‘Supercharged house price hike’: Academic throws cold water on Liberals’ super-for-housing scheme

Peter Dutton’s super-for-housing scheme will drive prices up between 7 and 10 per cent, analysis from the University of South Australia shows.

House prices would go up 7 to 10 per cent under a Liberal Party plan for first-home buyers to access their superannuation, new analysis shows.

The University of South Australia study shows the super-for-housing election promise would make houses more unaffordable.

“It is an uncontroversial finding – if you add demand to an inelastic market, prices are going to rise, with the unintended consequence of making housing less affordable” study author Chris Leishman said.

Opposition Leader Peter Dutton said that concern would be addressed by the Coalition’s major “supply side” policy that would result in more houses being built.

The analysis finds the median capital city house price will rise between 7.4 and 10.3 per cent. Picture: NewsWire / Max Mason-Hubers

Liberals’ housing spokesman Michael Sukkar labelled the work of Professor Leishman – the editor of the academic journal Urban Studies and a past editor-in-chief of the Housing Studies journal – “junk”.

“Using your own super to contribute towards a first-home deposit offers significantly better financial outcomes compared to being a lifelong renter,” Mr Sukkar told NewsWire.

“But Labor and their vested interests are working overtime with their junk analysis to try and attack super-for-housing and keep Australians renting, not owning a home.

“This junk analysis has been paid for by the industry super lobby, using members’ money.”

The analysis was commissioned by the Super Members Council. A council spokesman would not tell NewsWire how much Professor Leishman was paid, citing commercial sensitivities.

Mr Dutton and the Coalition are promising to allow first-home buyers to withdraw up to 40 per cent of their super – to a maximum of $50,000 – to buy a house. If the home is sold, the withdrawn amount would have to be repaid into super.

The relatively small super balances of Australians under the age of 45 has been cited as one key inadequacy for helping younger people own a home, via a super-for-housing scheme. Proponents say owning a house sets someone up for a better retirement, regardless of their super being diminished to get there.

Michael Sukkar calls Professor Leishman’s analysis ‘junk’. Picture: NewsWire / Luis Ascui

Economists warn the policy will drive up house prices, as it has in New Zealand.

“If a young Australian five years ago had been able to access super and buy their first home, then that asset position today would be hundreds of thousands of dollars better off than if they’d been excluded from buying a house,” Mr Dutton told media on Monday.

“Now our argument is that with the uplift, the original withdrawal from superannuation needs to go back into super because we want that money to compound by the time somebody retires so they’ve got adequacy in retirement.

“But by locking them out of the housing market, it’s just another asset class.”

The University of South Australia academic, Professor Leishman, used two econometric models to estimate the effects of the Liberals’ super-for-housing policy.

“The very close range of estimates despite using different data and methodologies for each, means we are very confident in concluding the proposal would be inflationary,” Professor Leishman said.

Median house prices in Sydney would rise by more than $122,000 under the Coalition policy. Picture: NewsWire / Flavio Brancaleone

The modelling found the policy would increase house (and unit) prices between 7.4 and 10.3 per cent in the capital cities.

Based on the larger figure, the average Sydney mortgage holder would be paying an extra $345 a fortnight; the scheme would inflate house prices by more than $120,000, to a median of $1.316m.

Melbourne could expect a median price increase of $79,500, to $851,800. Brisbane prices could rise $92,000, to a median cost of $985,600.

“Raiding retirement savings for house deposits would just unleash a supercharged price hike in house prices, not create more new home buyers,” Super Members Council chief executive Misha Schubert said.

Mr Dutton argues the super scheme is balanced with a supply-side measure of a $5bn fund for water, sewerage, electricity and telecommunications infrastructure, arguably making property development more attractive.

The $5bn fund would be released over the course of five years. Last financial year, nationwide $43.2bn was spent on this crucial infrastructure by the public sector.

Originally published as ‘Supercharged house price hike’: Academic throws cold water on Liberals’ super-for-housing scheme