Minister for Superannuation Jane Hume has conceded the Coalition’s recently announced first home buyer policy would increase house prices “temporarily”.
The campaign promise to allow first home buyers to dip into their super to help pay for a home deposit has been criticised by economists and the opposition as a policy that would only drive up house prices further.
Under the plan, people who have saved a 5 per cent deposit will be able to access up to 40 per cent of their superannuation, capped at $50,000, but must return the amount taken out, plus capital gains, if they sell the house.
“We know that people will probably bring forward some of their decisions to buy a house earlier and for that reason it will probably push prices temporarily,” Senator Hume said.
When asked how much prices would rise, Senator Hume said there were always a number of factors that drove price increases.
“What we know that interest rates play a big effect, housing supply plays an enormous effect, that’s why it’s important to play all ends,” she said.
Mr Morrison said any impact on house prices would be cancelled out by the Coalition’s other policy pitch to encourage older Australians to downsize.
“The balance of policies we have … means we’re freeing up housing stock with our downsizing policy,” he said.
“We think [this] minimises any potential impact on house prices.”
Super scheme tossed around before
The policy of allowing people to access their super has been tossed around for years without much luck.
It was floated back in 2017 when Scott Morrison was treasurer and dismissed by then-prime minister Malcolm Turnbull, who in 2021 called it “the craziest idea I’ve heard”.
Economist Saul Eslake said the Coalition scheme would do nothing to address the root causes of housing affordability.
“My initial reaction was that I wanted to scream that this reckless inflation of house prices must stop,” he said.
“Anything which allows Australians to pay more for housing than they otherwise would, which this scheme undoubtedly does, results primarily in more expensive housing, rather than in more people owning that housing.”
“It will be greeted with despair by those would be first home buyers who will see it rightly as pushing their dreams further out of their reach than they already are.”
Lowest earners may miss out
Brendan Coates from the Grattan institute agreed that while the scheme would increase house prices in the short term, the long-term impact would be modest.
But he said it would only help people who were already likely to buy a house to spend more.
“Because what you have in super is proportionate to the income that you earn,” Mr Coates said.
“A lot of low-income earners, people for whom getting into the housing market is a struggle, this scheme may not benefit a lot of them all that much, because they don’t actually accumulate that much super.”
Mr Coates said the poorest 20 per cent of 35- to 44-year-olds had a median super balance of zero, and for the next 20 per cent the balance was $15,000.
“The main effect of the policy would probably be to allow people on reasonable incomes that are already good chance to buy a home, to buy a better home, and probably push up prices a little bit in the process.”
But Mr Sukkar said the average 30-34-year-old would be able to take out about $20,000.
“We think this will be really popular for those people on those more modest incomes who find it increasingly difficult to save for a deposit as well as paying rent and all the other costs of living that that people have to meet every day,” he said.
“Of course, you need to have a superannuation balance to access it, that’s the point. It’s allowing people to access their money.
Parties ‘tinkering around the edges’
Mr Coates said neither of the major parties were addressing housing affordability in this election.
“I think another sign of our diminished ambitions on housing affordability [can be seen] in this election campaign,” he said.
“What we’ve seen from both parties is policies that tinker around the edges, will help some people into home ownership, but we’re not willing to tackle the underlying drivers of why housing is so unaffordable in the first place.
“We’re not willing to do things that would unsettle existing home owners by seeing prices and rents fall.”
Mr Eslake was also cynical in his analysis of the housing policy offers during this election campaign.
“There are far more votes to be had in policies that keep house prices going up, as this policy will do, than there are in policies which would restrain the rate of growth in house prices,” he said.
The real estate, housing and building industries, including Real Estate Institute of Australia president Hayden Groves, have welcomed the Coalition’s policy.
“The tension between superannuation and housing need not be there, as the government’s own Retirement Income Review shows that home ownership is a fundamental pillar for a successful retirement,” Mr Groves said.
“The Super Home Buyer Scheme strikes the right balance of addressing affordability and building retirement savings with a requirement for the super plus capital gains to be returned on the sale of the home.”
But Glen McCrea, deputy CEO of the peak body for superannuation, Association of Super Funds Australia, criticised the idea.
“This isn’t a policy that is going to solve housing affordability,” Mr McCrea said.
“The reality here is super is about providing income in retirement. Tackling housing affordability is a different policy issue.
“There have been numerous reviews into super in the last decade. None of them have recommended this policy. In fact, many of them have described it as being a bad idea.”
“The super system is designed to provide income in retirement. It isn’t designed as a scheme to break glass and take it out for other purposes.”