This article is from the Australian Property Journal archive
ALLOWING young Australians to raid all their super for a house deposit could cost taxpayers a mammoth $1 trillion, new Deloitte modelling shows, risking higher taxes or cuts to services.
A policy to encourage super withdrawals capped at $50,000 could still create a $300 billion cost to federal coffers by the end of the century.
Commissioned by the Super Members Council and completed by Deloitte, the modelling shows pension costs climb exponentially as first home buyers start to retire with far less super in the coming decades and are forced to rely more heavily on the taxpayer-funded age pension.
Governments may have to increase taxes or cut services to offset the extra fiscal pressure created by the bigger age pension outlays.
The capped super for a house policy could cost taxpayers an extra $8 billion per year, hitting $320 million a year by 2030, more than $3 billion per year at 2060. The Coalition’s plans to allow first home buyers uncapped withdrawals from their super in order to obtain a house deposit would add $2.5 billion a year to the budget by as soon as 2030. Ultimately, it would cost taxpayers an extra $25 billion each year, by around $200 billion in total by 2060 and around $1 trillion by the end of the century.
The Albanese government has pushed back against the proposal.
Table 1: Property price hike from proposal that allows first home buyers to use up to $50,000 from super
| Capital city | Median house price* | Supercharged price hike | Median after price hike | Difference |
| Sydney | $1,128,300 | 7% | $1,206,500 | $78,200 |
| Melbourne | $780,500 | 9% | $849,300 | $68,900 |
| Brisbane | $787,200 | 10% | $865,100 | $77,900 |
| Adelaide | $711,600 | 4% | $740,400 | $28,800 |
| Perth | $660,800 | 13% | $746,800 | $86,100 |
| Weighted five city average | $859,700 | 9% | $934,100 | $74,400 |
Notes: *CoreLogic Hedonic Home Value Index as at 31 December 2023. Prices rounded to the nearest hundred. Property prices encompass both houses and units. First home buyers typically enter the housing market at more affordable price points. However, increased demand from first home buyers will flow through to median property prices as represented in the table.
Source: SMC analysis.
Previous Super Members Council modelling showed the policy would also raise capital city house prices by 9% or $75,000 – forcing future generations of young Australians to wait even longer to buy.
“It’s economically reckless. It sets a policy trap for young Australians because it hikes house prices and blows a Budget blackhole in the decades ahead mostly by pushing up age pension costs – which every taxpayer would pay,” said Super Members Council CEO Misha Schubert.
“Ideas to break the seal on super just leave people with less savings in retirement and a bigger bill for all taxpayers.”
She said a growing body of expert evidence showed the policy would not lift home ownership rates – it would only make housing affordability worse while eroding retirement savings and leaving all Australians a tax bill.
“We all desperately want more Australians to own their own home, but this idea won’t achieve that. It’s unfair to lump the next generations of Australians with a policy that would only make the housing affordability crisis worse by driving up house prices.”
The modelling is based on a microsimulation model accounting for population change, super contributions and balances, tax and pension expenditures.
SMC analysis shows a 30-year-old couple who withdrew $35,000 each from their super could retire with about $195,000 less in today’s dollars.
