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Super access could make it worse for first home buyers

Super access could make it worse for first home buyers

Role for super to increase affordable housing supply – not add to demand.

Industry Super Australia (ISA) welcomed policy suggestions by the Federal Government that would increase opportunities for superfund investment to expand affordable housing stock, but pumping up demand by allowing first home buyers to tap into their super would be short-sighted and counterproductive.Treasurer Scott Morrison outlined in his speech to the Australian Housing and Urban Research Institute (AHURI) that the government is looking into policies that would provide opportunities for institutional investment to increase affordable housing supply.

However, ISA rejects other policies floated in the media today by allowing young Australians to dip into their super to buy their first home. Diverting super contributions would cripple super investment returns and push up housing prices.

“Providing greater opportunities for institutional investment – such as Industry SuperFunds – to increase affordable housing supply is a step in the right direction” said Industry Super Australia Director of Public Affairs Matt Linden.

“Tackling the housing affordability crisis should rightly be a top priority for the Government with the policy focus being on increasing supply though land release, regulation and reviewing tax subsidies that fuel investment.

“Industry SuperFunds are willing investors in affordable housing where returns are viable and welcome suggestions of creating new opportunities for institutional investment.”

Mr Linden said that other suggestions to tackle the housing crisis such as diverting super for housing deposits would increase prices and cripple super returns leaving members worse off in the long run.

“The super system relies heavily on compound interest over a member’s lifetime to drive adequate retirement outcomes, dipping into super when balances are still relatively low will have negative effects on member’s ability to grow their balance and also lead to lack of diversification in their savings.

“The housing affordability crisis will not be resolved by damaging the superannuation system.

“It doesn’t matter how the policy is dressed up to make it seem more acceptable, it’s simply a bad policy” he said.

The proposal is also inconsistent with the Government’s proposed objective of super announced in 2016 which is “to provide income in retirement to substitute or supplement the age pension”.

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