ALP, super sector say first-home plan ‘will hike prices, spoil retirement’

The ALP and the superannuation sector say the Coalition’s plan for Australians to use up to $50,000 of super to buy a first home will push up house prices and undermine retirement incomes.

The superannuation industry has condemned the government policy for Australians to use up to $50,000 of their super to buy a first home.

The Labor Party and the nation’s $3 trillion superannuation sector say the Coalition’s plan for Australians to use up to $50,000 of their super to buy a first home will push up house prices across the country and undermine retirement incomes.

While the super industry condemned the government policy, national housing and construction groups said the plan would help more Australians enter the property market.

Property Council chief executive Ken Morrison said the government’s super homebuyer scheme was “another demand-side measure supporting the worthy goal of home ownership” but the primary challenge was to “provide the housing supply and choice our growing communities need”.

“The government’s own official forecasts predict housing supply is set to drop by around 35 per cent right at the time population growth is resuming, with the Nat­ional Housing Finance and Investment Corporation forecasting that by 2032, Australia will be 163,400 homes short of demand,” he said.

“Falling supply and growing demand is a dangerous position for housing affordability.”

Master Builders Australia chief executive Denita Wawn said the government scheme would allow Australians to access the housing market while “maintaining the ­integrity” of the nation’s super­annuation system.

“The success of this policy is that it is aligned with the intent of superannuation, which is to provide sufficient retirement income,” Ms Wawn said. “This policy will mean that many Australians who do not currently own a home will not have to choose between the benefits of home ownership and an adequate super balance in retirement.”

Scott Morrison’s Coalition has first-home buyers will be able to invest up to 40 per cent of their superannuation to help with the purchase of their first home. Picture: Jason Edwards

Under the government’s proposed Super Home Buyer Scheme, first-home buyers will be able to invest up to 40 per cent of their superannuation, to a maximum of $50,000 – or $100,000 for eligible couples – to help with the purchase of their first home.

Association of Superannuation Funds of Australia chief executive Glen McCrea said the Coalition policy was “not in line with the objectives of the (super) system” and would have “long-term consequences for retirement incomes”.

In a March 2021 report, ASFA found none of the reviews of the super system over the past 10 years had recommended early release of super for housing deposits and that buying a home could become “even more out of reach for those with low superannuation balances.”

Industry Super Australia said the Coalition policy could hike the nation’s five major capital city ­median property prices by between 8 per cent and 16 per cent.

ISA modelling suggested that allowing couples to take just $40,000 from their super would send property prices up across all state capitals.

The impact would be most severe in Sydney, where the median property price could lift by $134,000.

The modelling also suggested prices could increase by $60,000 in Perth, $55,000 in Melbourne, $45,5000 in Darwin and $35,000 in Brisbane.

ISA chief executive Bernie Dean said throwing super into the housing market would be “like throwing petrol on a bonfire – it will jack up prices, inflate young people’s mortgages and add to the Age Pension, which taxpayers will have to pay for.”

Labor housing spokesman Jason Clare said the Coalition policy was the “desperate act of a dying government”.

“You shouldn’t have to raid your super to buy a home,” he said.

Mr Clare said the Coalition housing plan would make it harder to buy a home because young Australians would be at auctions “bidding with their superannuation”.

He said the ability to drawn on superannuation funds would have the effect of “supercharging the bidding war.”

He also quoted former finance minister Mathias Cormann, who said in 2014 that “increasing the amount of money going into real estate by facilitating access to super savings pre-retirement will not improve housing affordability.”

The Financial Services Council said the proposal would undermine the purpose of the super­annuation system and could force “up to 5.3 million young Australians to decide between owning a home or their retirement savings”.

HIA managing director Graham Wolfe welcomed the plan, saying access to finance for a deposit was the biggest obstacle stopping first-home buyers from entering the market.

“When the house is sold, they can put the money back into their retirement fund with a proportion of the capital growth in value of their home,” he said.

“They are effectively borrowing from themselves.”

“Owning your own home is the best form of security for your ­future retirement.

“This scheme is a responsible, well thought-out plan to ensure that the equity Australians hold in their super can be used effectively to ensure they own their home now and in retirement.”