Financial comparison website Mozo conducted a survey in September this year, asking first home buyers how they would prefer to fund their first home purchases.
While 49 per cent said they would prefer to save a deposit, 47 per cent were happy to forego their retirement savings.
“It’s clear Gen Y feel it’s unattainable to enter the property market by saving alone, and want the government to seriously consider superannuation as the solution,” said Mozo director Kirsty Lamont.
“It’s really interesting to see which first home buyers would choose when faced with the skyrocketing property prices we’re seeing at the moment,” she added.
The research comes after two senators called for superannuation to be opened up to first home buyers.
Nationals Senator Matthew Canavan questioned why Australians are forced to start saving for their retirement before they can afford to buy 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.
Independent Senator for South Australia Nick Xenophon announced in July this year he would introduce legislative changes in the spring session of parliament to 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.
[quote name=”Campbell”]Hi Brett
Australia has a system like this aswell. I think its called First Home Saver accounts, and it works within our super system. hardly anyone has used it though. The talk of accessing super is the 9% super guarantee (now 9.5%).
I’m sure the issue is housing affordability.[/quote]
Hi Campbell, The First home saver was a fantastic idea that very few people knew about unfortunately however since the 2014 federal budget it is no longer available.
Brett,
You need around 15% p.a, not the current 9.5%. from commencement of work to have a comparable retirement income to working period.
This was calculated in era of higher average returns than we are likely to see in the coming 10-20 years. This makes the 15% look a little low!
The WHOLE portion needs to be locked away as 9.5% probably won’t be enough.
Like I said below, this is one of the dumbest policy options I’ve heard in a long while.
Unless poverty mixed with old age appeals?
Hi Brett
Australia has a system like this aswell. I think its called First Home Saver accounts, and it works within our super system. hardly anyone has used it though. The talk of accessing super is the 9% super guarantee (now 9.5%).
I’m sure the issue is housing affordability.
I have no problem with the idea of accessing Non concessional contributions for life events such as a 1st home, it would encourage additional contributions into the system as a result. Provided there is a locked away portion designed solely for retirement purposes.
I think Singapore has a structure similar to this
Imagine the impact on property prices and household leverage if, literally overnight, around 200,000 Australians aged 25-34 suddenly had access to a $50k deposit from within super.
Scary…..
What a terrible idea. I understand that almost a tenth of the average person’s income is locked away until retirement, but if you can’t save for a deposit, are you truly ready for the financial commitment of home-ownership anyway? Let’s stop training the young to be terrible with their money and to expect everything handed to them. It will only end in tears once gen-y are all broke at retirement and the government can’t support them all. Plus, how much do you think that 20-30K would have become 40 years later after being invested in their super? Is this really the smartest idea for anyone?
Perhaps if the First Home Saver Account was still around, this ridiculous idea wouldn’t have surfaced. Where’s Captain Hindsight when you need him?
Interesting – the same government that loads you up with debt before you start working (via unregulated uni fees) wants you to abandon any pretence at saving for retirement.
Given that the sole purpose test will have to be eliminated in order to enable this proposal, why only allow acces to buy property?
If you want to see an entire generation have no assets or super. Retire at 70 still trying to pay off a house loan. Then have to get government assistant. Go right ahead and let them use their super for their house.
This has to be quite possibly the most terrible idea in the history of ideas. Not only has this been trialed in other countries but it’s been shown to INCREASE the cost of housing by the average super used to but their first house.
Again. Probably the worst idea in the history of bad ideas.
How about get rid of negative gearing. Capital gains exemption. No other country try let’s you write off your investment losses against your personal income. Crazy australia. Stop with the first home owner grants and bonuses
Let the market ‘readjust’ so millions of young Australians can start a life instead of signing up to debt slavery.
Really really dumb idea. Government policy has been aimed at providing more money so more people can “afford a home” i.e first home buyers etc.
More capital in a supply constrained market = rising prices. This is economics 101. What happened, we have amongst the most expensive property in the world with one of the lowest populations in the world per sq km.
Yes we have desert, eastern seaboard etc but government costs (DA, GST, other taxes) and lack of land release (government policy) and lack of regional infrastructure (government policy = poor job prospects) have fueled this problem.
More money to buyers to push up prices further. Less money for retiring gen y’s in their really expensive housing?
Really…really stupid idea.
The underlying problem is housing affordability. Allowing people to access super just masks the underlying problem. As house prices continue to rise, accessing super just reduces the pressure for maybe a decade but at a cost of denting a generations retirement savings.
When we bought our first home near 40 years ago the Government introduced a scheme where they loaned you the money to buy or build on your land and the repayments were based on a 1/4 of your monthly income. It basically was an interest only loan so you did not pay your house off until you started to pay interest and principle. Basically it was like renting your own property. We owned our land so we were able to borrow a maximum of $35000.00 to build. You could build a lovely home for that back then. We paid one week of my husbands wage on the house that we owned. We sold 5 years later paid off the loan and moved on to a bigger and better things. With a small family it gave us the opportunity to be able to buy our first home. Maybe this is something to consider
Use it as an offset account.
Superannuation should be used as an offset account. That way you can offset the interest while you pay out you asset.
Maybe the answer lay somewhere in between. Something like a home deposit fund within superannuation, where a member below a certain age, say 30-years, can borrow from their own superannuation balance as a deposit on their home, but that loan must be repaid (possible with low interest) within a reasonable time, or when the home is sold. This could be a one-off only borrowing covered by a second mortgage on the property. Many scenarios could be considered, such as 5-year repayment free or a HECS type repayment system. The options that could be considered are significant and in the end, the money would go back into their retirement savings.
well, if Gen Y wants it, then we should do as Gen Y says, right?