We can’t stop talking about housing affordability right now and all eyes are on how the Federal Government will tackle the issue in its May budget.
On Tuesday, while speaking to Sky News, the Assistant Treasurer Michael Sukkar refused to rule out allowing people to dip into their superannuation in order to fund the purchase of their first home.
So, if you’re one of the many Australians who are desperately looking for a way into the housing market, should you be cheering this policy idea or not?
This isn’t the first time we’ve heard this
Superannuation became compulsory in 1992 and ever since then it’s been suggested that people should be allowed to use their contributions to buy a house — in fact, the policy had bipartisan support at the 1993 election.
The idea was later dumped by prime minister Paul Keating, but in recent years a number of prominent politicians have suggested it could make a comeback.
Both the current Prime Minister and Treasurer dismissed the idea in the past, with Malcolm Turnbull calling it “thoroughly bad” in 2015. Labor isn’t on board, either.
It’s easy to see the appeal
People might already have enough money for a house deposit — it’s just that they’re not allowed to touch it because it’s tied up in their superannuation fund.
And from the Federal Government’s perspective, it’d essentially be giving people their own money which means it could solve the affordability crisis without taking a hit to the budget (for now, at least).
Surely a win-win situation …
The problem is, it won’t make houses more affordable
It’s simple economics: if you increase demand without increasing supply, prices go up.
Allowing people to access their super for a deposit means more people can afford to buy now — more people in the market equals more demand and higher prices.
It will also mean people have more money up front to spend on a house, further driving prices up.
Mr Sukkar acknowledged as much, saying that the Howard government’s $7,000 first home owners grant could have been paid straight to property developers because “all it did was pump a whole lot of extra money into the market”.
He said that any measures to increase demand would need to be “finely calibrated” with policies to increase supply.