Why early super fund access is not the solution to Australia's housing crisis

The federal Opposition has suggested dipping into superannuation funds early so more people can buy a home. However, data shows this could worsen housing affordability.

In 2000, the median house price was about four times the average full-time salary. 23 years later it's now eight times the mean income. Source: AAP / James Ross

Key Points

• Early access to superannuation could make housing affordability for Australians worse.
• Analysis of 300,000 super balances show Australians do not have enough money to afford their first home.
• The scheme, proposed by the Opposition since 2022, is more likely to benefit higher than lower income households.

Early access to superannuation will not help more Australians buy their first home but could instead exacerbate the housing crisis, new research has found.

Young Australians are increasingly locked out of the market. One-third of households under 35 owned their home between 2019 and 2020, a drop from 48 per cent in 1994.

The federal Opposition has proposed allowing Australians to dip into their retirement savings and withdraw up to 40 per cent of their super — to a maximum of $50,000 — so they can buy their first home.

However, a study by the Association of Superannuation Funds of Australia (ASFA) said accessing superannuation for a deposit is not enough to overcome the first-home entry barrier.

ASFA examined 300,000 taxpayers and found no Sydneysiders aged 25 to 34 could pay for a deposit on an average house or unit using their superannuation alone.

Melbourne was hardly any better, where only one couple in the top 20 per cent of superannuation balance holders could pay for an entire deposit with their retirement nest eggs.

What is the potential impact on housing affordability?

The report found the policy could make home ownership further out of reach for low-income households and exacerbate housing unaffordability more broadly.

Australians on low incomes would have limited access to funds as their superannuation balances would also be lower.

Instead, ASFA said the scheme was more likely to benefit high-income earners and could potentially grant them higher borrowing capacity.

This could in turn push up bids and affect housing prices. ASFA warned against increasing "demand-side pressure" instead of solving supply issues.

ASFA chief executive Mary Delahunty said delving into super would not solve the housing crisis.

"While superannuation may seem like a tempting pot to raid, our analysis shows it will only benefit those young people who are already more likely to be able to afford a home, and not solve the crippling supply-side deficit that is fuelling our housing crisis," she said.

Most young people also have relatively low superannuation balances compared to older Australians, which means they could be priced out under this policy.

Additionally, drawing from super is likely to increase house prices by increasing demand without addressing supply, pushing home ownership further from the reach of young Australians.

"Accessing superannuation is not the silver bullet to solving Australia's housing crisis," Delahunty said.

Instead, the housing crisis must be tackled holistically, ASFA's report said.

The lack of cohesion on housing policy across different levels of government must be addressed and replaced with a coordinated national approach.