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Voices oppose super home-buying idea

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Voices oppose super home-buying idea

A Liberal Senator has touted allowing Aussies to withdraw retirement savings to get into the property market but a variety of experts disagree about benefits.

Letting aspiring homebuyers tap into their super – a policy floated by the Federal Opposition – could push up property prices and fail to help those most in need of a leg-up, say leading economists.

Australians with super balances large enough to buy a home might not necessarily be those most in need of help to exit the rental market, Grattan Institute chief executive Aruna Sathanapally told a national audience recently.

With borrowing costs high, home prices recording their 15th-straight month of gains in April, and elevated rents and other cost-of-living pressures making it difficult to save a deposit, first home buyers are facing tough conditions.

Declining home ownership among young people and low-income households have been an enduring issue and, at the 2022 federal election, the coalition proposed allowing Australians to withdraw up to $50,000 from their retirement savings to go towards buying a first home.

During a speech to the Sydney Institute recently, Liberal Senator and home ownership spokesman Andrew Bragg described the policy as a “good start” and said an upcoming Senate report on housing would set out options to “allow Australians to make their own judgments”.

“The simplest demand-side reform is allowing Australians to use their super to buy and stay in their home,” Senator Bragg says.

Speaking at the National Press Club recently, Dr Sathanapally also said demand for housing would push up prices, though acknowledged some existing estimates were “on the high side”.

Boosting supply is more important to easing Australia’s housing woes, she says.

Impact Economics and Policy lead economist Angela Jackson says allowing people to access their super to buy a home is a “terrible idea” and a “band-aid solution”.

“It will just increase prices by even more than they would withdraw, and in the end, they’ll just be borrowing more and they’ll end up poorer overall because they won’t have their super,” Ms Jackson says.

“They would have paid more for their house.”

The super industry has also pushed back on the idea, with Super Members Council head Misha Schubert calling it “economically reckless” and saying it will nudge home ownership further out of reach for young Australians.

Yet Senator Bragg says home ownership is a vital form of saving for the future.

“The closed-minded, ideological approach and the assumption that super is the only vehicle for retirement clearly damages home ownership prospects,” he says.

The policy discussion follows another 0.6 per cent lift in national home prices in April, CoreLogic reports.

The real estate data firm’s research director Tim Lawless says home values are still rising, despite higher interest rates, low sentiment, worsening affordability and ongoing cost-of-living pressures.

Housing values are up 11.1 per cent, or about $78,000, since the trough in January 2023.

               – AAP

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