It’s being touted as a revolutionary way for young Australians to break into the property market, but Industry Super Australia has criticised a proposal that would allow Aussies to use their superannuation balances to finance their first homes.
The industry body said the total superannuation balance of the average young homebuyer is just $19,739. That’s less than 20 percent of the average Australian housing deposit. For a 10 percent deposit on a Sydney home, the typical young Australian would still need to find another $95,000.
Withdrawing this meagre superannuation sum would be punishing in the long run, with Industry Super Australia suggesting the typical Aussie would lose more than $100,000 from their retirement savings.
These figures are based on the average full-time income of $80,000 a year. For Aussies making the median income of just $50,000, the situation is even more dire. This the reality of many ordinary part-time and casual workers, who would have just $12,295 if they withdrew their entire superannuation balance. By the time they reached the retirement age of 67, early withdrawal would have cost these Aussies $63,665.
That’s bad news for struggling Australians and bad news for the federal government, Industry Super Australia says. The group predicts that if just a third of Australians used their super balances to buy a home, it could cost the government up to $1.5 billion in extra pensions over 10 years to cover the shortfall in retirement savings.
“This is likely conservative as we have allowed only one person’s super withdrawal per first homeowner dwelling as well as a low $50k salary,” Industry Super Australia analysts said.
Admittedly, purchased properties would also likely increase in value. However, Industry Super Australia estimates property gains would be less than half the diminished super value.
“The policy doesn’t seem to have a strong benefit for first homebuyers and will only drive housing prices further up while depleting members’ super balances and overall retirement outcomes,” David Whiteley, the chief executive of Industry Super Australia, told news.com.au.
“The housing affordability crisis will not be resolved by damaging the superannuation system – it will only leave individuals much worse off in retirement.”
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