This article is from the Australian Property Journal archive
WITH the federal election reaching the final mile, the race to pitch to voters impacted by the housing crisis intensified further with the Coalition unveiling a controversial policy to allow Australians to access up to $50,000 in superannuation to get into the property market, which opponents argue would drive up house prices by up to 16%.
At the Coalition’s official campaign launch in Brisbane yesterday, Prime Minister Scott Morrison also announced changes to the housing policy, allowing Australians over the age of 55 top up $300,000 into their superannuation from the sale of their home. The scheme will be available to 1.3 million empty nesters and pensioners. However, the rules do not require they downsize per se or buy a smaller home, meaning this is an incentive to boost their super by selling their primary residence if they have owned for 10 or more years.
Morrison said the policy would give Australians more choice to decide how they want to live the next stage of their life by removing financial barriers for people wanting to downsize their home.
“By removing barriers for Australians downsizing to residences that better suit their needs and lifestyle, we are helping to free up larger homes for younger families,” he added.
Minister for Superannuation Jane Hume said this is another in a line of reforms to make super more flexible.
This announcement comes as housing affordability becomes a focal point at this year’s election. Labor said it will match this policy.
Earlier this month Labor leader Anthony Albanese pledged to help Australians on low and middle incomes buy a home via the “Help to Buy” initiative, the centrepiece of its housing policy, as the major political parties pitch to first homebuyers at the election.
Recent research conducted for the Property Council found 70% of voters feared the dream of home ownership was now out of reach for most Australians, with almost 90% of aspiring home owners saying housing affordability would be one of the most important issues in determining their vote. Marginal seat voters in multiple states have the issue firmly on their radar ahead of the upcoming federal election. A majority of voters in Coalition-held Bass in Tasmania, Longman in Queensland and Flinders in Victoria, and Labor’s Gilmore in NSW, believe the federal government has not done enough to address housing affordability nor is there enough social housing.
However the PM immediately drew criticisms last night by announcing a policy to allow first homebuyers to access up to 40% of their retirement nest egg, up to $50,000, in the Super Home Buyer Scheme to buy a home. Australians need to save for at least eight years for a deposit, according to Domain, while over 40% of voters in most Sydney, Brisbane and Melbourne electorates are experiencing rent and mortgage stress.
The move is expected to be popular as the government’s COVID-19 Early Release Scheme showed more than 3 million Australians withdrew $10,000 from their super, totalling $36.4 billion.
If re-elected the government will introduce the Super Home Buyer Scheme from July 01 2023. The programme will only be open to first homebuyer who have saved at least 5% of the deposit and will live in the home for at least 12 months. They must first apply to the Australian Tax Office for approval to withdraw up to 40% of their super.
And if they sell the home, they must return the cash to their super as well a share of the capital gains.
“It’s your home and it’s your super,” Morrison said.
But opponents of this policy argue it will drive up house prices and does not fix the underlying issue, which is housing supply.
Labor housing spokesman Jason Clare said the policy would add “fuel on the fire” by pushing up prices.
Both the industry super and retail super funds oppose the scheme, also arguing it would drive up house prices.
Industry Super Australia chief executive Bernie Dean said the use of super savings would drive up property prices by 16% in Sydney, 9% in Melbourne, 8% in Brisbane and 14% in Perth.
The retail super funds body, the Financial Services Council, said the scheme would undermine retirement savings.
“The FSC is concerned the government’s proposal weakens the sole purpose of superannuation, which is to provide higher standards of living in retirement,” chief executive Blake Briggs said. “The government has an obligation to do more to boost supply, otherwise unleashing superannuation savings on the housing market risks driving prices higher still.”
Meanwhile the Urban Taskforce Australia CEO Tom Forrest criticised both major political parties “lazy” housing policies.
Forrest said the Coalition and Labor’s policies ignored the housing supply crisis and instead went with the politically easy option of offering cash handouts.
“Offering handouts, whether that is access to government funding through a home ownership equity scheme, or early access to up to $50,000 of your superannuation balance does nothing more than push up the price of housing, unless there is a significant stimulus for supply.
“Demand stimulus (or dressed up cash handouts) represent lazy politics. The Parliamentary Inquiry into Housing Affordability and Housing Supply, chaired by Jason Falinski, highlighted the importance of freeing up the over regulation of housing supply and the costs associated with planning regulation across our nation.
“This is intergenerational theft. But both political parties are missing the mark by offering up access to cash to solve this problem. All this will do is waste government funds (or diminish private super accounts) without providing one extra home. These policies actually make the problem worse.” Forrest said.
Forrest said that this election was an opportunity for Australia’s political leaders to give states and local government incentives to improve planning system efficiency and create an over-supply of housing approvals.
“The good news is that housing policy is finally front and centre of the political discourse in Australia. While both parties are getting their head around ways to resolve the issue – at least there is finally focus.” said Forrest.
But it was not all bad for the government, some sectors of the property industry welcomed the announcement. Retirement Living Council of the Property Council of Australia executive director Ben Myers said the policy will allow older Australians to unlock their home equity and get the country on a critical path to “right-sizing”.
“We know many older Australians face barriers to right-sizing their housing and today’s announcement will provide real incentives to encourage people to unlock their home equity and move into a home that supports them to live independently for longer.
“Encouraging older Australians to right-size, not only contributes to healthier ageing, it’s also one of the smartest and fastest ways a government can boost much needed housing supply for families,” he added.
Myers said there was still a need for broader action on housing supply, especially to encourage the supply of purpose-built age-friendly communities, to ensure Australians have affordable and accessible choices.
He added that industry research showed that retirement village residents, on average, entered aged care up to five years later than people moving from suburban homes. They also reported lower than average GP visits and hospital stays.
“We know that Australians living in retirement communities are living independently for longer, and they are saving governments over $2 billion annually in reduced health and aged care costs,” he said. “That’s another reason why encouraging right-sizing is a win for all Australians,”
Property Council chief executive Ken Morrison said helping older Australians find more suitable homes made sense, but housing supply remained a pressing need and more action was required by all governments on the issue.
“The government’s own official forecasts predict that housing supply is set to drop by around 35% right at the time population growth is resuming, with the National Housing Finance and Investment Corporation forecasting that by 2032 Australia will be 163,400 homes short of demand.
“While targeted demand-side policies to support aspiring homebuyers are welcome, a supply crunch is coming and this needs be the focus for whoever wins government next Saturday.” Morrison concluded.
