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A federal proposal to allow early access to superannuation funds to use for home deposits would put “significant upward pressure on house prices and exacerbate housing affordability concerns for low-income earners,” according to the Association of Superannuation Finds of Australia (ASFA).
The proposal has been brought up by federal Liberal politicians to help first-time buyers enter the property market, according to a news.com.au report.
However, Martin Fahy, chief executive officer of ASFA, said that, with the prevailing macro-economic conditions and surging demand for housing, using super for housing deposits “would be disastrous and push prices even further out of the reach of first-time buyers.”
“Superannuation isn’t the reason young Australians can’t afford to buy a home of their own,” said Fahy. “A lack of supply, and the policy settings with respect to residential investment property has had a distortionary effect on demand. These are the real issues that must be tackled to generate improvements in housing affordability.”
According to an ASFA analysis, using superannuation for housing deposits “would be inequitable and ineffective since it would most likely be used by higher income earners who can afford a home already.
“The direct effect on the housing market of early release of superannuation for housing deposits is that increased purchasing power would be near fully capitalised into higher house prices, exacerbating the upswing of the current house price-credit cycle,” said ASFA.
Additionally, Fahy said that using superannuation for housing deposits “is fundamentally inconsistent with the objective of superannuation to provide an adequate retirement income.”
“None of the comprehensive reviews of superannuation over the last decade have recommended it, while several have made recommendations to the contrary,” said Fahy. “Superannuation has been a key source of funding for increasing the supply of affordable housing. Patient, long-term superannuation capital has the capacity to generate increases in housing supply and improve tenure and affordability in the rental market.”