Innovative Housing Program May Significantly Reduce Home Waiting Time
According to a study, Australians saving for their first home could potentially own a property years earlier if allowed to tap into their superannuation for housing purposes.
Economists Peter Tulip and Matt Taylor’s report suggests that utilizing super funds for housing could boost the home ownership rate from 66 to 70 percent, enabling the average homebuyer to purchase a home three years sooner.
Tulip, the chief economist at the Centre for Independent Studies, stated, “Accessing superannuation for home buying could assist many young families in overcoming the deposit obstacle that hinders home ownership.”
The coalition is considering a proposal to permit Australians to withdraw up to $50,000 from their super accounts for their first home purchase if they win the upcoming election.
However, drawing funds from superannuation poses a risk to long-term retirement savings, which serve as a crucial element of financial security for Australians.
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Instead of direct withdrawal, Tulip suggests using super as collateral for low-deposit loans with higher repayments, to assist first homebuyers without wealthy guarantors.
The risk of lenders seizing super funds is low, limited to foreclosed mortgages.
Under the coalition’s plan, withdrawn super funds must be repaid upon selling the house.
Despite potential lower returns, many see the trade-off of reduced super balance for earlier homeownership as worthwhile.
The coalition aims to provide choice by opening up superannuation for housing, according to home ownership spokesman Andrew Bragg.
However, the policy may drive up housing demand, necessitating measures to boost supply and curb demand.
Housing Minister Clare O’Neil raises concerns about the scheme’s impact on house prices, retirement savings, and its limited assistance to those with lower super balances.
