Accessing Super to a Buy Home
Well intended calls are regularly made, particularly in the lead up to the Federal Budget, for first home buyers to be able to access their superannuation accounts to buy a property.
With sky rocketing property prices, most particularly in the east coast capital cities of Australia, accessing an investment balance for a purpose of a far too distant retirement need to help fund the purchase of a home appears very attractive.
But it is entirely counterproductive and short sighted.
Unfortunately, Australians have long demonstrated an inability to save for their retirement, figuring that after they have worked hard all of their lives they can rely upon the Government for their pension in retirement years. More unfortunately, too many Australians do not work hard enough or long enough to justify this, particularly given more years are spent in retirement due to health and medical advances.
This is why superannuation was brought in, in the first place. As part of a broader package negotiated with the unions to mitigate inflation inducing wage increases, wages are redirected to long term savings accounts to build private retirement balances. To help justify to the electorate this diversion of wages from current consumption to future consumption, tax incentives were built into the system to justify superannuation being locked up until a ‘condition of release’ is achieved.
Allowing young first home buyers to almost unanimously access meager superannuation balances to purchase a home, would cause house prices to increase, which would be great for the vendors – particularly wealthy property investors and current superannuants.
It would also give an unfair advantage to those accessing superannuation, to those who preferred to enjoy the benefit of long term compounding of their superannuation balances over decades.
Further, the broader population would be more likely to need to fund a future pension for those first home buyers compromise their current superannuation balances.
The short-term, counterproductive and long term damaging solution, is to allow first home buyers to obliterate their superannuation balances.
But there are several better (but politically more difficult) options to help first home buyers.