At present there is an ongoing debate whether First Home Buyers should be allowed to dip into their superannuation, in order to assist first home buyer housing affordability across Australia. Essentially, is this an appropriate and sustainable decision or a quick fix?
First, let's take the average superannuation value of $15,000 and the national median house price in capital cities of $692,000. Assuming a First Home Buyer is allowed to 100% access of their superannuation amount this will equate to 11% of the needed 20% deposit (to avoid lender mortgage insurance). This suggests that First Home Buyers still have to scout for almost half the remaining deposit amount.
Second, using superannuation to fund home purchases has been successfully implemented in other developed countries like Canada where First Home Buyers can access up to $25,000. It is understood, this has led to affordability outcomes. Using this as an example and replicating it in Australia may produce similar results in easing housing affordability tension.
However, there are potential disadvantages which should be taken into consideration.
One of the obvious consequences of using one's super funds now is a drain on available funds to sustain retirement costs in the future. To buttress this point, the Association of Superannuation Funds of Australia CEO Pauline Vamos believes that while it's tempting to want to use super funds to fund things like buying a house, the likelihood is this would lead to many people not having enough income to fund the envisaged lifestyle when they retire (Association of Superannuation Funds of Australia 2015).
Second, early access to superannuation might also lead to First Home Buyers paying higher proportion of their salaries towards superannuation in the near future to make up for the lost retirement income. This in itself will pose a challenge to the ability of First Home Buyers to meet other needs like food, Medicare and clothing.
This means that you get the 'real' valuation of your real estate with no hidden agendas.