Getting a first home buyer loan is an exciting time, but it also comes with a distinct set of challenges. For one, you’ve got to save up for a deposit and make sure you’ve got the cashflow to serve the loan over its lifetime. It’s interesting to note, then, that the idea of accessing super to purchase a home has reemerged after the release of the Treasury’s 2015 Intergenerational Report. Treasurer Joe Hockey raised the point to varying support and it has spurred intense debate from both sides of the fence.
For super discussion
Many housing industry commentators have welcomed the conversation. House prices are rising rapidly, particularly in Sydney, where SQM Research recorded an astounding 22.7 per cent increase in values over the past 3 years to the week ending March 17. At the same time, the proportion of first home buyers in the market is getting smaller. The Housing Industry Association (HIA) said that allowing first home buyers to use their super funds for a deposit on a home loancould be the difference between home ownership or a life of renting.
“Treasurer Hockey is right to flag the ongoing housing affordability challenges facing first home buyers,” said HIA Chief Executive Industry Policy and Media Relations, Graham Wolfe, in a March 10 statement.
“If superannuation is about preparing for retirement, what better way is there of achieving this goal than opening the door to home ownership.”
First time purchasers only accounted for 14.2 per cent of of the total owner-occupied housing finance commitments in January, according to the Real Estate Institute of Australia. However, letting first time purchasers dip into their retirement savings would theoretically make it more affordable for young people to obtain a home loan to purchase property.
Against super suggestion
On the other side of the coin are members of the superannuation industry. The Association of Superannuation Funds of Australia (ASFA) announced that it is vehemently against the proposal, pointing out that having access to super savings at this early stage could drastically undermine young peoples’ security in retirement.
ASFA CEO Ms Pauline Vamos did agree that affordability is an issue that needs to be at the forefront of discussion, but said there are more effective policy measures that can address this.
“If people take money out of their super, it’s likely at some point they will replace it through salary sacrifice, make additional contributions and receive a substantial tax concession for this,” she said in a March 9 release.
“Housing affordability is best addressed through policy measures directed at making housing more affordable, including through the release of land, rezoning, the lowering of stamp duty, the funding of assisted housing and other measures designed to reduce costs and increase supply.”
Whatever side of the fence you fall on, this debate is a sound reminder to get advice on first home loan options that suit your needs.
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