Liberal MP Tim Wilson contends that Australians should be able to access their superannuation to pay a housing deposit.
However, the Association of Superannuation Funds of Australia (ASFA) released a report yesterday staunchly opposing the move, arguing that it “would make a bad situation catastrophic” by putting additional upward pressure on house prices and adversely impacting housing affordability:
The impact on the housing market of early release of superannuation for housing deposits would be an increase in house prices. As take-up of the measure increased, additional purchasing power available to a broader group of potential first-home buyers would be competitively bid into higher house prices, exacerbating the upswing of the current house price-credit cycle…
None of the comprehensive reviews of superannuation have recommended the early release of superannuation for housing deposits, while several have made recommendations to the contrary…
The direct effect on the housing market of early release of superannuation for housing deposits is that increased purchasing power would be near fully capitalised into higher house prices, exacerbating the upswing of the current house price-credit cycle.
I am an outspoken critic of Australia’s compulsory super system and believe it needs root-and-branch reform. I also oppose lifting the superannuation guarantee to 12% for a multitude of reasons.
That said, allowing households to use their super savings to purchase a home would be a retrograde move. Like all demand-side subsidies, the extra purchasing power would simply be capitalised into higher house prices, resulting in no ‘affordability’ gain and the downside of having less savings available in retirement.
Australians are already heavily indebted and property prices are inflating at a feverish pace. Do we really want to pour superannuation fuel on the housing bonfire?
Demand-side gimmicks like this might play well with the electorate and property lobby, but they risk making housing affordability and retirement outcomes worse.
