house deposit

‘Like throwing petrol on a bonfire’: Industry Super boss slams plan to use retirement savings for home deposits

PHOTO: Super for a house deposit

Industry Super Australia has thrown cold water on the concept of allowing prospective homebuyers to access their superannuation to enter the housing market, describing the idea as fundamentally flawed.

According to the preliminary results of a study from the research and advocacy group for industry superannuation, allowing first-home buyers to redirect some of their superannuation to use for housing deposits could hike up the nation’s five major capital city median property prices by between 8-16 per cent.

Industry Super’s figures suggested if couples were able to take $40,000 from their super for a house deposit, it would lead to soaring property prices across the country but the impact would be most severe in Sydney, where the median property price could rise by $134,000.

The results indicate that in most locations, price increases and extra property taxes would quickly surpass the amount of super a first-home buyer could withdraw, so homebuyers would be paying more but at the expense of their super.

In all cities but Hobart, if a couple took $40,000 from their super, nearly all would be lost through the price hikes fuelled by increased demand, and in Sydney, prices would spike by three times that amount.

“This just confirms what experts have been saying for ages; that throwing super into the housing market would be like throwing petrol on a bonfire. It will jack up prices, inflate young people’s mortgages and add billions to the aged pension, which taxpayers will have to pay for,” Industry Super Australia CEO Bernie Dean said.

The research shows the market would react quickly to the scheme becoming a reality, and within a year the full price increases would likely be realised.