‘More expensive housing’: Superannuation for property would turbocharge prices

More Australians are retiring without owning their home outright, new data reveals.

More Australians are retiring without owning their home outright, new data reveals. Photo: Getty

A Coalition policy that allows Australians to raid their super for property would turbocharge house prices, according to new modelling of the controversial scheme.

Figures published on Tuesday by the Super Members Council (SMC) found the Morrison government program could have pushed up property prices $75,000 across major capitals.

The policy, which formed a cornerstone of former prime minister Scott Morrison’s failed re-election bid in 2021, allowed Australians to take $50,000 from super for a house deposit.

Opposition Leader Peter Dutton has since retained the policy in the Coalition platform.

SMC chief Misha Schubert said the analysis showed everyone would have been worse off under the scheme, while those struggling to buy property wouldn’t be better off either.

“Using retirement savings for house deposits would just unleash a huge price hike,” Schubert said.

“That would mean higher and longer mortgages for Australians – and would quickly make capital cities even less affordable for new home buyers struggling to get into the market.”

The SMC has been publishing modelling against early access super schemes lately in support of an Albanese government push to legislate that superannuation is only for retirement.

Last week it published analysis finding the Morrison government’s COVID-era early release super scheme could cost the public billions over the long run in larger pension payments.

Veteran economist Saul Eslake thinks Morrison’s early release of super for housing would have been among the worst housing policies Australia has pursued over the past 25 years.

He said the SMC modelling is right to project higher prices flowing from the dumped policy, though doubted whether the increase would be higher than the super people withdrew.

“We have almost 60 years of evidence showing unequivocally that anything which allows Australians to spend more on housing than they otherwise would results in more expensive housing, not a higher proportion of the population owning that housing,” Eslake said.

“This [super for housing deposits] is just another example of it.”

The SMC modelling found house prices would rise in all capitals under the Coalition proposal, but by most in Sydney, where median values would soar by $80,000.

In Melbourne, prices would rise $70,000 and in Brisbane the increase would be $78,000.

Schubert said those who participated in the scheme would cause problems for everyone else too, because they would need to rely more on public pension payments in retirement.

The SMC numbers show a 30-year-old couple that withdrew $35,000 each from their super for a deposit could be almost $200,000 worse off at retirement in today’s dollars.

“Breaking the seal on super leaves people poorer in retirement and costs every Australian taxpayer more from higher age pension costs,” Schubert said.

The fact is, however, that far fewer Australians are retiring owning their home outright these days, amid decades of price increases that have ushered in lower rates of ownership.

Eslake said the super system has traditionally assumed that the vast majority of retirees will own their homes outright – a key factor underpinning financial security on a fixed income.

But that’s no longer the case, with an increasing proportion of people retiring without a home or still paying down a mortgage in their 50s and early 60s.

That’s something federal and state governments must reckon with, including by moving away from policies that stimulate demand for housing like first-home buyer grants, Eslake said.

“We need to do things that will boost supply, which could include funding for the construction of new social and affordable housing,” he said.

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