‘Implausible’: Big super’s 75k property price hike claim met with scepticism

A claim by Australia’s largest superannuation funds comes amid a fierce political battle over how to help Australians into home ownership.

A claim by the superannuation industry that house prices would jump $75,000 if first home buyers were allowed to tap into their super to help save for a deposit has been branded “implausible” by economists and slammed by the Coalition as “self-serving”.

With house prices soaring and home ownership rates sliding, the Coalition has proposed first home buyers should be able to withdraw 40 per cent of their superannuation savings – up to $50,000 – to assist with purchasing a property.

Under the plan, first home buyers would have to later repay the withdrawn amount, plus a share of the capital gain made on the property, when they sell the house.

On Tuesday, newly formed superannuation policy and lobby group, the Super Members Council released new analysis claiming the Coalition scheme would hike the price of homes by nine per cent.

The proposal would add almost $80,000 to median prices in Sydney, almost $70,000 in Melbourne, $78,000 in Brisbane and $86,000 in Perth, the modelling claimed.

Liberal senator Andrew Bragg said the house price claim was another example of superannuation funds serving their own self-interests. Picture: NCA NewsWire / Martin Ollman

“We all desperately want more Australians to own their own home, but this idea won’t achieve that,” the council’s chief executive Misha Schubert said.

But freshly minted Coalition assistant minister for home ownership Andrew Bragg rubbished the SMC’s report, arguing that funds were acting in their own interests, rather than that of their members.

“The Super Members Council’s ‘analysis’ is a desperate self-serving scare campaign against super for housing,” Mr Bragg said.

“Big Super wants to keep our super under lock and key so they can keep charging $30bn in fees a year. It is like putting Dracula in charge of the blood bank.”

Brendan Coates, who heads economic policy at independent think tank The Grattan Institute, labelled the SMC’s figures “implausible”, granted the relatively small amount many young Australians had accrued in their superannuation savings.

“Very few people in their 20s and 30s even have $50,000 in super,” Mr Coates said.

According to the Australian Taxation Office data, the average account balance for a 30 to 34 year old male is $56,344, while the average female in the same age bracket has $46,289 saved.

Therefore, the maximum amount an average male or female in this cohort could receive under the policy is $22,538 or $18,516, respectively.

“I’d be very surprised if the (price) effect was as large as the Super Members Council is implying because that would be implying that compulsory super itself is the suppressing house passes to the tune of 20 or 25 per cent,” Mr Coates said.

The council’s $75,000 claim comes amid a heated political debate over home ownership. Picture: NCA NewsWire /Brenton Edwards

Centre for Independent Studies chief economist Peter Tulip also poured cold water on the SMC’s analysis but was sceptical that the Coalition’s policy would significantly bolster home ownership rates.

“Policy changes like this do not figure as major determinants of housing prices,” Dr Tulip said.

“If this was coupled with a boost to supply then maybe you would have the advantageous effects that the Coalition is talking about, without an adverse effect on affordability.”

Mr Coates added that those who needed the greatest assistance to own their own home would receive little benefit from early access to their superannuation.

“The beneficiaries of the policy are likely to be middle and high income earners who can buy better homes as a result of being able to access their super,” Mr Coates said.

“I don’t think it’ll shift the needle much for low income earners.”

The SMC analysis also claimed a couple of 30-year-olds who each withdrew $35,000 from their superannuation would retire with roughly $195,000 less, in today’s dollars.

But Dr Tulip estimated that the policy would reduce the average superannuation balance by a more modest $11,000 by retirement age, with the benefits of owning a home offsetting this loss.

Originally published as ‘Implausible’: Big super’s 75k property price hike claim met with scepticism