Robert Gottliebsen has urged the federal government to allow first home buyers (FHBs) to raid their superannuation nest eggs for the purposes of purchasing a home:
For young people, let’s revisit the idea that, on a restricted basis, some of their superannuation could be used to help them own a home. Owning a dwelling to live in is probably the best single long-term step anyone can take to fund retirement. The idea of using superannuation to help both current living and retirement this way is abhorrent to the superannuation movement. But they have to start thinking not only about helping their members move towards retirement but engaging younger people in supporting superannuation.
There is no better way of doing that than using superannuation to help get them started on buying a residential dwelling.
The Financial Services Council (FSC) flat out rejected Gotti’s idea last month:
Jane Macnamara, said that when the proposals being put forward were closely examined they simply did not “stack up” and ran the risk of artificially inflating house prices…’
[Macnamara] said that while, at first blush, the superannuation for housing proposal looked attractive there was a “mountain of research demonstrating that giving first home buyers more money simply increases house prices”.
“We’ve seen this in action with first home buyers’ grants. So, topping up your deposit out of super savings is going to put you… more or less back where you started, only with a bigger loan that takes longer to pay off. And a lower super balance,” she wrote…
“Australia has some of the least affordable property markets in the world, and it is not the role of the superannuation system to fix that”…
Too right. The only way for housing to become ‘affordable’ is for prices to fall.
House and land prices are determined through supply and demand. And if you increase the supply of money for housing by flooding the market with funds drawn from super, all it will do is drive up house prices further rather than make housing more affordable.
The last thing Australia needs is to concentrate more of the nation’s financial resources into its grossly distorting property bubble.