A recent study suggests that a Coalition proposal allowing first-time homeowners to use their super for a house deposit could lead to a significant surge in prices, potentially raising property values by nearly $75,000 across Australia’s five major cities.
According to modelling from the Super Members Council (SMC), directing retirement savings towards housing could exacerbate an already-inflated market.
The projections indicate that median prices in capital cities could increase by nine percent under the proposed scheme, where first home buyers would access $50,000 from their super for a deposit, as advocated by the Coalition.
However, the SMC warns that if implemented, this could lead to price jumps of almost $80,000 in Sydney, $70,000 in Melbourne, $78,000 in Brisbane, and a staggering $86,000 in Perth.
Misha Schubert, CEO of SMC, highlights the ripple effect this could have, ultimately resulting in higher mortgage payments for all home buyers.
“Using retirement savings for house deposits would just unleash a huge price hike and would quickly make capital cities even less affordable for new home buyers struggling to enter the market.”
Misha Schubert, CEO of Super Members Council (SMC)
Economists, including those from the RBA, have expressed concerns that utilizing super for housing deposits might inflate property prices.
According to shadow treasurer Angus Taylor, the Coalition’s policy would permit first home buyers and women over 55 to access their super for a deposit, with funds returned upon selling the home.
Schubert argues that “breaking the seal” on superannuation would leave individuals with less for retirement, ultimately resulting in increased costs for taxpayers through higher age pension expenses.
The SMC’s analysis suggests that a couple in their 30s withdrawing $35,000 each from their super could retire with about $195,000 less in today’s dollars. This shortfall could potentially lead to higher taxes to cover the increased age pension costs.
Schubert emphasises the importance of carefully considering the “long-lasting consequences” of policies that encourage dipping into retirement savings.
