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In handing down its interim report, the Senate economics committee, chaired by Liberal senator Andrew Bragg, has recommended that first home buyers be allowed more access to their super than previously proposed.
The committee’s recommendation would see first home buyers be allowed to withdraw their superannuation contributions for use towards a home deposit with a withdrawal percentage threshold.
This would be in consideration with withdrawal cap options of $100,000, $150,000, or no maximum cap at all.
The Coalition proposed the scheme in 2022 to allow first home buyers access to up to $50,000 (40 per cent) of their super to fund an upfront house deposit.
Senator Bragg said: “Rampant inflation under Labor means that the committee has had to re-examine previously proposed thresholds and caps, to ensure the policy can be effective for first home buyers.”
The report received evidence from actuaries Michael Rice AO and Jonathan Ng that suggested a higher cap would be appropriate so that first home buyers could have enough flexibility to withdraw a sufficient amount for a deposit.
“Analysis from Mr Rice and Mr Ng found that for a 35-year-old who used super to form a 20 per cent deposit on a $800,000 unit, the value of that equity in the unit in today’s dollars would be worth $1.2 million 30 years later at the point of retirement,” Senator Bragg said.
“This is compared to only $319,000 had it remained in superannuation.”
Additionally, the committee has recommended that buyers who participated in a super withdrawal housing scheme be allowed to use the proceeds of a home sale to purchase their second home following the sale of their first, instead of immediately recontributing the proceeds of the first sale back into their superannuation accounts.
The recommendation suggested that buyers recontribute the withdrawn amount back into their super accounts (including a share of any capital gain) within 12 months, unless they intend to live in a second property within 12 months of the point of sale from the first.
“By eliminating red tape, the policy can work better for Australians who wish to sell their first home and relocate,” Senator Bragg said.
Moreover, the committee also recommended that: the First Home Super Saver Scheme (FHSSS) be simplified and expanded; super can be used as collateral for a home loan; and the Australian Prudential and Regulation Authority (APRA) investigate the viability of superannuation-based shared equity schemes.
“The committee will now be examining other policies to advance home ownership in retirement, such as letting Australians use their superannuation as a mortgage offset,” Senator Bragg said.
“We will be seeking submissions from experts and the community on this matter.”
Super for housing could increase house prices
Allowing first home buyers to access their super for a deposit has come under scrutiny since its inception by the Coalition.
Among the dissenters was the Super Members Council (SMC) that estimated that allowing first home buyers to participate in the scheme could increase property prices by almost $75,000 in the nation’s capitals.
Assuming borrowers are allowed to take out $50,000 of their super as previously proposed, the SMC estimated that the scheme could raise median house prices across the major capitals by 9 per cent and would “inflame an already-inflated property market”.
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