Key PointsEarly access to superannuation could worsen housing affordability for Australians.Analysis of 300,000 super balances shows that Australians lack the funds to afford their first home.The scheme, proposed by the Opposition since 2022, is more likely to benefit higher income households than lower income households.
Early access to superannuation will not help more Australians buy their first home but could instead worsen the housing crisis, according to new research.
Youth in Australia are finding it increasingly difficult to enter the housing market. Between 2019 and 2020, only one-third of households under 35 owned their home, a decrease from 48% in 1994.
The federal Opposition has suggested allowing Australians to use their retirement savings — up to $50,000 — to purchase their first home.
However, a study by the Association of Superannuation Funds of Australia (ASFA) indicates that using superannuation for a deposit is insufficient to overcome the barrier of buying a first home.
ASFA analyzed 300,000 taxpayers and found that no individuals aged 25 to 34 in Sydney could afford a deposit on an average house or unit using only their superannuation.
Melbourne was not much better, as only one couple in the top 20% of superannuation balance holders could cover an entire deposit with their retirement savings.
What is the potential impact on housing affordability?
The report suggests that the policy could make home ownership even more challenging for low-income households and worsen housing unaffordability on a larger scale.
Individuals with low incomes would have limited access to funds as their superannuation balances are typically lower.
According to ASFA, the scheme is more likely to benefit high-income earners and could potentially increase their borrowing capacity.
This could lead to higher bids and impact housing prices. ASFA cautions against increasing “demand-side pressure” without addressing supply issues.
ASFA’s CEO Mary Delahunty stated that tapping into superannuation will not resolve the housing crisis.
“While using superannuation may seem like a tempting option, our analysis shows that it will only benefit those young individuals who are already more likely to afford a home, without addressing the supply issues causing our housing crisis,” she explained.
Most young people have lower superannuation balances compared to older Australians, making them potentially unable to afford homes under this policy.
Furthermore, withdrawing from superannuation is likely to drive up house prices by increasing demand without addressing supply, making home ownership even more difficult for young Australians.
“Using superannuation is not a cure-all for Australia’s housing crisis,” Delahunty emphasized.
ASFA’s report suggests that the housing crisis must be addressed comprehensively.
The lack of unified housing policy across different levels of government must be tackled and replaced with a coordinated national strategy.
