A question posed on a community platform has led to a lively discussion about whether first home buyers should be allowed to access their superannuation before retirement to pay for a deposit.
The use of superannuation to fund property, particularly for first home buyers, has been up for debate for some time.
In response to a question on the topic on community platform simplyaskit, which allows consumers to have finance and credit-related questions answered by experts, mortgage brokers have shared their thoughts on the implications of such a scheme.
According to mortgage broker Michael Nasr from Merrylands, Sydney, it could “add fuel to the fire” of an already-hot property market. “It will lead to increased prices with no solution to the problem,” he said.
Glendenning mortgage broker Ken Olds emphasised that lobbyists should instead be turning their sights to the abolition of stamp duty.
“To have sufficient funds in superannuation to do this would require at least 10 years in the workforce. If this is the only way to demonstrate savings, then potentially the loan is unaffordable for that individual,” he pointed out.
“What the lobbyists should be working on is the abolition of stamp duty. This is the most unfair tax ever, where the ones who can afford a home loan pay double tax.”
Meanwhile, Sydney-based accountant Damien Linn said that with “careful management” the strategy could potentially be implemented effectively.
“I think with careful management, allowing people to access some of their super to buy their first home would benefit the wider population, with some key features: 1) this withdrawal is offered once and once only 2) the home loan should have a maximum LVR of say 80 per cent – to provide some extra protection and make it easier to afford and thus reducing the risk of loan default 3) the loan should be a principal and interest loan, and 4) there should be a cap on the value of the home, indexed to the state it's purchased in,” he said.
“Maybe a one-off helping hand from super can help correct the imbalance. It just has to be done very, very carefully.”
These comments come after late last month, speaking as part of a panel during an ABC Lateline special on housing affordability, former liberal leader John Hewson called it out as “not much of a solution”.
“Looking at superannuation … I can see that some people would argue that if you could access the money early on and invest it, you’d probably do better than you would in terms of investing your superannuation, which is generally pretty poorly managed in this country, but having said that, I’d like to keep them separate,” he said.
“I don’t think it’s much of a solution. The average balances for first home buyers are very small, they’re not going to make much difference, so I don’t think I would undo the superannuation system just for the sake of that small benefit.”
“There’s no silver bullet here,” he concluded. “The solution is going to be multi-faceted, it’s going to include negative gearing, capital gains tax and a host of other measures on the supply and demand side.”