The superannuation and property industries have welcomed the suggestion of increased investment in affordable housing, but not allowing first home buyers to access their super.
Yesterday the Treasurer said, in a speech, that he hoped superannuation funds would invest more in affordable housing. On the same day it was reported that the Government was considering allowing first home buyers to direct superannuation into a special savings account.
Industry Super Australia (ISA) welcomed the suggestion of increased opportunities for super funds to invest in expanded affordable housing stock, but said first home buyers accessing super was “short-sighted and counterproductive”.
“ISA rejects other policies floated in the media today by allowing young Australians to dip into their super to buy their first home. Diverting super contributions would cripple super investment returns and push up housing prices,” said an ISA statement.
“Providing greater opportunities for institutional investment – such as Industry Super Funds – to increase affordable housing supply is a step in the right direction.” said Industry Super Australia Director of Public Affairs Matt Linden.
“Industry SuperFunds are willing investors in affordable housing where returns are viable and welcome suggestions of creating new opportunities for institutional investment.”
But Mr Linden said diverting superannuation for housing deposits would leave members worse off in the long run.
“The super system relies heavily on compound interest over a member’s lifetime to drive adequate retirement outcomes, dipping into super when balances are still relatively low will have negative effects on member’s ability to grow their balance and also lead to lack of diversification in their savings,” he said.
“The housing affordability crisis will not be resolved by damaging the superannuation system.”
“It doesn’t matter how the policy is dressed up to make it seem more acceptable, it’s simply a bad policy.”
Glenn Byres, Chief of Housing and Policy for the Property Council of Australia, said the speech by the Treasurer was rightly focused on increasing supply through increasing investment and reducing supply constraints.
“This is where the government should be focused. It should continue to resist ideas like encouraging the use of superannuation for housing, which will simply create new demand pressures for housing.”
The Australian Institute of Superannuation Trustees (AIST) said the plan reportedly under consideration would drive house prices higher and lead to poorer retirement outcomes for young people.
“Tapping into super is completely counter to the Government’s own objective for super,” said AIST CEO Eva Scheerlinck.
“The purpose of super is to enhance people’s capacity to support themselves in retirement, not to throw money at the housing crisis and further drive up prices.”