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Morrison’s home-buying scheme could ‘jack up prices’ by $130,000

·Personal Finance Editor
·2-min read
A sold sign out the front of a home and Scott Morrison smiling.
Morrison's Super Home Buyer Scheme has been slammed by some experts. (Source: Getty)

The Morrison Government’s freshly announced plan to help first home buyers break into the housing market by dipping into their super has been slammed by some experts.

Under the Super Home Buyer Scheme, first home buyers would be able to invest up to 40 per cent of their superannuation, up to a maximum of $50,000, to help with the purchase of their first home.

Industry Super Australia (ISA) has slammed the scheme, saying it will send home prices skyrocketing and trap young people with massive mortgages.

ISA modelling found allowing couples to take just $40,000 from super would send property prices soaring in all state capitals, but the impact would be most severe in Sydney, where the median property price could lift a staggering $134,000.

The analysis found it could hike the nation’s five major capital city median property prices by between 8 and 16 per cent.

“Throwing super into the housing market would be like throwing petrol on a bonfire,” ISA CEO Bernie Dean said.

“It will jack up prices, inflate young people’s mortgages and add to the aged pension, which taxpayers will have to pay for.

“Super is meant to be for people’s retirement, not supercharging house prices and pushing the home ownership dream further away.”

A chart showing the difference in home prices.
(Source: ISA)

Dean said many potential buyers would be locked out of the supercharged market, while others would be lumped with far bigger mortgages.

“Not only will it lock young people into hugely inflated mortgages without any requirement for their own deposit, it will torpedo investment returns for everyone, leading to everyone having far less at retirement,” he said.

“We need sensible solutions to address house prices – like boosting the supply of affordable housing, which will bring prices down and get young people into a home without lumbering workers with higher taxes in the future.”

Difference in retirement

For many people, retirement seems a long way away, while the dream of home ownership is more immediate.

But removing large portions of super savings now could have a massive effect on your future.

The average 30-year-old in Australia on a salary of $78,192 with $46,708 in superannuation savings would retire with around $800,589.

If that person removed 40 per cent of their retirement savings ($18,683) to help purchase a home, they would retire with $727,291 - $73,298 less.

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