A proposal to allow Australians to use their super entitlements to enter the housing market will do little to improve affordability and will lead to an increase in prices instead, according to two superannuation representative bodies.
In an address to the Australia Institute yesterday, Liberal Senator Andrew Bragg reaffirmed coalition support for a plan to allow first-home buyers to use super for a home deposit, arguing it will offer better outcomes for those grappling with the housing affordability crisis.
However, the Association of Superannuation Funds of Australia (ASFA) pushed back at this suggestion, noting its research of more than 300,000 super accounts found the measure is likely to lead to an increase in house prices as more capital becomes available for a deposit and is eventually priced into the market.
“After having this proposal soundly rejected at the last federal election, Senator Bragg has brought back the same policy which will leave young people behind and entrench intergenerational inequality,” ASFA chief executive Mary Delahunty noted.
“Australians can see clearly that this type of measure would likely push up house prices by increasing demand-side pressures on the housing market, putting home ownership even more out of reach for most aspiring first-home buyers.
“In his speech, Senator Bragg argues that using super for a home deposit is better than being a lifelong renter, but why does it have to be either-or?
“Young people and first-home buyers rightly expect to have both dignity in retirement and housing. Unfortunately, Senator Bragg’s proposals risk resulting in neither.”
The Super Members Council (SMC) concurred with ASFA, citing its own research, which revealed a capped ‘super for housing’ policy will drive a 9 per cent increase in the median price of houses in capital cities.
The representative body also expressed dismay at reports some coalition members of parliament were pushing for the policy to be uncapped.
“That would be economically reckless – and sets a trap that would make it even harder for future generations of young Australians to realise the great Australian dream of owning a home,” SMC chief executive Misha Schubert said.
“Politicians would be shirking their responsibility of fixing the housing crisis, instead telling young people they can either have a house or save for retirement – but not both.
“And what’s the upshot for young Australians? They’d be forced to pay more for a house, with a bigger mortgage, have less super at retirement, and pay more in taxes to fund a bloated age pension. We urge a sensible rethink on any policy ideas that would undermine super.”