Calls grow to allow using super to buy property

Calls are growing to allow first home buyers (FHBs) to access their superannuation savings to purchase a home after the Treasury’s Retirement Income Review found that home owners have far better retirement outcomes than non-home owners.

A group of Liberal MPs, led by Tim Wilson, are leading the calls:

Mr Wilson… told The Age and The Sydney Morning Herald that compulsory superannuation had reversed the normal stream of life events and now prioritised saving for retirement ahead of saving for a house.

“Most Australians don’t think it should be a choice between home ownership and super, but the reality is every dollar locked in super can’t be used to buy a home”…

“If Australians buy a home they can start saving for their future retirement, whereas they can’t start saving for a home from retirement”…

Mr Wilson said it was “illogical” that a 40-year-old had $100,000 in superannuation savings but did not own their own home.

“On the same trajectory they’ll get the pension, it’s just whether it will be gobbled up in rent, or used for a dignified retirement while owning a home,” he said.

Former Reserve Bank governor Bernie Fraser agrees:

“In my view … the long-term return of owning a house rather than having to be renting one would outweigh the return of even a good performing super fund,” he said…

“I just think, particularly as house prices are going up and rent prices are going up, the opportunity for some modest-income people to have a house would be a very good investment.”

As does Robert Gottliebsen:

My first recommendation is therefore that an amount of money in superannuation (let’s leave the amount required until later) should be allocated to help buy a first home.

There’s a term used in economics called the ‘fallacy of composition’, which arises when an individual assumes something is true of the whole just because it is true of some part of the whole.

Sure, allowing an individual FHB to access their super to purchase a home would increase their chances of home ownership, since they would have a leg-up on other buyers.

However, if you allow all FHBs to access their super, this advantage diminishes, and the end result will be home prices being bid-up for no ‘affordability’ gain, with the added downside of having less funds available in retirement.

Do we really want to pour more petrol on the housing dumpster fire?

Unconventional Economist
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Comments

  1. Or you know, a consumption necessity like shelter could just be more reasonably priced and the entire fiscal, tax, land zoning and monetary policies could be tilted away from inflating shelter prices.

  2. “Mr Wilson… told The Age and The Sydney Morning Herald that compulsory superannuation had reversed the normal stream of life events and now prioritised saving for retirement ahead of saving for a house.”

    No, what the issue is the financialisation of housing.

    • In other news, Mr Wilson supports the right of parents to mortgage their children’s organs in order to get on the property ladder.

      • The market should always be allowed to operate as it is always right.

        “I just can’t sell my soul cause no one is buying.”

        [Edit] Insurge

  3. I reckon Gotti’s been worded up and he’s now kite flying for Joshy.

    Look out for a one off ability to transfer say $20k or even $50k from your super to a First Home Saver account.

    • I’m against this proposal but I will take the cash. If I don’t take the cash I’m at a disadvantage compared to those who do. Simple game theory.

      • Totes BeWokeMEMBER

        Not if you don’t buy. You can double down and salary sacrifice $25k a year into super and earn 10 to 20% taxed at 15%. Even better, contribute non-concessionally as well.

        I cannot see the attraction of housing with minimal upside, but potentially catastrophic downside.

        Surely if all we continue to do is housing its going to fall in a heap, immigration or not. That should be obvious.

        Disclaimer; 1. I own a fair bit of housing. 2. I don’t know anything about economics.

        • Can you point me at the super fund earning 10-20% I’m lucky to be much above break even over the last 20 years.
          10-20% is whats REQUIRED to achieve a retirement income on our contributions, but not what is achieved, as far as i know,

          • Totes BeWokeMEMBER

            Yeah my self managed one.

            Even if you’re earning 3%, while property stays stagnant you’re better off. Or you can rent for $800 a week, and buy for $1000.

            Almost every scenario from here, I’d guess you’re better off in super, but don’t forget my disclaimer above. I’d be happy to hear other views.

            The way I see it, the country’s broken. Housing’s going to give way eventually, and when it does i want a lot of money off shore.

          • Totes BeWokeMEMBER

            Taking on $1m debt, to buy into an enormous bubble at historically low interest rates, with the prospects of our country a mystery post housing doesn’t seem prudent to me. We earn multiples of what our competitors do, real estate prices and energy costs are prohibitive, and the big driver immigration is now ripping the country to pieces in every way. Labor have completely shafted the plebs.

        • Totes – my only fear with your proposal is that you are then locked into a tax structure (super) for a long time and the Gov has even longer to change the rules on you – defer access, make a land grab, some sort of compulsory levy, etc. Not sure I trust the f*#krs

          • Totes BeWokeMEMBER

            My fear too. Things I didn’t think possible 20 years ago are happening. The government are determined to keep housing rising, and it wouldn’t surprise me to see levies on foreign investments, or whatever else they dream up to get our money into housing.

  4. Scumo and the states know they cant keep dipping into the debt tree to drive up house prices so now they are looking for another source. superannuation for house purchases will continue to drive up house prices without the government needing to put its hand in its pockets. And the consequences for retirement will be long down the track when scumo and co has moved on.

    • Yes, one of the things that I most object to is that a necessity (shelter) has been hijacked as a class of investment.

      If these clowns are going to keep peddling their half-truths (it’s good to spend super to buy yourself a house even though it will bid prices up) then balance things by doing away with investor tax concessions.

      As far as ponzi, that applies to whole global financial system imo, I call it the big ponzi.

      • GunnamattaMEMBER

        In the case of super that reflects the fact that nobody ever clearly stated what Super is actually for.

        Keating originally set it up to be an aged pension replacement/supplement. Howard turned it into a wealth creation/tax avoidance vehicle, now it is shaping up as a house deposit mechanism.

        The upmarket end of town has always wanted to destroy the original idea because they think their rights to avoid tax trump any responsibility being shown by the riff raff for catering for their own aged funding needs.

    • Well yes. Instead, both Kennedy and Lowe, are right out there, beating the drum for mass migration. It’s a bit hard to care about housing affordability, when you have a market and a GDP to look after.

      • Strange Economics

        Well if you have a waterfront mansion and an investment property portfolio you can clearly see why you need more buyers using their super and more foreign buyers and renters. Think of those poor RBA workers, bankers and pollies.

    • The90kwbeastMEMBER

      Won’t somebody think of the AUD!

      In all seriousness I agree. Our cash rate should never have dropped below 1%.

    • Noting yesterday’s MB article about how the aged have pulled well ahead of everyone else according to the latest HILDA

  5. reusachtigeMEMBER

    This will happen and it will be great. If youse chicken sh1ts don’t finally bloke up and buy on the announcement you really are over-educated retards. Just saying.

    • I think this is right. There is a window between now and the next budget when who knows what bad policy will be announced. Lower rates through expanded TFF. State governments borrowing heavily to get velocity of money moving. Super access for housing is coming.

      And as soon as they can the gates will be flung open to third world warm bodies. This reality will over ride any mortgage stress, which will be controlled through endless deferals which will grow the loan books of the banks.

      This engineered inflationary policy agenda will occur with a background of low rates. Load up on debt, just make sure the LVR isn’t too big.

  6. “..Do we really want to pour more petrol on the housing dumpster fire?..”

    Of course we do.

    That is whole point of everyone supporting the RBA pursuing QE, TFF, ZIRP and NIRP and all the other loopy garbage that is pouring out of Martin Place.

    What is the point of driving down the cost of money and then being all shy and coy about getting people to LOAD UP with debt peddler product lines?

    Does anyone really believe that the dumpster firemen are

    APRA!!!!!!!
    APRA!!!!!!!
    APRA!!!!!!!
    APRA!!!!!!!

    🙂

    https://theglass-pyramid.com/2020/08/15/myrba-the-quick-guide-and-helpful-links/

    • Display NameMEMBER

      Along with a BS gas transition, its the best we can now do apparently. Across the top tier of business and government they are all trying to stuff their pockets and ensure the ponzi doesnt collapse on their watch. And when it does, it will be “Who could have anticipated this?”

  7. Holiday In ScomodiaMEMBER

    While super is a big dumb drag, you either have it and the big dumb rules it needs to work (?) or you just scrap it altogether. First it will be a withdrawal to a home deposit saver account, eventually it will be withdrawal to jet ski and Bali holiday saver account… the ridiculousness and complexity will set in further and further…

  8. Perhaps a half-way house is to allow Super withdrawals on the same basis as it is contributed?
    ie: Weekly withdrawals based on past contributions – say $200 per week, to allow that ‘income’ to count towards mortgage serviceability rather than being able to plonk the whole outstanding balance amount (eg :$50,000) down on the purchase price.

    • A better halfway house is to replicate and bolt on the Canadian Tax Free Savings Account model. A side account to super that has zero tax, an annual contribution limit of about $5k (which grows by $5k p. a.), all growth in the account is tax free, all withdrawals are tax free. Can withdraw at any time if you need to for life events (redundancy, retraining, birth of a child or housing).

      Does away with the current hoo ha about raising the contribution level to 12%. Doesn’t have an immediate impact on house prices. Would make Aussies more interested in managing their money.

      Caveat: Of course I have no ability to determine the cost to the budget.

    • This just allows the banks to extract more interest, costing those who can least afford it even more. Either let them take it of the mortgage up front or don’t.

  9. Arthur Schopenhauer

    There’s around One Trillion US dollars on the table to transition from fossil fuel to renewables. And anyone interested in making real money over the next 50 years is focused on that future.

    Growing those industries will grow jobs and wealth, yet the only thing the leaders of the Australian economy can think to do is bolster the housing market.

    The lack of imagination is depressing. There is only a small window of time to get in at the base of a technology ‘S Curve’. Canon-Brookes knows it. None of the troglodytes in Parliament seem to have a clue.

    (Props to NSW Energy Minister Matt Kean for having a clue.)

    • Totes BeWokeMEMBER

      “None of the troglodytes in Parliament seem to have a clue”

      Their standard gig is extremely lucrative. Post politics too. They don’t need to look for anything else.

    • Parliament abandoned all responsibility for Electricity generation decades ago.
      It is “THE MARKET” that lacks imagination, or more correctly is interested in shorter term rate of return. Whocouldanode?

      • Arthur Schopenhauer

        I’m more interested in building wealth and jobs over the long term, than electricity generation per se.

        It obvious that the electrification of everything is the next great technology/innovation wave. At the moment, the world is at the base of the ‘S-Curve’, and it’s about to go exponential.

        As a business, that’s where it’s good to be. As a nation, that’s where bets should be placed.

        • The problem is bets on that large a scale literally need to be placed by a “nation”. Australia has privatized everything not nailed down and the private owners see tax farming as much more profitable than blue sky R&D that might pay of in a couple of decades.
          If the Government still ran the power network, then profits from existing generation could be used to subsidize these new techs, rather than make the rich richer. But as has been said many times on this site, the answers lie back in time.

          • The problem is the people controlling capital won’t. They don’t need to. Far easier to make money building another toll road, or continue raking in profits on your government built power station you bought for cents on the dollar.

  10. They have realised that no matter how low the rates, there is the small problem of saving for that ever larger deposit. Which explains the 5% deposit LMI policy and now this.The ponzi must be fed.

    • And it will be. No more Chinese, but there are plenty of Bangladeshi and Nigerian debt vectors available for import. We just need a vaccine and ponzi on!

  11. Mr SquiggleMEMBER

    It’s not the 100,000 in super that is keeping 40 year olds from buying their first home. It’s the $600-$800k price tag for a small dog box apartment that is stopping the FHB. Why should it be a case of a first home or super? Why can’t someone who is 40 have both.

    Giving people access to more money to buy something that is massively expensive doesn’t make it affordable.

    • In reality most FHB who want to buy have already pulled $20k to $40k from their super (the latter if they have a partner with super).

      I’d bet a lot of people did the same to have a cash buffer in the bank ‘just in case’, regardless of whether they intended to use it for a house deposit.

  12. At 43 and I’ve got $350k in super. I already pulled $20k out this year and haven’t touched it. Just added to my house deposit war chest. If they go down this path I don’t think I have any choice but to pull out more cash. If I don’t yet others do, then it’s a comparative disadvantage.

    I can afford to raid my super (years of 17% contributions and always tipped in extra). Others can’t. The 40 year old with $100k can’t afford to raid $20k (20%) of their balance. The younger the person the lower the balance and the worse it’s going to be.

    It’s just terrible desperate policy.

    • “It’s just terrible desperate policy.” – hence why I think we are heading for early elections.

    • The 40 yr old with 100K super can’t afford to retire either way, without aged pension. Not without a significant investment outside super anyway. That 100k might be 300k by retirement, that gets you 6 years at 50k a year. Not exactly a comfortable retirement. Want to live 30 years past retirement, better be able to live on 10k a year.

  13. This Real Estate Insanity will not stop until our entire economy is devoted to Property Speculation.
    Nothing will stop this because nobody really want’s it to stop, it’s that simple.
    Every last penny of both Government and Private money will end up devoted to the provision of shelter.
    With this in mind it’s obvious that Super should be withdrawn to allow for house purchases, and it follows that future Super should be available to pay said mortgage.
    It’s so sad to see free people not only enslaving themselves but selling their children and neighbors into slavery. we’ve reached a new social low.
    It’s interesting to understand that this is not the first time that the world has travelled down this pathway but it never ends well.

    • Totes BeWokeMEMBER

      Given we know what they’ll do with housing, wouldn’t it be better to outright reject this proposal so when it collapses, we’ve individually and collectively still got assets in international markets?

      • There were plenty of ways that we could have avoided this outcome but today the end result is locked and loaded.
        I’d suggest you spend your free time teaching your kids how to respectfully address their new masters. Feudal systems all have one common feature, which is the need for the serf to understand their place and in so doing protect the wealth of those born to be their betters.
        If we recreate Feudalism then we will most definitely recreate the social, religious, political nd justice systems needed to protect and intrench Feudalism.
        So teach your kids to bow a lot, know their place and not look their betters in the eye, these three skills combined should give them a better then even chance of surviving.

        • Totes BeWokeMEMBER

          It didn’t have to be like this. Back in 2019, all we had to do was replace Labor with Independents who would act in the interests of Australia, and Australians, and it was all over for the horrific path LNP have us on.

          • Replace LNP candidates with Independents – Fixed it.

            Interesting how it is LNP seats are the ones most under pressure from Independents.

          • Totes BeWokeMEMBER

            I think we’d both agree some people like what’s happening. They’re LNP voters.

            Stop dreaming mate. The problem is the plebs party is no longer the plebs party.

          • It didn’t have to be like this.
            In my opinion Politics is not the force driving this change, so given this I don’t think can be either blamed or looked to for solutions.
            The best way to avoid Feudalism is to educate our kids.
            Think about how the Industrial revolution killed Feudalism, and then think about why.
            In my opinion Feudalism was dead the moment that labour had employment choices that didn’t involve some form of indenture.
            The modern form of Indenturing is the Debt slave who willingly takes on a huge debt to secure shelter where BS employment is available (the only job that they properly matches the education skill set)
            Real Education is the only thing enables the next generation to throw off these shackles. It enables them to find employment outside of the modern BS job factories that are setup to enable labour indenturing.
            There’s a good reason why our PISA education rankings are falling like a brick and no Politician or Business leader is doing a damn thing about it. (except to allocate even more government money towards the education of tomorrows aristocracy)

          • Lols,
            https://theconversation.com/hawke-was-our-larrikin-but-also-our-reformer-117308
            Look at what labor was doing for, i mean TO, the plebs 40 years ago.

            “In early 1985 the government injected some real competition into Australian banking, inviting applications for new banks.
            Later that year it relaxed restrictions on foreign investment in Australia.”
            How have those 2 initiatives turned out?
            “Hawke introduced a raft of other changes to industrial relations all the way through to the 1991 introduction of enterprise bargaining, ” This seems to have ended well at this point, no?
            “Hawke that began a further and systematic reduction in tariffs and other trade barriers, for some products all the way down to near zero. ” This has left us with a strong local manufacturing sector…
            “A raft of government assets began to be privatized under Hawke. From the Commonwealth Bank to Qantas,”
            Commonwealth bank is really putting australians interest first these days…

          • Totes BeWokeMEMBER

            bjw678

            That’s excellent. So you not only acknowledge Labor are sht, but tell me they’ve always been sht.

            Sooooo. Stop defending them.

          • Totes BeWokeMEMBER

            known knowns

            A smart electorate would vote for politicians who do what we want, would engage in HONEST dialogue and do what’s good for the country and our kids futures.

            It is 100% up to us and the politicians we collectively put there.

            At the moment it’s two indulgent parties taking the lot at our expense. It has to change, and we can change it.

          • @TBW with all due respect, what you are proposing requires that Australia change both it’s core beliefs (RE to the moon) and the Labor / LNP choice paradigm.
            What I’m suggesting requires zero participation from anyone else, it is something that you can do yourself for your children.
            A real education can’t be stolen, you can’t be swindled or cheated out of it, you won’t wakeup one day and find it gone (nicked by some greedy F###). In truth if you’re not in a position to give your kids an inherence then my best advice is to take the time to give them an education. Real 21st century skills enabling them to get a real job with real pay and be beholden to no one.

          • @Totes,
            disagreeing with you is not defending them. Stop telling me how the change in labor is why the country is going to sh!t. Labor hasn’t changed.

            Also, how exactly do you expect to get a politician to do what you want with only the option to vote them in or out every 4 years. History has proven repeatedly this doesn;t work despite the indoctrination everyone is fed at primary school about the “wonders of demnocracy”. Think for yourself for the first time in your life.

          • Totes BeWokeMEMBER

            known knowns

            “Australia change both it’s core beliefs (RE to the moon) and the Labor / LNP choice paradigm”

            People I know do not like the path this country is on, and don’t think it’s desirable or sustainable. They don’t want LNP, Labor, nor ever rising house prices. They know none of this is good for their kids. No matter what their education.

            “Real 21st century skills enabling them to get a real job with real pay and be beholden to no one”

            My kids are educated. So are many of the migrants coming to compete with them.

            bjw678

            “Also, how exactly do you expect to get a politician to do what you want with only the option to vote them in or out every 4 years. History has proven repeatedly this doesn;t work”

            Really? I don’t remember that happening.

            “Think for yourself for the first time in your life”

            As far as I can see, I’m the only one looking for a solution, and I’ve found it, and you don’t like it because you’ve got skin in the Labor party.

          • Totes BeWokeMEMBER

            kierans777

            You going to outsmart, out study, out work migrants?

            That’s one very high opinion you have of yourself. You have no understanding of what’s coming for you, and your fellow Australians.

            You think this is about fighting tories? lol.

          • My kids are educated. So are many of the migrants coming to compete with them.

            I would say that by definition you are wrong. Real Education is about learning differentiated skills, if you truly have highly prized differentiated skills then nobody (no migrant especially) is coming to take your job.
            If your job really doesn’t require the skills you’ve learned but does require the BS job allocation system (which is another core part of Australian labour market ) then it is not your education (your kids education) which enables them to earn above average wages but rather their participation and their right to participate in the BS game of Aussie employment.
            It is precisely this BS employment game that demands that young families participate in the RE game.
            Real education delivers one the skills needed to avoid participating in this whole putrid mess.

          • Totes BeWokeMEMBER

            I know what you mean, but I’d rather they not need to compete. 20 years ago, we had a choice. To open our country to competition via globalisation and immigration….or protect our sanctuary. It’s a race to the bottom, and only a country full of morons would have agreed with it.

            We were conned, and Australia’s kids will pay (ARE PAYING) the price.

            I’m with you, there are ways to protect yourself …..(only available to the talented, intelligent and dedicated….what about everyone else?)……., but man, it’s doing it the hard way in comparison to what we had.

          • As a country I don’t think I’ve ever said that we are on the preferred path, however I do believe that globalization sneaks in regardless of what you do to prevent it. So from this perspective you might as well let it in the front door.
            Imagine how quickly our kids would be selling their souls for an iPhone or Samsung or whatever if we regulated that all telecommunications equipment for sale in Australia was both designed and manufactured here.
            We would be all fighting to be allowed to own some sort of Nokia brick phone and in the process denying our young their right to position themselves with relevant 21st century skills.
            I have a friend that runs a popular Youtube channel, he has over 500K subs, there’s global interest in his channel and he is making a great living by producing content.
            He wouldn’t have this job if we didn’t have globalization.
            It’s good it’s bad and it’s ugly but I’m pretty sure there’s no better alternative.
            Now if what you’re saying is that you wish Australia had the skills to best Samsung or Apple at their own game then I agree completely. but that pathway begins with superiors education not better politics or better job allocation algorithms, procedures or exclusion regimes.

          • @Totes,
            Really? I don’t remember that happening.
            As far as I can see, I’m the only one looking for a solution, and I’ve found it, and you don’t like it because you’ve got skin in the Labor party.

            By your own admission neither the labor or liberal party are doing what you or the people want, ergo elections don’t get you politicians that do what you want, ergo more elections will still not get politicians that do what you want. Doing the same thing and expecting a different outcome is insanity.

    • ” and it follows that future Super should be available to pay said mortgage.”
      This is ALREADY the case. How do you think people approaching retirement age get 30 year loans for huge amounts. Lump sum super payout is clearly the intended payback mechanism.

  14. And in the Victorian state budget announced yesterday, stamp duty on new houses under 1M is cut 50%, and on existing under 1M 25%. Another boost for house prices.

  15. Tap your super to buy property?
    Well, isn’t that just ‘[email protected]’ idea!

    Straya will implement every policy available to avoid a margin call to protect her banks.
    Really is a shame that everyone at the round table thinks a 75 year old asbestos shack 50 k’s from the city costing $1.0m is a good thing.

    • We’re talking about Penrith right? Utter stupidity. The hottest spot on Earth in Summer and the worst commute to Sydney CBD with it. Get out of Sydney is my advice. If new migrants love it, let them love it, but don’t stay.

      • There’s 100’s of ‘Penrith’s in Straya Gav!
        What kills me is the near total agreement by all involved that buying ‘Penrith’ at any price will lead to some kind of ‘success’.
        It’s like spraying the factory mags of a 96 Falcon with 450 k’s on the odo with Super Cheap’s vinyl black (wheels on car; masking tape on edges) and believing afterwards the car value just doubled!
        We’re a land of morons!

        • Thanks for the metaphor, I agree. But sometimes it makes sense to take advantage of that stupidity.

          • Yes! There’ll always be value opportunities.
            Just have a huge debt-aversion and ‘home ownership’ cannot be obtained without gargantuan mortgages it seems.
            All time record low interest rates on all time record mortgage sizes means the buzzer will sound soon.
            The key is having a ‘manageable’ mortgage as life is uncertain. We’re so far into wild and geared speculation now that even small percent price moves down will be lethal due the leverage ratios.
            Note: we’re all pulling for you Gav! (MB’s Chuck Yaeger: willing to skip the ship at the end of the atmosphere and edge of space while reporting what it’s like-thanks!)

  16. Poochie the Rockin DogMEMBER

    I would rather have $$$ in cash & stocks than buy into this nightmare. I get that people are dumb & will find a way to enslave themselves no matter what but it’s still sad to see

  17. From the article;
    ‘Most Australians don’t think it should be a choice between home ownership and super, but the reality is every dollar locked in super can’t be used to buy a home,” Mr Wilson, the chair of federal parliament’s economics committee, said.’
    If house prices were what they were even twenty years ago ‘Australians’ could buy shelter and save for retirement at the same time. But of course he isn’t genuine, super is just there to fuel the bs status quo trajectory of shelter inflation as far as Timmy and his mates are concerned. And the banks wouldn’t be able to profit off as much seigniorage and usury on public money.

  18. Totes BeWokeMEMBER

    Are Labor saying this is the dumbest idea they’ve ever heard of? Is anyone listening to them? Is the message buried under today’s other more important words of woke?

  19. Cross-posting my comment from the other super article today. In a way people are using super for housing but at retirement instead of when they are younger. One of the current issues with the system is you can lump sum withdrawal the lot at age 60 if retired and 65 even if not retired. I hear stories of many still carrying a mortgage on their primary residence going into retirement with the plan that they are just going to use the super to pay that down/off lump sum as soon as they are eligible. Many then qualify for at least a part pension since equity in your main house is not included in that means testing. So it is just another tool to prop up the housing ponzi – especially since often that mortgage balance may be tied to a bank of mum and dad gift to their kids to get them on the housing ladder too…

  20. A proposal. Every Australian is given a UBI on the condition that it is used to buy real estate. If you buy a second house, you get a second UBI. Only on new builds. Forever boom here we come.

    • Yep play the game. But hold some back in XAU or foreign assets for the inevitable day the whole mess implodes.

  21. It’s almost comical how the LNP are recycling this call to allow super to prop up the property ponzi. We’ve been here before, complete with Nick Xenophon turning up to the Senate in his PJ’s IIRC.

    It’s like the Libs don’t have any new ideas or vision 🤔

    ROFL