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Allowing the super for home deposits would trigger another boom in house prices [LINK CORRECTED]

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Scott Morrison’s plan to let people spend their retirement savings on home deposit would reignite a house price boom, increase household debt and deplete retirement savings, according to the latest detailed modeling conducted by the country’s leading real estate economists.

A McKell Institute reportProduced in collaboration with researchers from the Center for Housing, Urban and Regional Planning at the University of South Australia, Mortgaging Our Future, published just five months ago, used sophisticated modeling to project the effect on the housing market if Australians had access to their super to use on a home deposit – a policy announced by Scott Morrison at the Coalition’s campaign launch today.

The report’s modeling found that allowing potential buyers access to $40,000 in superannuation would drive up house prices and increase housing debt. The government’s proposal would provide access to up to $50,000 of the superannuation.

City

New debt ($bn)

Median home price increase ($) – March 2022

sydney

23.3

45,342

melbourne

25.4

31,126

Brisbane

6.9

99,346

Adelaide

4.8

84,534

Perth

11.2

57,413

Hobart

1.3

92,796

TOTAL

73.6

The median house price in Sydney would increase by more than $40,000, while in Brisbane it would increase by almost $100,000.

In addition, an additional $25 billion in debt would be incurred by Melbourne households, while debt in Sydney would rise by $23 billion.

The report also found that Australians who choose to invest in a real estate deposit instead of keeping their money invested in a super fund will retire worse off, as average super fund returns are higher than average growth. long-term property prices.

McKell Institute executive director Michael Buckland said the data showed the policy amounted to a new intergenerational transfer of wealth from young people to existing and older owners.

“Homes are already unaffordable for millions of Australians and Scott Morrison’s proposal would add fuel to the fire,” Mr Buckland said.

“What first-time buyers desperately need is some calm in the overheated housing market. This proposal would trigger another spiral in house prices, robbing young people of their super savings and making virtually no money. nothing to improve real affordability.

“Super for housing would essentially mean first-time home buyers handing over their hard-earned retirement savings to existing homeowners, when they would be much better off investing that money in super.

“Young Australians need their retirement savings quarantined and funded. To use these savings to fuel another housing price frenzy would be political folly.

/Public release. This material from the original organization/authors may be ad hoc in nature, edited for clarity, style and length. The views and opinions expressed are those of the authors.