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Changes to super may lead to property market lift

Property

Changes to super may lead to property market lift

Downsizers and first homebuyers will benefit from superannuation changes coming into effect from July 1.

From July 1 two changes to Australia’s superannuation system will benefit downsizers and first homebuyers and may lead to another uplift in the residential property market.

The eligibility age for downsizer contributions will drop from 65 to 60 years old. Eligible people will be able to choose to make a downsizer contribution into their superannuation of up to $300,000 per person (or $600,000 per couple) from the proceeds of the sale of their home without it impacting their contributions caps.

The other key change is first homebuyers’ eligible contributions that count towards a person’s maximum releasable amount across all years will increase from $30,000 to $50,000.

Both changes open the door to more market movement, but how they will impact on the Coast’s current buoyant but undersupplied market is difficult to answer.

Direct Collective’s Mal Cayley is concerned that with the current undersupply of Coast property, for downsizers selling their home to free up equity, it opens up the quandary of where are they then going to buy.

“We have people who have homes they don’t need to live in for the size and which they have great equity in, but they are house-locked; they have nowhere to go to,” he says.

Moving to a retirement village is one option but Mr Cayley says there isn’t enough of that accommodation. As to moving to an apartment when there is an undersupply?

“We need to deliver, not approve, 3000 units a year and we are not hitting 1000,” he adds.

Mr Cayley doesn’t expect any noticeable impact by downsizer selling on the local market.

“The Coast market, regardless of what happens across the country at a macro level, has incredibly strong drivers for price growth over the next five to 10 years,” he says. “So what they then have to compare is if downsizers were to put $300,000 in to get a tax break, is that better than just leaving it where it is?”

As for first homebuyers it’s possible the change will have an impact on housing demand, but it still comes back to the Coast market’s ability to meet demand and entry affordability.  While Mr Cayley says investing in the Coast’s residential market is worth considering, the costs of that choice compared to keeping the money in superannuation needs to be evaluated.

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Tracey Johnstone has worked as a Journalist for over 15 years. She started as a sailing writer and working on international events both in Australia and overseas. For several years Tracey was a feature writer for a national Seniors newspaper before bringing her experience in buying, selling building and renovating Coast property to MWP in 2019.

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