Bandaid solution: economists take aim at super to buy

Letting aspiring homebuyers tap into their super, a policy floated by the federal opposition, could push up property prices and fail to help those most in need of a leg-up, say leading economists.

Australians with super balances large enough to buy a home might not necessarily be those most in need of help to exit the rental market, Grattan Institute chief executive Aruna Sathanapally told a national audience on Wednesday.

With borrowing costs high, home prices recording their 15th straight month of gains in April, and elevated rents and other cost of living pressures making it difficult to save a deposit, first home buyers are facing tough conditions.

Declining home ownership among young people and low-income households have been an enduring issue and, at the 2022 federal election, the coalition proposed allowing Australians to withdraw up to $50,000 from their retirement savings to go to buying a first home.

During a speech to the Sydney Institute on Tuesday, Liberal senator and home ownership spokesman Andrew Bragg said the policy was a "good start" and an upcoming Senate report on housing would set out options to "allow Australians to make their own judgements".

Grattan Institute CEO Dr Aruna Sathanapally
Boosting housing supply is a key way to improve home affordability, Dr Aruna Sathanapally says. (Lukas Coch/AAP PHOTOS)

"The simplest demand-side reform is allowing Australians to use their super to buy and stay in their home," Senator Bragg said.

Speaking at the National Press Club on Wednesday, Dr Sathanapally also said demand for housing would push up prices, though acknowledged some existing estimates were "on the high side".

Boosting supply was more important to easing Australia's housing woes, she said.

Impact Economics and Policy lead economist Angela Jackson said allowing people to access their super to buy a home was a "terrible idea" and a "bandaid solution".

"It will just increase prices by even more than they would withdraw, and in the end, they'll just be borrowing more and they'll end up poorer overall because they won't have their super."

"They would have paid more for their house," she said while speaking on the same panel.

The super industry has also pushed back on the idea, with Super Members Council head Misha Schubert calling it "economically reckless" and saying it would nudge home ownership further out of reach for young Australians.

Yet Senator Bragg said home ownership was a vital form of saving for the future.

"The closed minded, ideological approach and the assumption that super is the only vehicle for retirement clearly damages home ownership prospects," he said.

The policy discussion follows another 0.6 per cent lift in national home prices in April, according to CoreLogic.

The real estate data firm's research director, Tim Lawless, said home values were still rising despite higher interest rates, low sentiment, worsening affordability and ongoing cost of living pressures.

Housing values are up 11.1 per cent, or about $78,000, since the trough in January 2023.