In the lead up to the Federal Election on Saturday, Prime Minister Scott Morrison has launched a new scheme that aims to address housing affordability.
Under the new Super Home Buyer Scheme, first home buyers can invest up to 40% of their super to help with the purchase of their first home. With a max withdraw amount of $50,000, people will be able to apply for both new and existing homes.
“Our Plan makes it easier for first home buyers to save for a deposit, reducing the time people need to pay rent, and also means a smaller mortgage with less debt and smaller repayments,” said Mr Morrison.
When the house is sold, the invested super amount returns to your superannuation fund, including a share of any capital gain. Starting by 1 July 2023, the new scheme aims to strike a balance between home ownership and retirement security.
“Under the Super Home Buyer Scheme you keep building your super savings – in the home you live in. When you sell, the amount you invested is returned to your super – plus a share of any capital gain,” said Minister for Superannuation, Jane Hume.
The scheme, however, has received a mixed response from experts. Industry SuperFunds has stated that “Allowing couples to take $40,000 from super would send property prices skyrocketing in all state capitals”, particularly in Sydney. But how will it impact South Australian house prices?
Glam spoke to Mark Sheppard of Harcourts Sheppard to discuss how the policy would impact punters in SA looking to buy their first home.
When asked if the Super Home Buyer Scheme would, overall, have a beneficial or detrimental impact on house prices in South Australia, Mr Sheppard indicated that the scheme would have a minimal impact on everyday South Aussies.
“In my opinion at this early stage, I don’t see it will have a substantial impact in regard to house prices in South Australia, due to the fact that the amount of money to be used by first homebuyers from their super is well below the median house price and is capped at $50,000,” said Mr Sheppard.
Mr Sheppard continued to say that only a “minimal amount” of South Australians will fit into the eligibility category, “therefore having minimal impact on house prices”.
Only first home buyers that have already saved a 5% deposit without accessing super can access pull additional funds from their super. Based on a median house price of $565,000, South Australians would need to save approximately $28,250 in order to be eligible for the Super Home Buyer Scheme.
Mr Sheppard did, however, explain that if house prices were to increase, it would affect the cheaper houses on the market.
“This policy may slightly strengthen the lower sector of our housing market in regard to price, with the small increase in numbers engaging in a purchase who without this scheme would not have done,” said Mr Sheppard.
“If a price increase occurs, it will (I believe) affect properties well below the median house price in South Australia.”
Five months ago, The McKell Institute, along with researchers from the Centre for Housing, Urban and Regional Planning at the University of South Australia, compiled a report entitled ‘Mortaging our Future: The Effects of Super for Housing Policies on Australian Property Prices & Financial Health in Retirement’.
The report predicts that “any policy to allow early super release would cause a one-off effect, by bringing forward the purchase decision of private renters who are already saving for a deposit.” Moreover, the report predicted that “an increase in lending would cause prices to increase for four successive quarters.”
To read more, find The McKell Institute Report here.
