- Industry Super is against the notion of withdrawing super to pay for property deposits
- The scheme would inflate property prices, and leave two and a half times less for retirement
- Example: Taking $40K from super could raise Sydney house prices by $134K
For every $1 taken out of super in your thirties to buy properties, you need $2.50 more in your pension to recover the difference, argues Industry Super Australia.
Robbing Peter to pay Paul is not only wrong, goes the logic, but Peter and Paul will end up with less in the long run, the taxpayer will end up footing the bill, and property prices will rise more than the resultant whole in their super.
“This just confirms what experts have been saying for ages; that throwing super into the housing market would be like throwing petrol on a bonfire,” said Industry Super Australia (ISA) Chief Executive Bernie Dean.
“It will jack up prices, inflate young people’s mortgages and add billions to the aged pension, which taxpayers will have to pay for.
“Politicians who own multiple investment properties and pocket 15% super might think price hikes are a ‘secondary’ consideration. They don’t care about locking young people into hugely inflated mortgages and a bleak future with hardly any savings to fall back on.”
The “industry outcry” is in response to a backbench politician’s idea to allow first home buyers to dip into their super to pay for housing deposits.
Calling this proposal “fundamentally flawed”, ISA research has apparently shown that this action could “hike the nation’s five major capital city median property prices by between 8% to16%.”
In one worked example, taking $40,000 from a super fund could lift the house median price in Sydney by $134,000, thereby creating a double whammy: being worse off in the market, and having less in super for retirement purposes.
The real winners in the scheme, the ISA argues, are the banks who would reap the windfall of the inflated mortgages.
Last week Superannuation Minister Jane Hume joined a chorus of economists, housing experts and a Retirement Income Review report author who have cautioned against raiding super for housing.
The findings of ISA’s preliminary analysis backs expert warnings that such a scheme would inflate prices and make affordability worse.
“We need sensible solutions – like boosting the supply of affordable housing which will bring prices down and get young people into a home without lumbering workers with higher taxes in the future,” said Mr Dean.
“We welcomed the minister pouring cold water on this idea very publicly last week and would encourage the Treasurer and the PM to back her up and show that the government is not beholden to extreme elements within its ranks.”
Table: Impact on capital city prices of allowing couples to withdraw up to $40,000 from super for a house deposit.
The median residential property price is sourced from ABS Cat.6416.0 and the estimate covers both established houses and attached dwellings.