Super Home Buyer Scheme could reduce super, increase home ownership

So, is this the right way to organize society? What is the right balance between the money invested in the property and the super? How much should Australians be forced to sacrifice today to fund their retirement future? 9%? 12%?

Maybe a little encouragement to sacrifice current consumption to fund future consumption isn’t a bad thing, especially if it just means fewer vacations or eating out.

But it’s not so good when young Australians increasingly lack the funds to buy one of the most basic consumer needs of all: a house to live in.

Home ownership is the little-known fourth pillar of our retirement savings system, alongside old-age pensions, super compulsory and voluntary savings.

But as a pillar, it crumbles.

One of the best retirement safeguards is to make sure you own a home and aren’t paying rent yet.


The assumption that most workers will achieve this, having purchased and paid for a primary place of residence in retirement, is a key assumption built into our system. The old-age pension is only sufficient if you don’t also try to pay rent.

But the biggest financial benefit by far for most Aussies in buying a home is that it provides access to the wonders of ‘leverage’. In other words, the bank lends you a huge sum of money to immediately own – and be entitled to any earnings on – a large amount of assets.

There is no other asset class on which banks will lend so much, or to such a wide range of people. Nor is there any other asset class on which you will pay no tax on any capital appreciation.

I think young people should start a conversation about whether they want more of their money to fund their retirement rather than keeping more in their pockets to buy property.

By far the easiest way to achieve this would be to simply prevent the mandatory super guarantee from increasing to 12%.

Instead, the Coalition’s entire political approach is a complicated game of hokey pokey. You are forced to put more money into the super, then withdraw super money, then reinvest super money when selling the house. Presumably, a policy to help homebuyers “shake it all up” is pending.

As others have observed, this new Coalition policy, by facilitating access to large lump sums, should only drive up real estate prices in the short term.

Labor, it should be noted, has a particular blind spot when it comes to super. Keating is revered in the party for inventing super and apparently no attempt to raise mandatory dues is ever too much.


In truth, youngsters must yearn to both save a down payment for a house and contribute to a comfortable retirement.

By far the best thing politicians could do to really help them would be to stop forcing an increasing amount of their salaries into super, while addressing the underlying forces that are pushing required deposits up, to both increasing the supply of new homes and reducing investor demand. for them.

But I’ve been advocating this for almost two decades now.

Ah, the hokey pokey.

About Wanda G. Warren

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