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Minister concedes super home deposit plan will push up house prices

Politics

The Coalition’s housing policy has been rubbished as one of the worst in 30 years while a government minister has admitted house prices would temporarily go up in the short term as a result of the scheme.

 

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Federal Labor has also attacked the government’s new policy allowing first-home buyers to dip into their superannuation to get into the housing market.

But Prime Minister Scott Morrison says anyone opposing the plan is doing so because they don’t see superannuation as people’s own money to use as they want.

“It’s your money, it’s in your super, you earned it, you saved it,” he said on 4BC radio on Monday.

“We want that to be able to help you get in your own home so you don’t have to sit on the sidelines and watch house prices rise and run away from you.”

Morrison used the Liberal Party’s official election campaign launch on Sunday to announce first home buyers will be able to access 40 per cent of their superannuation up to $50,000 to buy a house.

Leading economist Saul Eslake said it was “a contender for one of the worst housing policy decisions of the last 30 years or so”.

He said it would do nothing to address the issues of affordability.

“My initial reaction was that I wanted to scream that this reckless inflation of house prices must stop,” he said.

Liberal campaign spokeswoman and superannuation minister Jane Hume said she expected there would be an increase in house prices.

“I would imagine that there would be a lot of people that bring forward their decision to buy a house so I would imagine in the short term you might see a bump in house prices,” she told ABC Radio National on Monday.

“But that doesn’t play out the long term benefits of more home ownership, fewer people relying on rent … there are so many factors that play into the housing market.”

Labor housing spokesperson Jason Clare said the policy would drive up prices and hurt young Australians, after the former prime minister and super architect Paul Keating called it a “full-frontal assault” on the system.

Clare branded the policy “a last desperate act from a dying government”.

“This would be like adding kerosene to a fire. Their super will supercharge the property prices,” he said.

“You shouldn’t have to raid your super to buy a home.”

Clare also raised past opposition to similar schemes by Liberal stalwarts John Howard and Peter Costello as well as Malcolm Turnbull and Mathias Cormann.

“John Howard said super is for retirement, and he’s right,” Mr Clare said.

“That last great generation of Liberal leaders who could count – Howard, Costello, Turnbull, Cormann – have all reached the conclusion that this policy won’t work.”

Morrison said the policy would put Australians in charge of their own superannuation and give people retirement security.

“The evidence shows that the best thing we can do to help Australians achieve financial security in their retirement is to help them own their own home,” he said.

Homeowners would then return the initial super amount withdrawn plus an equivalent proportion of the capital gain or loss when they eventually sell the house.

“This will responsibly ensure that the majority of your super remains in your existing fund and maintains the diversification of your savings,” Morrison said.

“But this will be a game-changer for thousands of Australian families who sit and look at that money on their balance and go, ‘if only I had that to help me now’.”

The Australian Institute of Superannuation Trustees said the coalition’s plan would drive up house prices and undermine the core purpose of the super system.

“Using super as a deposit will drive up property prices, leaving Australians with higher debt and depleted retirement savings,” AIST CEO Eva Scheerlinck said.

“Superannuation … is not a piggy bank the government can open at its convenience to avoid dealing with the real systemic issues facing first home buyers.”

A McKell Institute report points to a $45,352 increase in the median house price in Sydney and by almost $100,000 in Brisbane, under the policy.

The report also found Australians who chose to invest in a house deposit instead of keeping their money invested in super would retire worse off, because the average returns in a super fund are superior to the average growth in house prices over the long term.

The Real Estate Institute of Queensland has backed the Coalition’s promised housing policies and has also endorsed Labor’s plan.

REIQ Antonia Mercorella said the housing initiatives announced yesterday Liberals demonstrated an innovative approach and were welcome additions in the Coalition’s election campaign.

“This initiative will help older Australians to invest in their superannuation and improve their future financial security while freeing up housing stock for younger, growing Australian families. It’s win-win for everyone,” Mercorella said.

“The REIQ has long supported ‘right-sizing’ incentives – In the lead up to the last Queensland state election, we called for stamp duty exemptions for older Queenslanders arguing that the removal of this costly tax would provide senior citizens with an opportunity to move into more age-appropriate housing and create more housing options for young, growing families.”

The Association of Superannuation Funds of Australia said the Coalition’s policy would be ineffective in improving affordability and would significantly impact the retirement of those who took up the initiative.

 

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