Bold idea could drive house prices higher
A controversial push to allow Australians to dip into their superannuation to buy a home would have dire consequences on price affordability, Australia's peak superannuation body has warned.
The Association of Superannuation Funds of Australia says allowing members to access funds for a home loan deposit instead of retirement, would place "significant" pressure on a housing market already choked by a lack of supply.
A number of federal Liberal politicians have floated the idea of early access to super for home deposits as a mechanism to help first-time buyers enter the market.
The policy comes off the back of the federal government's early release of super scheme during the coronavirus pandemic, which strengthened household balance sheets and saw $36.4bn sapped from the nation's near $3 trillion savings pool.
However, analysis from ASFA has found such a scheme would put upward pressure on prices and dent housing affordability - particularly for low income earners.
ASFA chief executive Martin Fahy said the policy would be "disastrous" and make home ownership more out of reach for everyday Australians.
"Superannuation isn't the reason young Australians can't afford to buy a home of their own," Dr Fahy said.
"A lack of supply, and the policy settings with respect to residential investment property has had a distortionary effect on demand.
"These are the real issues that must be tackled to generate improvements in housing affordability."
ASFA's research found the scheme would predominantly benefit higher income earners and would exacerbate the upswing of the price cycle.
Coalition backbenchers pushing for the policy to allow super to be put into housing equity include Jason Falinski, Andrew Bragg and Tim Wilson.
Dr Fahy said ransacking super was fundamentally against the system's design, which is based on compounding long term savings.
"Using superannuation for housing deposits is fundamentally inconsistent with the objective of superannuation to provide an adequate retirement income," he said.
"None of the comprehensive reviews of superannuation over the last decade have recommended it, while several have made recommendations to the contrary."
ASFA says superannuation funds are increasing investment within residential property developments, which would improve housing affordability and lower prices in the rental market.
The report says record low interest rates are pushing up house prices across the country.
Federal and state governments already have schemes in place to help first-time buyers enter the housing market.
Commonwealth Bank, NAB and a slew of smaller lenders also offer first home buyers grants where only a 5 per cent deposit is needed to acquire a mortgage.
ASFA is calling on the government to conduct an independent review into housing affordability, similar to the retirement income review handed down last year.
Originally published as Bold idea could drive house prices higher