The superannuation rules setting up a ‘major generational clash’

Preventing Millennials and Gen Zs from using superannuation to buy a home while self-managed super funds are allowed to invest in residential property sets Australia up for a “major generational clash” over housing, the Coalition’s home ownership spokesman, Andrew Bragg, says.

Self-managed super funds owned almost $49 billion in residential real estate as of last December, figures from the Australian Taxation Office show.

Self-managed super funds own $49 billion in residential property.Credit: Artwork – Marija Ercegovac

The mean home price was $933,800 in December, according to the Australian Bureau of Statistics. Based on that figure, those self-managed funds could hold about 52,000 homes.

The Coalition’s policy since the last week of the 2022 election campaign has been to allow Australians to access up to $50,000 from their superannuation as a housing deposit.

That policy has been rubbished by the superannuation industry and some experts who say it will only lift house prices, but Bragg said the ATO figures showed a deep irony when it comes to superannuation and housing.

“It highlights the perversity of the situation that you can invest in any house except your own,” he said.

“It’s going to become a major, major generational clash. Millennials and Gen Z are going to be forced to have all this super but no house, whereas I’d rather them have a house as a first priority.”

Superannuation is compulsory for all working Australians, and those retirement savings now top $3.3 trillion. More than a quarter of that, or about $868.7 billion, is kept in self-managed funds.

Property makes up a small but gradually growing share of the assets held in self-managed funds, the ATO figures show, amounting to 7.2 per cent of all assets held by funds between $500,000 and $1 million, and 6.8 per cent of assets in funds worth between $1 million and $2 million in December last year.

But younger Millennials and Gen Zs were less likely to have a self-managed super fund than their seniors.

Just 2.4 per cent of all people with self-managed funds were aged between 25 and 34, the ATO data shows. The figure falls to 0.5 per cent for those under 25.

That’s compared with older Gen Xers and Baby Boomers. More than one in five (22.4 per cent) self-managed funds were held by people in their 50s, and nearly one in four (24.3 per cent) were held by people in their 60s.

Bragg said it was unfair that self-managed funds could buy property as investment assets, and industry funds could invest in housing projects, while younger people could not use their super to buy a home.

He said the Coalition was looking to improve its super-for-housing policy, after shadow treasurer Angus Taylor revealed this year that the party would expand it to include women over 55.

Liberal senator Andrew Bragg said young people should be allowed to use their superannuation to buy a home.Credit: James Brickwood

“It’s ridiculous that people are denied their biggest and their best opportunity of getting into a house absent the bank of mum and dad, and we don’t want to have a country where people are relying on intergenerational wealth,” Bragg said.

Chief economist at Fresh Economic Thinking Cameron Murray said it was “totally reasonable” for people to use superannuation for a home, given super could already be used by self-managed funds to buy property, and it was better to pay off a mortgage before retirement.

Speaking on the ABC’s Q+A program last week, Murray said a record 166,000 first homes were bought in 2021. He attributed part of that growth to home buyers’ ability to access superannuation through the previous Coalition government’s early superannuation access scheme during COVID.

“I think that’s worked for a lot of people, it’s brought forward a lot of buying, and it’s given people security,” said Murray, who believes the superannuation system should be unwound completely.

“I don’t think it’s unreasonable to use your super to buy a house to live in when you can already use your super to buy houses for other people to live in.”

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