Super could be the answer to Home Affordability

The Government agrees with 62% of you, Super could be the answer to Home Affordability 

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Back in February, I published the article “The answer to Home affordability – superannuation” Click this link to review my article.

We also conducted a Poll amongst our readers, thank you for your response. I thought we would share the following results:

Answer to Home Affordability Superannuation

I applaud the government and
 note that the government has agreed with the concept I put forward in that article of using superannuation to assist first home buyers, by commencing the first home buyers super saving scheme.  This will help first home buyers save for a home deposit faster by salary sacrificing into their super fund from July 1. My numbers may have been different but the principle is the same. On top of existing compulsory super contribution, individuals saving to buy will be able to put a total of $30,000 into their super, or $15,000 maximum per year. Couples can put in a total of $60,000. 

Let me share some of the feedback received from our clients:

  • Yes – “The dream of if first home buyers owning their own home has been all but squashed by the ever rising property prices and banks strict lending criteria. The rise of cost of living has made saving a significant amount of money difficult if not an impossible task. This proposal would work boosting the property market. “

  • No – “No. It’s really not that hard to save up for your first house even on a 60k a year single income. Prices are already over-inflated now, using super to fund houses is only going to make things worse. Negative gearing and CGT concessions are the first things that need to be addressed. People should be discouraged from entering this dirty game of Monopoly which consists of buying several investment properties.”
  • No – “Nothing stopping them selling the house and keeping the super”
  • No – “They’ll have nothing for retirement “
  • No – “I never had that luxury “
  • Yes – “need it”
  • Yes – “Good idea “
  • Yes – “I agree on your statement on retirement funds a long way off for younger people, having access as outlined in your article could kindle greater interest (pardon pun) from an earlier age”
  • Yes – “in the majority of cases most young people would never get an opportunity to save a deposit particularly if they start a family. Getting access to super will certainly speed up the opportunity plus will avoid government greed over coming years where as we see now our super is reducing for this reason. I see policies as brainless when it comes to economics. The only view they have is to fill their own pockets whilst the opportunities ” One Nation ” we need you now.”
  • No – “Another nanny state idea. People can do this voluntarily now, without paying the administration fees similar to super funds – and get better investment returns. If people do not have the psychology or mentality to do their own savings for a deposit, it does not augur well for the rest of their lives – saving for a car, children’s education, electricity bills. House prices go up and down – supply and demand. What next. Do we get developers to set up a savings account for when their property development income goes down? If people don’t want to budget – which may mean giving up something else – car, designer jeans, nights out, why should we be taking over for them?”
  • Yes – “Most first home buyers have many years of employment still ahead of them to continue building their superannuation funds. If they sell the property, the money taken from their super accounts should then be returned. “
  • Yes – “Investment in Real estate is one of the best ways of securing one’s future. It is our money, not the government’s: why should 1st home buyers, or any home buyers, not have this option? We should have some control over our funds, not just having it at the mercy of costly and sometimes corrupt superannuation entities, and/or under threat of government caveat at some later time if economic crises again prevail.”
  • No – “Super is paid by the employer on behalf of the employee above their gross income for retirement, it is not a deduction from their income. Sadly Australia’s problem is that we have been encouraged for too long to live beyond our means, which has effectively taught us how not to save. It seems we want our last home first. It also is interesting that it is often he case that those seemingly struggling to save a deposit (which can actually be a lot less than 20% and with the various subsidies available the costs are considerably lower than 5%) own two new cars, the biggest TV available and the latest mobile phone. I could go on and on but the sooner people realize they have to actually work for what they want the better off the country will be. If an employee doesn’t make a profit for the employer then why should the employer bother to hire, how is it feasible to pay someone more to go on holidays than when they are actually producing? “
  • Yes – “better value in owning property”
  • No – “Many do not have understanding and diligence to work this money and build on it. It should be untouchable enforced savings that is available only when it is really needed – retirement. People need to learn to cut out extravagances and value saving.”

  • No – “You are robbing Peter to pay Paul. Superannuation needs to grow so that it supports people in the future thus reducing the pressure on them and the government when in retirement. The younger generation needs to be like us we got no hand outs from the government and had to buy where we could afford. Thus we bought out in the suburbs and built our equity then moved to where we wanted to be as and when we could afford it. We still use the second hand kitchen table we got when we were married 30 odd years ago, some (not all) people today want everything immediately and thus complain that they can’t get into a market. Grow up and look at a different market.”
  • Yes – “Enable easier access to funds for deposit and assorted costs.”
  • No – “they should rent if they can’t afford to buy and invest in shares or managed funds. “
  • Yes – “Sounds similar to the Singapore scheme which has worked well for many years.”
  • Yes – “No brainer. “
  • Not Sure/ Undecided – “After 10 years the owners mortgage is larger than on day 1. But they do have 50 percent equity… not sure.”
  • Yes – “I agree to the approach however it is very unlikely that young people will have very much in their super to access for this purpose.”
  • No – “1st – as this will just add to the home price increases (as did the first home owners grants) and 2nd they can loose their equity in their home due to a whole range of issues ( home prices fall, bad investment/spending , addiction habits of a partner) – it really is a dumb idea”
  • Yes – “I don’t only think this should be available to first home buyers. House affordability is a bigger issue than just first home buyers. It should be available to any adult who has lost their home through a traumatic experience, such as divorce. I am a divorcee who is locked out of the market now after losing my house when my marriage broke up. Because I owned that property I am no longer eligible for a lot of benefits that first home buyers receive. So, now I am expected to come up with 20% deposit while paying rent? The maths on this does not add up. Super should be able to be accessed for a property that you live in, on the condition that if it is sold, that money loaned from the super is payed back into the account to ensure it does not leak into other spending. “
  • Not Sure/ Undecided – “Im not sure young people would have enough in there super to use as a deposit. I think a better option would be to remove stamp duty or a similar strategy”

  • No – “The First home buyers are usually not experienced enough when it comes to making significant finance decision like purchasing the property. Wrong decision might cost them to not having funds when it will come to retirement. They have to learn to save and sacrifice something in life in order to have stable future. “
  • Yes – “I feel it is pointless having money sitting in super, when it put first home buyers in the market earlier. It would also set them in the right direction towards investing sooner as it could be used for deposit “
  • Yes – “Stimulation of housing market is a key to the economy”
  • Yes – “For the young there main investment is the home super is too far away and too complicated “
  • Yes – “Superannuation funds need to be invested. Hence there is a large amount of super money available and real estate is arguably a safer investment than the share market where a lot of super money goes”
  • Yes – “Most people see their family home as a form of super anyway with the view to downsize when they retire. It means a different way of same thinking.”
  • Yes – “Traditionally house prices double every 7 to 14 years so people need to own a home asap as their return on investment being their cash on cash return assuming a 25% deposit including s/d with say 7% annualized capital growth is in excess of 30% p.a. compounding no bank will ever give them that and neither will any super fund and being a PPR it is tax free. “
  • No – “Unless the person using their superannuation for the deposit and costs is very young, they may not have enough time to save for retirement.”

Yes yes yes! My partner and I talk about the possibility of using our Super for our first home all the time. The dream is so far away because of the reserve put on the deposit. I only wish this were a reality.

Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.

Related:  Super Funds Performance: Why Some Are Not So Super At All

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2 responses to “The Government agrees with 62% of you, Super could be the answer to Home Affordability ”

  1. Karen Ley says:

    Yes – If I am correct, the government is not actually say use your super, it is simply using the super fund as a vehicle to hold the additional ‘saving’ with the added benefit of tax concessions through salary sacrificing. First home buyers will only have access to the quarantined savings to purchase their first home. It is their savings not their super. If they don’t buy a house, I assume it becomes part of their super which would become pat of their total super on retirement??? That is my understanding, so if it helps fast track saving whether for a house or for long term super it is a good thing and provides incentive and hope for first home buyers.

    • Chan & Naylor says:

      Thank you for your response Karen. You are Correct, Super to be used simply as a vehicle to encourage savings

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