Economists warn Australian house prices will explode if buyers can tap into the super | Australia News



Allowing Australians to use their pensions to buy a house would cause another “price explosion”, property economists have warned.

The $ 3.3 billion savings pool is an attractive target for politicians looking to increase home ownership, finance infrastructure, or wean government pensions in decades to come.

A McKell Institute report released on Wednesday models the effect on the housing market if Australians had access to the super for home deposit, as advocated by federal government members such as Deputy Minister Tim Wilson.

House prices have risen dramatically during the pandemic, helped by record interest rates. Rental costs have also increased.

A standard 20% deposit for a home in Sydney – where a fifth of Australia’s population lives – is now around $ 300,000, nearly five times an individual’s median annual income.

Housing affordability is a huge challenge, but using super won’t help, said Michael Buckland, executive director of the McKell Institute.

Allowing access to $ 60,000 or more in retirement savings would allow more potential buyers to move into homeownership, but would inflate home prices in major cities, the report said.

The proposal would add nearly $ 69,000 to the price of an average home in Sydney, $ 108,000 in Melbourne and $ 159,000 in Adelaide.

Australians who opt for a security deposit instead of keeping their money invested in the super would retire in a worse situation, as money invested in the super offered more sustainable long-term returns than housing.

“Subsequent rounds of potential buyers would therefore face even higher price points, and demands on their super would have to be higher again to compensate,” the report said.

Buckland said the Mortgager Our Future report was a sobering reminder of what was at stake.

“Young Australians need their retirement savings quarantined and compounded. Using those savings to fuel another housing market feeding frenzy would be political folly, ”he said.

It is already possible for individuals to save up to $ 30,000 on their super account thanks to additional voluntary contributions, in order to add to a home loan deposit.

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This allowance is in addition to regular savings and is limited to $ 15,000 per year under the First Home Super Saver Plan (FHSS).

The report found that allowing potential buyers to access between $ 10,000 and $ 30,000 in a security deposit would have no significant impact on the overall rate of homeownership.



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