At present, Australians are allowed to withdraw from their superannuation fund if they are about to default on a home loan, but not in order to pay a deposit. Superannuation funds are government-backed and encouraged in Australia and are designed to provide funds for individuals to live off in retirement.
Senator Xenophon commented that many young Australians struggle to save money for a deposit, and such a scheme would allow thousands of young people to break into the market. Sydney Mortgage Practice and Mortgage Choice both expressed cautious support for the plan.
However, many analysts commented that whilst well-intentioned, Senator Xenophon’s plan for housing affordability was misguided.
The Australian Institute of Superannuation Trustees warned that withdrawing capital at a stage when funds should be accumulating would leave savers poorer in retirement. Scott Donaghue estimated that such a withdrawal could cost $175,000.
Meanwhile, analyst Todd Hunter questioned whether the plan would really help first home buyers. Access to more capital may well have the opposite intention and merely drive prices higher as the market adjusts.
Superannuation Funds Are Not A Long-term Solution
Indeed, a recent article by Garth Turner, who proposed the scheme in Canada, expresses his regrets. Whilst it did arrest a falling housing market in Canada, the long-term result was rising prices and Canadian property has become some of the least affordable in the world.
It is positive to see politicians focusing on the issue of housing affordability for first-time buyers, an issue with real salience for many.
Whilst Western Australia has been fortunate that housing remains relatively affordable, especially for those who choose to build. Encouragement for first time home buyers remains important. Across Australia, there are concerns that a generation may miss out on the benefits of home ownership and there are many splendid initiatives tackling this very issue.
However, Senator Xenophon may need to reconsider this particular proposal.
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