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As the election cycle ramps up, the Coalition has announced plans to boost home ownership.
One introduction was allowing Aussies to access up to $50,000 from their superannuation savings to go towards a house deposit. The money initially withdrawn from super will need to be returned when the house is sold to support retirement.
“Entering the property market shouldn’t be limited to those who can rely on the bank of mum and dad. That’s why a Coalition government will allow Australians to access up to $50,000 of their super to buy their first home. And we will extend that policy to assist separated women,” Opposition Leader Peter Dutton said.
The current system in place by the Labor government allows for $15,000 withdrawals of voluntary contributions each financial year, to a total of $50,000.
Other than that, the conditions for release of super are:
- Once you turn 65 (even if you haven’t retired).
- Upon reaching preservation age and retire or start a transition to retirement income stream while continuing to work.
- You satisfy an early access requirement.
The plan has critics
While this may seem like a beneficial means for young people to enter a difficult property market, some are critical of the initiative.
According to The Association of Superannuation Funds of Australia (ASFA), this wouldn’t benefit all young people, only those who are likely already able to afford a home.
“While superannuation may seem like a tempting pot to raid, our analysis shows it will only benefit those young people who are already more likely to be able to afford a home, and not solve the crippling supply-side deficit that is fuelling our housing crisis,” ASFA CEO Mary Delahunty said.
“Accessing superannuation is not the silver bullet to solving Australia’s housing crisis … To improve outcomes, housing affordability must be tackled more holistically. There is arguably insufficient agreement and cohesiveness across federal, state and local government jurisdictions in addressing many of the substantive issues around affordability. A coordinated national approach is needed, with the ultimate objective of generating improvements in affordability.”
Further to this, a recent article from The Guardian discussed the impacts of this policy, with Saul Eslake, principal of Corinna Economic Advisory, claiming it would “result in more expensive housing to the benefit of those who already own housing”.
Eslake revealed that over 78 per cent of single people wouldn’t be able to withdraw more than $20,000.
“The median non-home-owning couple both aged between 35 and 44 would be able to withdraw $38,500 for their deposit and could borrow up to $192,500 more. That would give them a total of $231,000 more to spend on a house. The median couple aged between 45 and 65 could spend $400,000 more,” The Guardian said.
“Singles between 25 and 34 have a median super balance of $20,300, while couples in that age bracket have $45,200, which means that the median amounts which they could divert to the purchase of a home would be just over $8,100 and $18,000 respectively. This would increase a single person’s purchasing power by $40,500 and a couple by $90,000.”
Looking to New Zealand
The New Zealand government introduced similar policy back in 2007, coming into effect in 2010.
The KiwiSaver scheme allowed for residents to withdraw superannuation. In doing so, a report from Super Members Council found that between June 2010 and June 2024, house prices grew by 1.5 times the rate as Australia – growing by 134 per cent, compared to Australia’s 86 per cent.
In the decade before the KiwiSaver withdrawals, the annual growth rate was 7.6 per cent. The decade after saw an annual rate of 9.2 per cent.
“Allowing withdrawals from New Zealand’s KiwiSaver scheme for a first home purchase has failed to lift home ownership rates across any age group. Rather, it has corresponded with a fall in home ownership rates, particularly among younger New Zealanders. Home ownership has fallen by about 7 per cent for people in their 30s,” Super Members Council said.
“The proportion of first home buyers accessing KiwiSaver to buy a home has risen from 65 per cent in 2015–16 to 77 per cent in 2023–24. Since KiwiSaver housing withdrawals commenced, and house prices began to surge, New Zealand first homer buyers have been forced to borrow more to buy homes. Since 2014, the total number of first home buyers taking out loans with a loan-to-value ratio over 80 per cent has tripled, and the proportion of high LVR loans taken out by first home buyers has risen from 25 to 75 per cent.”
What the council is now referring to as a “cautionary tale,” it has implored the Australian government to not go down the same path as New Zealand.
“If you want to see further rises in house prices and falling home ownership rates – New Zealand shows introducing a super for a house policy leads in that direction,” Super Members Council CEO Misha Schubert said.
“But if you want to fix the housing crisis, then the answer is building many more new homes to expand supply, rather than telling young people that raiding their super is the answer.”
“The evidence is clear – from an overwhelming majority of leading economists and new analysis of New Zealand’s real-world experience -that using super for house deposits will just further drive-up house prices, fuel higher mortgages and debt stress in a cost-of-living crisis, and push the Great Australian Dream of home ownership even further out of reach for many young Australians.”
While the Coalition’s plan may seem promising for young, potential homeowners at a glance, the consequences could prove to be the opposite.
