Should you really be accessing your super to buy a house?

Real Estate experts investigate whether accessing your superannuation to buy a house could do more harm than good.

In an effort to combat the rising cost of living, the former Scott Morrison government had unveiled the Super Home Buyer Scheme. This initiative would see Australian’s have access to up to 40 per cent of their superannuation, to a maximum value of $50,000, to contribute towards the deposit for their first home. While Superannuation funds are criticising the stratagem, builders are welcoming it. With a new government now in parliament, it is unsure whether this plan will come to fruition, however, it is important to know it’s impacts before making a decision to dip into your super.

The Nays

CEO of the Australian Institute of Superannuation Trustees Eva Sheerlinck believes that the implementation of the scheme will reduce asset diversification in retirement accounts. Sheerlinck explains, “First home buyers are being asked to choose between a home and saving for their retirement, they should be able to have both. A first home should not come at the expense of dignity in retirement”. In March 2021, the Association of Superannuation Funds of Australia published a report on the matter. The document outlines the argument that releasing superannuation funds early for housing deposits will increase housing prices, making home ownership further out of reach for low-income earners.

The Yays

On the other hand, supporters of the scheme reason that it does retain the integrity of the retirement savings system. They argue that when a property is sold, the amount contributed from super would be returned to the fund, along with a share of any capital gains. CEO of Master Builders Australia, Denita Wawn says, "The success of this policy is that it is aligned with the intent of superannuation, which is to provide sufficient retirement income. People who own their home, particularly in retirement, are significantly more secure financially that than those who do not”.

What we think

As with any financial dilemma, our advice is to speak to a professional prior to making a decision. As real estate professionals we can see both sides of the debate. In some instances, the scheme has merit when you consider housing as an investment in your future as an alternative to superannuation. On the other hand, it is not unlikely that the plan could boost the cost of housing, which would be beneficial for sellers in the market, however, could erode the scheme’s intention for first homebuyers. What side do you sit on?

Source: 7News