Could early access to super fix our housing Hunger Games?

Is it just me, or is the Australian property market looking more and more like the Hunger Games? And I’m not talking about tenants fighting to the death for an overpriced rental – though that scenario might not be far off.

I mean the growing divide between investors hoarding multiple properties and working Australians stuck forever renting, much like how the Hunger Games’ wealthy Capitol rules over the struggling Districts, maintaining control through economic disparity.

Allowing access to our superannuation could address the growing divide between younger renters and older home owners.Credit: Dionne Gain

And just like in the dystopian tale, a significant resource – Australians’ own retirement savings – is being kept from them, when allowing people to access their superannuation could help more working Australians break out of the rental trap.

First home buyers are being further outpaced by investors. According to Australian Bureau of Statistics data, the number of new home loans to first home buyers increased by just 0.2 per cent last year, while loans to investors surged by 13.2 per cent. The trend of home ownership has only been declining since its 1966 peak, affecting younger generations the greatest.

While working Australians struggle to save for a deposit, many retirees have more super than they can spend, yet still find ways to access the pension. Instead of ensuring self-sufficiency, super is more often treated as an inheritance fund, worsening wealth inequality and undermining the Australian ideal of the fair go.

“Current legislation enables wealthy retirees with substantial super to also access the old-age pension,” says Peter Tulip, the chief economist at the Centre for Independent Studies policy institute.

Because super is a tax on wages, younger generations are disadvantaged. It takes an average of 11 years to save for a deposit today, compared to about four years in the 1980s, before compulsory super.

With Australia’s superannuation system set to become the second-largest single pool of cash in the world within a decade, all that wealth is locked away paying the fees of big super managers, while working Australians are stuck in rental poverty.

Not everyone has access to the bank of mum and dad, which now helps more than half of first home buyers and perpetuates a modern aristocracy, where having wealthy parents matters more than working hard.

If you ask me, giving Australians access to their own money for housing isn’t against their best interests. It’s the status quo that’s failing them, especially when super can be used for investment property but not a first home.

As the election approaches, voters should demand bold solutions to both add supply and reduce demand in the market.

Ken Henry, a former Treasury secretary, recently hit a nerve by describing the current tax system as a “wilful act of bastardry” that denies young workers a reasonable prospect of home ownership.

This systemic problem is also the bugbear of Cameron Murray, author of The Great Housing Hijack, who argues “super makes you poorer when you are young and poor, so you can be richer when you are old and rich”.

Murray highlights the fundamental contradiction in our approach to wealth building – forcing sacrifices during the years when financial security matters most.

Murray’s radical approach would “unwind the whole super system”, although Tulip disagrees, and instead suggests using “super as collateral” for a mortgage.

Between these positions sits the federal opposition’s policy, which proposes allowing first home buyers to use up to $50,000 (or 40 per cent) of their super for a deposit and repaying it if the house is sold – essentially letting Australians “live in their super”.

The Grattan Institute acknowledges the Coalition’s proposal “could help some younger Australians become home owners” with the caveat that younger people typically have limited super balances.

But that shouldn’t prevent those with sufficient funds from accessing them. After all, there are Australians of all ages stuck in the rental market wanting to get out.

Opponents to change argue that accessing super for housing would inflate house prices. However, Murray says: “Super for housing is not the same as giving people free money like grants because super is your own money. It requires you to forgo other investments. The impact on prices would be marginal and would just shift in time when people can buy homes, not whether they can buy them.”

Tulip is more wary about the impact on prices of the policy in isolation.

“Accessing super would open home ownership up to buyers currently locked out of the market,” he says. “It’s not a solution in isolation, but coupled with measures to increase housing supply, it could help.”

Indeed, as the election approaches, voters should demand bold solutions – such as zoning reform and reductions to immigration – to both add supply and reduce demand in the market.

As part of a broader policy arsenal, ideas such as super for housing could help tip the odds ever so slightly in favour of first home buyers, before we end up in a real-life Hunger Games.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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