More support for using superannuation to buy property

I noted yesterday how calls were growing louder to allow first home buyers (FHBs) to use their superannuation savings to purchase property.

This has arisen following the release last week of Treasury’s Retirement Income Review, which found that home owners enjoy superior retirement outcomes than non-home owners.

The proposal has moved one step closer to becoming reality with the Senate cross-bench giving its tick of approval:

One Nation leader Pauline Hanson, Centre Alliance’s Stirling Griff and independent senator Rex Patrick said on Tuesday they would be open to changes to the super system to help renters enter the property market by accessing their retirement savings early.

A growing number of Coalition MPs are urging cabinet to prioritise home ownership over super savings…

The crossbenchers’ comments indicate the government could have enough support in the Senate to achieve changes to the retirement system…

A spokesman for independent senator Jacqui Lambie said she did not yet have a position. One Nation’s Malcolm Roberts did not respond to a request for comment.

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.

But if you allow all FHBs access to their super, this advantage diminishes, since the increased demand would bid-up prices. The end result would be no ‘affordability’ gains and the downside of having less funds available in retirement.

Again, do we really want to pour more fuel on the housing affordability dumpster fire?

Unconventional Economist
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Comments

  1. adelaide_economistMEMBER

    “Again, do we really want to pour more fuel on the housing affordability dumpster fire?”

    If by we you mean the power brokers who run this housing and holes outfit called Australia, then absolutely. What’s not to like? It eviscerates the union-linked super funds, pumps up the value of their suite of IPs, boosts ‘economic growth’ temporarily and allows them to stand hand on heart and proclaim they are doing something to help all those locked out FHB wannabes.

    • Stewie GriffinMEMBER

      Absolutely 100% – as I said yesterday, the correct lens through which all Macroeconomic policy should be viewed is that if it helps to ‘save the system’ and ensure that our shakeling debts are preserved and serviced, while maintaining the status quo i.e. our housing/consumption based economy, then any suggestion will be given serious consideration.

      If accessing Superannuation helps to ‘save the system’ then I guarantee you, it will be thrown on the fire along with lending standards and any other unthinkable sacred notion.

  2. Can anyone even keep track of how many ridiculous housing pumping schemes are in the works at this point? This is our version of the US MIC.

    • Actually, a thorough list of all them since this bubble launched in the early 2000s to refer to would be great! The state-specific ones would make it difficult to even find them all.

  3. They do it in NZ. So of course it will be allowed in Australia. Anything that favours home buyers against property investors wins them political points. At the moment, between taking all your money out of KiwiSaver (you only have to leave $1000 in it) and the Govt FHB grants, people can buy a house with effectively no personal savings as their deposit. Once you add in the removal of responsible lending, ongoing servicing won’t be an issue, and FHB will flood the market. As is happening in NZ (as no LVR restrictions, so banks are doing 95% LVR for FHB).
    https://www.stuff.co.nz/life-style/homed/first-rung/123016304/minimum-wage-no-help-and-on-the-ladder-at-25-heres-how-they-did-it

    • Anything that favours home buyers against property investors wins them political points.

      this favours property investors by increasing the value of their assets.

  4. And I’m sick of this routine of some cancerous, swamp dwelling Lib backbencher raising a racket over the latest handout to vested interests until the government is “reluctantly” brought along. Fk them all.

  5. “Again, do we really want to pour more fuel on the housing affordability dumpster fire?”

    I think removal of responsible lending indicates that the answer to this question is a firm yes!

    Australians are sitting on the roulette table and continually betting the house on red, because that’s what won last time. The government is doing everything it can to fix the wheel and make sure the ball always lands on red. Everyone else just looks on in disbelief.

    • The government is nowhere near the “everything it can” benchmark yet, although it’s definitely getting closer.
      Despite whatever all the housing has to fall spruikers around here say.

      • I often wonder how people will look back on this time in say 20 or 30 years. Will it be a case of “look at the absolute craziness of what was going on then” or will it just be looked at as when the new normal was established?

    • At the moment the banks can’t do irresponsible lending, because buyers dont have the minimum deposit. Give them access to their Super, and suddenly they have a 5% deposit, and the banks can then irresponsibly lend the rest.

  6. Australia has had its exports eviscerated – the tsunami of forced sales has not even gotten CLOSE to beginning which starts in the new year.

    You can have all the schemes in the world – but when the market is flooded with forced sellers and being greeted by queues of unemployed people or those who have just had their business folded – prices go down.

    Developers can add an all the extra they want – but mass unemployment is mass unemployment.

    There have been 6 houses sold in Geelong over $1.7 million since Covid began in earnest – there are now 50 properties on the market for above said price – same right through every single price range.

    Market is saturated beyond belief – but a couple of high priced sales and everyone raises their expectations because Core-Logic says there is a price boom on.

    Its so stupid it hurts.

    • happy valleyMEMBER

      Surely, you can’t be talking about Straya, the land of milk and honey?
      Are there any forced sales?
      Haven’t Scummo and Josh whispered to the banks to go easy?
      Also, happy clappy Phil from the RBA has shafted depositors for the umpteenth time to bail out borrowers and get banking funding costs down to zero?

    • Also the case in melbourne eastern suburbs – saw a post on twitter last week where someone did a RE search on max $1 million price, 4/2/2 properties in East Melbourne – took a screenshot of the map which showed 30 or so listings compared with about a half dozen a few months ago.

  7. Would this scheme not result in a fair whack to the ASX? Since most balanced funds are made up of 30-40% Aussie stocks. Sacrifice one asset bubble to save another..

  8. reusachtigeMEMBER

    Super should be changed to a system that helps everyone put together a deposit for property investment, not just homes.

  9. The system needs fresh $$$$$ to leverage. This move is a function of debt exhaution, interest rates that can go no lower, and closed international borders.

    It is a desperate move but also one with real consequences. They will not stop until there is nothing left.

    • adelaide_economistMEMBER

      Yep, and super is a $3 trillion honeypot just waiting to be unlocked – all in the name of a ‘good cause’.

  10. I don’t think it will be open slather on superannuation balances.

    But I do think there might be a John Howard style one off opportunity to move an amount (say up to $25k per person or $50k per couple) from your super balance your First Home Saver account balance which then effectively stays in the super system until the person needs to take it out for their first home.

    Alternatively, John Alexander’s “super home loan” is getting some attention, where you can borrow your super balance to buy a home but need to pay it back when you sell it. I think that would be administrative very difficult though.

  11. Hmmmm… so the plan is to let the young lose their retirement savings to bid up prices of housing for existing retirees who don’t have their home included in any sort of asset test.

      • I know. Young people are just lazy and entitled. Maybe if they didn’t spend all their money on day spas they could afford to buy houses with a 20% saved up deposit like the early Boomers all did.

  12. For what it’s worth, the Retirement Income Review made no comment about using superannuation for housing.