At Thursday’s Senate economics committee hearing, representatives from both industry and retail funds issued a stark warning – allowing early access to superannuation for housing deposits would deal a devastating blow to both the housing market and retirement savings.
Speaking at the inquiry, Mary Delahunty, CEO of the Association of Superannuation Funds of Australia (ASFA), argued that housing supply – not access to savings – is “at the heart of the problem here in Australia” and globally.
She pointed to ASFA research, based on data from 300,000 taxpayers aged 25–34 across capital cities, that compared the impact of using super to fund a 20 per cent home deposit.
“We found that people with lower balances would effectively be priced out of the market,” the CEO said.
“The additional nominal purchasing power for these home buyers will be built into the purchase price, which means prices would rise, and not a single person in the age group in Sydney, whether single or a couple, could raise sufficient money for a housing deposit using their superannuation alone.”
She warned that releasing superannuation for housing would only fuel demand, exacerbating the affordability crisis without addressing the root issue – supply. Ultimately, she said, it would undermine retirement savings and leave future retirees in a perilous position.
“It’s incredibly unfair to ask a generation to have to choose between a house and a retirement savings pool,” Delahunty said, noting that this is a choice previous generations never had to make.
Super Members Council (SMC) CEO Misha Schubert echoed a similar sentiment, cautioning Australia against following in the footsteps of global counterparts.
“It’s really clear when we look at the international evidence, and particularly the cautionary tale of what happened in New Zealand,” Schubert said on Thursday.
The SMC highlighted earlier this year that in New Zealand, where early withdrawals from the KiwiSaver scheme are permitted for home deposits, the KiwiSaver balanced options delivered returns around 1.14 per cent per year lower than Australian balanced MySuper products over a 10-year period. This disparity could result in as much as $130,000 less at retirement for a typical 30-year-old.
“When people were allowed to withdraw money from their retirement savings to put towards house deposits, house prices grew at almost twice the rate of Australia across that period, home ownership rates actually fell in the key demographics,” Schubert said.
The CEO added that with reduced retirement savings, the burden would shift back onto taxpayers and the Age Pension.
“We think the evidence is absolutely crystal clear; withdrawing super for house deposits would simply push up house prices, reduce retirement savings, increase reliance on the Age Pension and lower super returns for all members, including today’s generation of retirees.”
Following the hearing, ASFA released a statement noting that superannuation funds are already playing a significant role in housing supply, having invested $30 billion in residential projects between 2018 and 2024, with more projects in the pipeline.
“That is the real boost superannuation can make to helping solve the housing affordability and supply crisis,” Delahunty said.
The proposal to expand early access to superannuation for first home buyers has been championed by the Coalition, seeking to tackle the worsening housing crisis. By allowing individuals to use their savings as deposits, the initiative aims to combat declining home ownership rates amid soaring property prices.
The proposal has, however, drawn criticism from economists who argue that allowing people to tap into their superannuation for housing could exacerbate the housing crisis rather than alleviate it.
