Many leading economists say allowing first home buyers to draw their superannuation will eventually push house prices higher. But are Australians better off leaving their money in their super fund or using it for a home deposit?
No-one can predict if in a decade from now house prices will have risen faster than superannuation savings.
Economists also argue policymakers need to consider the implications of measures that drain people’s savings for retirement (and in turn could lead to more people in future relying on the age pension) and that fuel demand for housing.
It now takes more than a decade for a first home buyer to save a deposit for a first home.
And by the time they do, they are almost into their 40s (ABS data shows the average age of a first home buyer is now 36).
Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.A decade of savings still isn’t enough for most first home buyers(Nassim Khadem)
The latest ABS data shows the average super balance for 35-44-year-olds was $62,400 (all genders).
A breakdown in gender shows it is typically higher (at $80,000) for males and lower (at $53,000) for females.
But for 25-to-34-year-olds, the average super balance is far lower, at $25,000. (At this early stage the balance between genders is similar — $25,500 average for males, and $22,000 for females).
So most young people do not have a huge amount saved for retirement, and taking out $50,000 would, for many of them, entirely deplete their super funds.
But let’s assume that a first home buyer does have $50,000 to withdraw.
And let’s assume there’s a re-elected Coalition government, and on July 2023 they allow first home buyers to access up to 40 per cent of their superannuation, to a maximum of $50,000.
Would a first home buyer, then, be better off leaving their money in their super fund and allowing it to compound over time?
Or would they be better off pulling it out and putting towards their first home, and then selling it …….