Ever wished you could use your super to buy real estate? From July 1 this year, you’ll be able to. As part of the Federal Budget, the Commonwealth announced that first home buyers will be able to tap into their contributions for a first home purchase. First Home Buyers (FHBs) will be able to contribute $15,000 per year (to a total of $30,000) that can be withdrawn for this.
However, the move has sparked debate from all corners – here’s what you need to know.
Those in favour
Each paycheck, Australians stash 9.5 per cent of their earnings into superannuation. Considering there’s $2.2 trillion of accrued superannuation assets nationwide, according to the Association of Superannuation Funds of Australia, it’s no surprise some FHBs want access.
By accessing their super for a home, the government argues that FHBs will be able to have home loan deposits up to 30 per cent larger than with a savings account.
Almost 9 in 10 non-property owners are concerned that they won’t be able to afford their first home, according to CoreLogic’s Perception of Housing Affordability Survey. For many prospective FHBs, superannuation money represents their first viable means of coming up with a deposit.
And those against
On the flip side, many experts say it’s not a good idea. Superannuation has long been considered a compulsory retirement fund, and it doesn’t make sense to let FHBs spend a large portion of it on property – especially at current price points.
“Withdrawing superannuation savings to buy a house – especially when house prices appear to be at the high end of the cycle in major states – will not help first home buyers into the market,” says Sally Loane, the chief executive of the Financial Services Council.
Opponents of the new mandate argue that allowing FHBs access to their super will offer no comprehensive solution. Housing affordability is a nationwide problem, and the solution might need to come from grants and tax breaks.
If you’re looking to buy your first home, talk to me about a first home buyer loan. You can contact me on 0412 809 827 or email firstname.lastname@example.org.