with our world-leading superannuation system – and no doubt workers who want to protect their retirement savings will bear that in mind at the federal election on 3 May,” he said.
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