In its Financial Stability Review, the RBA expressed concern that some potential first home buyers are likely to have been priced out of parts of the market by investors who typically have higher incomes and are able to outbid competition.
In an article published by the ABC, Senator Canavan stressed the importance of giving first home buyers access to their superannuation.
“I’ve suggested we allow people to access their superannuation to buy their first home, I think it’s very important we allow people to do that and it’s their money and they should have control of it,” he said.
In his maiden speech to the Senate earlier this year, Senator Canavan questioned why Australians are being forced to save for their retirement before they can purchase their own home.
“At the federal level we make it harder for young people to buy their own home by forcing them to put 9.5 per cent of their income into a savings account they may not be able to access until they are 65. I wanted a home when I was 25, not 65,” he said.
In July this year, Independent Senator for South Australia Nick Xenophon announced he would introduce legislative changes in the spring session of parliament that would allow first home buyers to access their superannuation for a house deposit.
“There’s something strange about being able to access your super fund if you are about to default on your housing loan, but you can’t access it to put a deposit on a home in the first place,” he said.
However, at the time, The SMSF Academy’s Aaron Dunn warned the long-term benefits of this proposal need to be comprehensively considered, noting the proposal “doesn’t fix” the adequacy gap that exists in the retirement savings of Australians.
He also said the impact this notion would have on housing prices should be considered, given it would potentially allow a significant number of new entrants to the property market.
We used our Super to purchase our first home, before Super became compulsory. It was the best thing we could have done, which went against all advice, at the time. The issue isn’t so much about allowing Super to be use against a first home purchase. It is more of a case of lowering expectations of first home buyers and the areas in which they wish to buy their first home. We all need to walk before we can run. Don’t take on more debt than can be comfortably repayed, on one income. Lenders have moved past the prudent lending levels of when your monthly repayment couldn’t be more than a third of your monthly income. Lifestyle had to be earned and still and still does. It isn’t a right. Sacrifices have to be made, to get ahead. I do agree with the idea of only allowing Australian Citizens to be allowed into the residential housing market. Let non nationals invest in commercial property development, but not residential housing.
Hey I’ve got an idea, to curb this insane property pricing discrepancy, why don’t we just have laws in place that you must be a permanent residential tax payer to own a property in Australia. Many other countries do not allow foreign investment in residential property, thereby protecting land for people who actually contribute to the local economy. Not a single politician in this country has proffered leadership in this area. Yet no economist can argue that foreign nationals soaking up our property at inflated prices does a single thing to help our economy. In fact its counter productive.
the effect on house prices will be the same as if first homebuyers were given a $40,000 first homeowner grant …..explosive.
Another idea adding to demand so that prices can rise even more. Genius!
Nice thought but what happens when this drives house prices up further and then a crash comes. No house value and no Super as well. Super is so you can retire not spend it before you get there.
I agree with Peter Kelly. Giving people access to super for a house deposit will just give them more money to push the house prices up even further. And what happens when the house is sold? How can we ensure the money is returned to super – with interest? What a nightmare. Super is for retirement. Taking money out of super early will mean more people are reliant on the age pension later in life.
If there was a definition for ‘terrible idea’ this would have to be it. Releasing Super for this purpose would simply push prices up until Super was insufficient to reduce the level of debt required to make the purchase. Then you simply have affordability levels that jeopardises not only getting into the housing market, but retirement as well. You would also need to safeguard the Super investment, effectively making it the 1st mortgage position, which would affect how much banks would lend. Its just not a good idea. Super has its purpose. Leave it alone to do its job.
Somehow I don’t think accessing super will solve the problem of ever-spiraling housing prices and accessibility problems experienced by first home buyers. It may simply just push prices up even further. Personally I think we need to revisit the ability of non-residents to access new housing stock. Even though opening the market to foreign ownership was designed to to stimulate the home building industry, it has created a situation where younger Australians have simply been priced out of the market. Developers have no commercial interest in seeing the housing stock supply increase in order to temper price rises.