Super is for retirement – not for overheating the housing market

McKell Institute analysis has found that allowing homebuyers to tap into their superannuation to help them buy a home would inflate the housing market even further, worsening Australia’s housing inequality.

In fact, a super for housing scheme would add about $69,000 to the price of the average house in Sydney, $108,000 in Melbourne and $159,000 in Adelaide.

Analysis to pinpoint an amount that could realistically be added to a first homebuyer’s deposit from their superannuation with minimal inflationary impact would be about $10,000 to $30,000. However, adding that amount to a deposit would have little impact on a buyer’s capacity to get into the market.

And, while withdrawing $10,000 – $30,000 from super may seem harmless in the long-term, withdrawing that money would leave first homebuyers worse off in the long-term.

That was a lesson learned from the Covid 19 experience, when people were allowed to withdraw from their superannuation during the pandemic. The impact is shown in our review of that early super access scheme, Buy High, Sell Low. Australians withdrew $36.4 billion from super accounts in 2020. Within a year, that amount would have grown to $41.1 billion if it was left untouched, representing $4.7 billion in foregone retirement savings.

Allowing early super access contradicts the purpose of superannuation, which is to secure retirement funds for workers in their old age.

We’ve outlined this position as part of the McKell Institute’s submission to the Senate Committee’s inquiry into improving customer experiences, choice, and outcomes in Australia’s retirement system.

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