Industry Super Australia has thrown cold water on the concept of allowing prospective homebuyers to access their superannuation to enter the housing market, describing the idea as fundamentally flawed.
According to the preliminary results of a study from the research and advocacy group for industry superannuation, allowing first-home buyers to redirect some of their superannuation to use for housing deposits could hike up the nation’s five major capital city median property prices by between 8-16 per cent.
Industry Super’s figures suggested if couples were able to take $40,000 from their super for a house deposit, it would lead to soaring property prices across the country but the impact would be most severe in Sydney, where the median property price could rise by $134,000.
The results indicate that in most locations, price increases and extra property taxes would quickly surpass the amount of super a first-home buyer could withdraw, so homebuyers would be paying more but at the expense of their super.
In all cities but Hobart, if a couple took $40,000 from their super, nearly all would be lost through the price hikes fuelled by increased demand, and in Sydney, prices would spike by three times that amount.
“This just confirms what experts have been saying for ages; that 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 billions to the aged pension, which taxpayers will have to pay for,” Industry Super Australia CEO Bernie Dean said.
The research shows the market would react quickly to the scheme becoming a reality, and within a year the full price increases would likely be realised.
According to Industry Super Australia, under the proposed scheme, which is being pushed by a Coalition backbench MP, taxpayers would be forced to pay billions of dollars into the age pension, which could lead to higher taxes.
Last week Superannuation Minister Jane Hume joined a chorus of economists, housing experts and a Retirement Income Review report author in cautioning against raiding super for housing.
The findings of ISA’s preliminary analysis backs expert warnings that such a scheme would inflate prices and make affordability worse.
“We welcomed the minister pouring cold water on this idea very publicly and would encourage the Treasurer and the PM to back her up and show that the government is not beholden to extreme elements within its ranks,” Mr Dean said.
“We need sensible solutions – like boosting the supply of affordable housing, which will bring prices down and get young people into a home without lumbering workers with higher taxes in the future.”