The House of Representatives’ report tabled last week included a total of 16 recommendations to improve housing affordability and supply across the country.
One possibility raised was to use superannuation as security for first-home buyers wanting to get onto the property ladder.
After a year of unprecedented property growth that saw the total value of Australia’s housing market reach nearly $10 trillion, Jason Falinski, chair of the House of Representatives Standing Committee on Tax and Revenue, said younger Australians find it more and more difficult to afford a home, savings.com.au reported.
“Most people focus on the price of the house, but the largest barrier to entry for young Australians is saving for the deposit,” Falinski said in the report. “On all the various measures, the time it takes a worker on average wages to save for a deposit has increased from a number that could be measured in months to one that can be measured in a decade.”
The National Housing Finance and Investment Corporation (NHFIC) recently revealed that from just four years in the early 1990s, the time it takes to save for a deposit has doubled to eight years now.
According to the House report recommendation, first-home buyers should be able to use their super as collateral for a housing loan given that paying off a mortgage is a very common way of saving for retirement.
“This would reduce the deposit needed to enter the housing market and have a similar effect to allowing access to super,” the report said. “Under this approach super balances would only be reduced if the first-home buyer defaulted on their home loan, which is an unexpected and infrequent occurrence in Australia, limiting negative impacts on younger Australians and women.”
Falinski said evidence showed that deposit is the biggest impediment to gaining entry into the housing market, and using superannuation as collateral could ease that pressure.
“Inquiry after inquiry has found ownership of your home is the single biggest factor in determining financial security,” Falinski told savings.com.au. “This idea reduces that impediment; that is why it is beneficial for the first home only.”
Solving supply issues remains a priority, with the committee recommending that the Australian government implement policies which financially incentivise state and local governments to adopt better planning and property administration practices, the report said.
“The federal government needs to incentivise state and local governments to empower communities to make their own choices and trade-offs, while offering real benefits for those who bear the costs,” Falinski said in the report. “These benefits should include better transport infrastructure, improved local amenities, and the assurance of protections and preservation of surrounding areas guaranteed in law, not just spoken of to be broken within a few years."
Graham Wolfe, HIA managing director, said Australia will have to build 1.66 million houses by 2030 to pace with the demand from population growth.
“The housing affordability challenges facing Australian households can only be addressed if the supply of housing can align with demand,” Wolfe told savings.com.au.
