“Having to return much of the equity to the government at this point, or go back into superannuation, will make it difficult for first-time home buyers to access their next homes.”
Coates adds: “Its impact will be like another stamp duty. This will lead to first home owners renovating and extending their existing home rather than moving to another, meaning it is a constraint on labor mobility.
Labor mobility, or the ability of employees to move from one city to another to find employment, is an important factor in economic flexibility.
Coates believes the proposed scheme will allow first-time homeowners to buy a better home or move to a better suburb, rather than lead to a surge in new buyers entering the market.
The Liberal Party has announced two new housing and pension policies ahead of the federal election this weekend.
The first lowers the age threshold for those who could access the reduction in pension contributions to 55 instead of 60, which qualifies up to 1.3 million households.
The program, which came into effect in 2018, had only attracted around 22,000 owners between July 2018 and May 2021.
The second is the super homebuyer program, which would allow people to invest up to 40% of their super — up to a maximum of $50,000 — to buy their first home. Key aspects of the program include:
- Only for first-time home buyers who must have saved a minimum down payment of 5%;
- Available to homebuyers of any income;
- Couples can use their combined savings; and,
- Applies to new and existing homes and all property prices.
According to APRA, the $50,000 goal, or 40% of a $125,000 super account, isn’t reached by most men until age 45 and women’s age 50. .
Only 7% of people under 35 have $100,000 in super or more. For those aged 35 to 44, it’s less than a third.
“That means there’s probably only about 1.5 million people who probably have enough super to profit from politics,” Dunnin says.
According to government statistics, median home prices last year rose $250,000 to $1.2 million.
“Even assuming you have enough superannuation saved to take full advantage of the deal, the $50,000 super transfer would have only covered about a fifth of the 2021 price hike and only 4% of the price. himself,” Dunnin said.
“While it’s all helpful, the magnitude of these numbers shows that at best it will only help at the margin.”
However, buyer’s agent Phoebe Blamey, director of Clover Financial Solutions, says even small sums can be enough to help many first-time home buyers get into the market.
“It is aimed at fairly young people who can combine it with existing grants, such as the First Home Lenders Guarantee, the Family Home Guarantee and the Rural House Guarantee. This could be instrumental in attracting young buyers to their home and allowing them enough time to complete their super programs.
The potential effect on prices depends on the outlook for economic growth, the effect of rising interest rates and the likely increase in demand as migration levels increase, economists say.
AMP Capital’s chief economist, Shane Oliver, said increased government support on the demand side would raise prices in the long term, but would not prevent an average price decline of between 10% and 15% over the next 18 months due to rising interest rates.
soften the blow
Tim Lawless, head of research at CoreLogic, said great for housing would soften the impact of projected house price increases of between 7% and 10% over the next 18 to 24 months. Other economists, such as consultant Saul Eslake, warn that rising demand will fuel house price inflation.
In New Zealand, where the government introduced a similar scheme, national median house prices rose by around 24% last year, according to the Real Estate Institute of New Zealand.
Senator Jane Hume, Minister for Superannuation and Financial Services, said the proposed scheme is a ‘win-win’ as it helps people buy a home and then receive a return on investment when it is sold and that the program is completed.
But investors are abandoning the super assets of the S&P/ASX 200 in housing will likely experience a 50% decline in returns of around 9% to 6%, based on an analysis of the 10 years to the end of 2021.
“Of course, you can’t live inside your super account,” says Dunnin. “But buying a house as an investment isn’t always what it’s supposed to be. For the average person, MySuper has been a better investment than investing in housing.
MySuper is a default account for people who don’t choose their own super fund when starting a new job.