Should first home buyers be able to use super to buy a house? | The Business | ABC News
With home ownership further out of reach than ever for younger Australians, some are pondering whether their locked-away retirement funds would be better off used now, to buy a house. It’s a policy being put forward by the Coalition, ahead of the federal election on May 3. The scheme proposes that Australians should be allowed to take up to $50,000, or 40 per cent, of their superannuation fund to buy their first home but it would need to be returned to the superannuation account when the house is sold. Some economists who study the housing market don’t think withdrawing superannuation for purchasing a property is the best use of those funds. Professor Rachel ViforJ from Curtin University thinks it will push up prices and could also exacerbate inequality. Centre for Independent Studies chief economist Peter Tulip thinks the policy will mainly help buyers, who have difficulty saving for a deposit. Mr Tulip says super could be used to guarantee home loans, similar to the so-called “Bank of Mum and Dad’, where parents act as guarantor with their existing assets. Modelling by the Super Members Council shows someone withdrawing $50,000 at the age 30 would lower their superannuation balance at retirement by $135,500. Using super to purchase homes is among a suite of measures unveiled by the major parties targetting first home buyers. The coalition has also announced a plan to deduct mortgage interest payments on new homes, while Labor is proposing to help them buy properties with just a 5 per cent deposit, plus building 100,000 new homes for first home buyers. Economists say there’s no shortage of ideas to tackle the housing crisis. Most agree on the need to build more homes, and some are calling for the political will to end tax breaks for investors like negative gearing.
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