If first-home buyers are allowed to use their superannuation to buy property, they are more likely to end up with bigger nest eggs upon retirement than if they rented their whole lives, said Malcolm Gunning, president of the Real Estate Institute of Australia (REIA).
Gunning said it was “nonsense” that raiding one’s super to afford a house deposit would erode retirement savings (as many politicians, including former Prime Minister Paul Keating, have alleged), as both comprise the asset pool upon retirement.
Giving young people access to their own money in a superannuation fund to finance first-home purchases should not be seen as controversial, as the strategy has worked successfully in other developed countries, such as New Zealand, Singapore, and Canada, according to Gunning.
With super out of the picture, many young Aussies not fortunate enough to have wealthy parents or trust funds can barely save for their deposits. Many are turning to alternative means, such as taking out personal loans and using credit cards, to cross over the line and cover all transactional costs. (Aside from the deposit, homebuyers also need to cough up cash for stamp duty and miscellaneous charges.)
“Many young people already have a partial deposit … access to their super would make the difference but they aren’t allowed to make the decision to access what is after all their own money until they retire,” Gunning said.
He said the idea of using some superannuation funds to finance a house deposit was “practical,” and could mean young Aussies have a larger nest egg of assets upon retirement. “By buying earlier in life, retirees have every prospect of having a higher equity on retirement and a larger ‘nest egg’ on downsizing,” he said.
Gunning further claimed that allowing widespread access to superannuation funds for the purchase of a first home could help reverse the trend of falling homeownership, adding that it would address “the looming social problem of large numbers of long-term renters aged 45 years and over remaining in the rental sector and possibly requiring rental support in later years.”
Collections: Mortgage News