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Allowing first home buyers to withdraw superannuation for house deposits could lead to a significant increase in house prices, according to a new study by Professor Chris Leishman from the University of South Australia.
Allowing first home buyers to withdraw superannuation for house deposits could lead to a significant increase in house prices, according to a new study by Professor Chris Leishman from the University of South Australia. The study, commissioned by the Super Members Council (SMC), found that this policy could hike house prices by 7.4% to 10.3%.
Impact on Property Market:
Study Details:
Professor Leishman's study utilised two econometric models to estimate the price impacts of a proposal allowing first home buyers to withdraw $50,000 from their super for a home deposit. The models, based on extensive housing market research, provided consistent results indicating the policy's inflationary effect on house prices.
Expert Insights:
Professor Leishman emphasised that adding demand to an inelastic market would inevitably drive prices up, making housing less affordable. SMC's estimates suggest significant price increases across major cities, with Sydney seeing an average rise of $123,000, Melbourne $80,000, Brisbane $92,000, and around $84,000 in Perth and Adelaide.
International Evidence:
A similar scheme in New Zealand led to house prices growing at twice the rate of those in Australia and a drop in home ownership rates among first home buyers.
SMC's Position:
SMC CEO Misha Schubert highlighted that early withdrawals of super for house deposits would exacerbate housing affordability issues, pushing more Australians out of the housing market. She warned that this policy would lead to higher mortgage repayments and increased cost-of-living pressures for younger Australians.
Long-term Consequences:
Withdrawing super for house deposits could also reduce retirement savings, increasing future age pension costs for taxpayers. SMC analysis shows that a 30-year-old withdrawing $35,000 from their super today could retire with $195,000 less in today's dollars.
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