NZ a warning on super-for-housing: Super lobby

The Super Members Council says New Zealand’s experience shows what lies ahead for Australia if workers are allowed to access their super for housing.

The Super Members Council says New Zealand’s experience shows why Australia should not go down the route of opening up super for housing. Picture: Max Mason-Hubers

Opening up super for housing would drive up prices, lead to lower rates of home ownership, and hit retirement savings as funds are forced to hold more liquid assets, the Super Members Council (SMC) has warned.

Drawing on New Zealand’s experience, where savers can access their retirement funds to get into the housing market, the super lobby group cautioned the scheme had delivered a spike in house prices along with a decline in home ownership rates over the 15 years it had been running.

Debt levels among first home buyers also rose sharply during this time, an SMC review of the program found.

House prices in New Zealand jumped 134 per cent between June 2010 and June 2024, more than in the previous two decades and 1.5 times faster than house price rises in Australia, according to a report from the SMC to be released on Tuesday.

Over the same period, home ownership rates declined by about 7 per cent for people in their 30s, while the proportion of high loan-to-value ratio loans taken out by first home buyers leapt from 25 to 75 per cent, the lobby group found.

“If you want to see further rises in house prices and falling home ownership rates — New Zealand shows introducing a super for a house policy leads in that direction,” Super Members Council chief executive Misha Schubert said.

“But, if you want to fix the housing crisis, then the answer is building many more new homes to expand supply, rather than telling young people that raiding their super is the answer.”

The Coalition has pledged to let people access up to $50,000 of their super savings to buy their first home if it wins the upcoming election, but critics, including the SMC and its peer, the Association of Superannuation Funds Australia, have warned of the impact on housing and retirement incomes.

“The evidence is clear – from an overwhelming majority of leading economists and new analysis of New Zealand’s real-world experience — that using super for house deposits will just further drive-up house prices, fuel higher mortgages and debt stress in a cost-of-living crisis, and push the Great Australian Dream of home ownership even further out of reach for many young Australians,” Ms Schubert warned.

More broadly, the SMC cautioned on the impact on investment returns: “In part to manage KiwiSaver withdrawals, New Zealand retirement funds hold more liquid assets than their Australian counterparts and generally deliver lower long-term risk-adjusted returns than alternative growth asset classes,” the report said.

“As at September 2024, Australian MySuper products had outperformed comparable KiwiSaver investments by an average of 1.16 per cent for each year over the past decade – resulting in significantly lower investment earnings for New Zealanders.

“If KiwiSaver’s lower net returns were replicated in Australia, Australians would have significantly lower retirement balances and less money to live on in retirement.”

Based on the KiwiSaver rate of return, SMC estimates a 30-year-old Australian worker with $25,000 in super and earning the median Australian wage would be $132,000 worse off at retirement age (67) in today’s dollars.

House prices in New Zealand jumped 134 per cent between June 2010 and June 2024, 1.5 times faster than house price rises in Australia.

The findings come months after economist Saul Eslake put out a report, commissioned by the SMC, with similar warnings on the impact of accessing super on the housing market.

Opposition home ownership spokesman Andrew Bragg earlier this month hit out at these claims, arguing vested interests are trying to distort the super-for-housing debate and that people would get a better outcome from investing in their own house than leaving it in super.

“The impact (of the housing-for-super policy) on retirement incomes is positive, not negative. For most Australians, a house is the core of their retirement and the No. 1 priority,” Mr Bragg wrote in The Australian.

“Based on historical data, Australians get a better outcome from investing in their own house than leaving it in super,” he argued.

Originally published as NZ a warning on super-for-housing: Super lobby