In a statement released earlier this week, Mr Xenophon noted a similar scheme operates successfully in Canada, where up to $25,000 can be accessed for a first home purchase.
Mr Xenophon will be moving for changes to the Superannuation Act 1976 to allow the release of superannuation funds for a first home, with similar safeguards to the Canadian scheme known as the Home Buyers’ Plan.
“With more and more Australians finding it difficult to break into home ownership, adopting the Canadian scheme would make a difference to many thousands of Australians each year,” Mr Xenophon said.
“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.”
Mr Xenophon noted that housing affordability has decreased in Australia, with an annual affordability survey by Demographia conducted this year finding Australia has the second-worst housing affordability in the world, sitting behind Hong Kong.
Speaking to SMSF Adviser, The SMSF Academy’s Aaron Dunn said this notion, which would breach the sole purpose test, needs to be “actively” discussed with the industry.
Mr Dunn said the long-term benefits need to be 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.
However, Mr Dunn added that it was worth raising the issue for public debate.
What a mess the future Australia would be if we let all the Y gens jump in this hole.
There are better ways to improve affordability that will help our economy as a whole. Get rid of negative gearing and stop selling Australia offshore. Encourage baby boomers to offload their investments and downsize their homes.
My fear is that if young people can access up to (say) $25,000 to fund the deposit for their first home, we will see house prices, particularly at the “first home buyer” end of the market, increase by $25,000. It will be no different to what happened with the Government first home buyer grants.
Seb, I have a lot of sympathy and empathy for you. Housing affordability is a massive issue, and not just in capital cities. Lower wages in regional centres make affordability a challenge there aswell. Letting people access super to use to buy a home initially seems like a way to provide a huge relief to younger Australians. The reality though is its just spending your retirement money today. If house prices were say 20% lower I imagine many people looking to buy their first home would find it an achievable goal. My own view is politicians are scared to make what they see as toungh decisions because when negative gearing was looked at in the 1980’s the timing was bad and the house building sector crashed. Next weekend there’s 3 types of people looking to buy a house. Current owners are also looking to sell high or low prices tend to net off for them. That leaves investors and first home buyers. Remove tax breaks for investors and housing affordability improves for first home buyers.
Well some people need to think about their comments and get off their high horses. You think it’s easy for everyone to just work their buts off and save a deposit while paying rent and everything else in the current economical state we’re in? Let’s not direct our attention away from the real bad guys here, the greedy homeowners who think they’re houses are worth double of what they really are. This capitalist system is an absolute joke, absent of any empathetic and sympathetic values toward the meek and unfortunate. If wages had risen in conjunction with house prices we wouldn’t be in this mess. Instead the greedy see dollar signs over all other humanitarian values and don’t care about the consequences. The RBA and banks change interest rates to squeeze every dollar out of the lower middle class, practically making this country a slave work force who will always suffer while attempting to put dinner on their families plates and a roof over their heads.
Hi all, no leave super alone. Only one way to buy a house save, save and save for that deposit. In this “2 minute noodle society” we need to realise you need to work for these dreams. Rather than pull money out of super that was not designed for this purpose. warm cheers the silver fox.
I like alot of Xenophon’s ideas, but I can’t say I am a fan of this one. Giving more cash to first home buyers will fuel prices more than help with affordability, it is a pure supply and demand situation.
With stamp duty, I dont think state governments will want to take big revenue cuts like this, however if first home buyers could buy a property without needing to pay stamp duty up front (i.e. pay it in installments a la HECS), that would help buyers, plus reduce the need for alot of first timers to cough up on LMI.
Typical politician – trying to shore up votes at the expense of any common sense public policy. Giving people access to more money will only push property prices higher and exacerbate the affordability issue.
Then, of course, those same people will have no retirement savings and will be dependent on the Age Pension.
Also, why allow access only to funds held at a particular point in time I.e. when they purchase a property? Why not let those same people have their SG contributions redirected to the loan? Where would this end?
Agree with Aaron Dunn. As much as I admire Nick Xenophon, his idea is a short term band aid solution which will do nothing to fix the underlying, high home price, low availability problem, and will definetly not fix the adequacy gap for many/most retirees. Consideration must be given for more land to be opened up, more modest homes, less or no stamp duty, better infrastructure, including transport to new, outlying suburbs, which should include shopping, schools and entertainment precincts. There really are no short cuts to this increasing social problem.
Very interesting proposal and way to tap into the younger market.
Perhaps if people stopped spending money on things they don’t need and lowered their expectations for their first home, then they wouldn’t have the need to access money from elsewhere. They’ll probably default on the loans anyway. Bad idea IMHO.
This is an ‘old one’ which surfaces every now and again. The ‘sole purpose test’ always seems be thrown up so that it becomes ‘a given’ that it would be breached. This is a bit of a ‘Dunn Deal’ is it not!!! Surely this stance could be challenged since owning a home outright in retirement is an obvious benefit – being able to direct savings to a home in the early stages of working life makes sense. The fact that super could save major capital expense such as LMI, help negotiate a better loan rate, save being locked in to the bank which takes up the mortgage insurance etc etc make a great deal of sense. The issue is more in repaying the loan – but this in turn opens a number of really interesting options. At the end of the day if the scheme required participants to pay more back to super than the standard SG by employer, the scheme would actually mean more savings to super in the long term. Perhaps exactly what is needed is an independent without an agenda to push the idea.
This is like putting a bandaid on a severed limb. The real issue here is housing affordability, which is being pressured by inflows of 250,000 people per year to Australia, coupled with overseas speculators pricing locals out of the market.
How about we deal with the underlying issue here, not unlock superannuation which will barely cover stamp duty.
Sorry but this is a very bad move, not to mention a breach of the Sole Purpose Test. Obviously Nick is just trying to win votes.
So who will this suggestion really assist? just remember who the FHOG’s assisted. certainly not the first home buyer, but the vendor! this would be no different. Proceed with extreme caution Senator Xenophon.
I like Nick Xenephon, but can’t agree with this policy proposal. Howard took it to the 1996 election, but dropped it, and the reasons are unchanged.
Housing affordability is addressed by stabilising or reducing house prices. People using their super fuels price rises. If we have a fixed number of homes and a fixed number of buyers, providing buyers with more money just sees them buy the same home but at a higher price. Looking at it from the super side, I bought my first home at age 35. If I could access my super I’d be age 35 with nothing saved for my retirement. For most people that would guarantee them being much more reliant on the age pension, and fellow taxpayers.
There’s no quick fix to housing affordability. Anything which reduces prices adversely affects many current homeowners. Ideas like quaranteening negative gearing losses until profits are made can help. More supply can help. Steady implementation of policies to stablise prices is the answer.