Landmark inquiry reveals how this works
A landmark inquiry into housing affordability has raised the possibility of young Australians using superannuation to secure a mortgage.
The housing affordability and supply inquiry, established in July last year by the Standing Committee on Tax and Revenue, found that the number one roadblock for first home buyers was the deposit. It equally raised concerns over supply and planning.
Report on the inquiry results followed news of Australia’s worsening house price crisis, including two of the country’s capital cities, Sydney and Melbourne, ranking in second and fifth place, respectively, for least affordable housing markets around the world.
One of the inquiry’s key recommendations was that first home buyers be allowed to access their super assets to serve as security for home loans. The savings would not be used towards the deposit itself but would be collateral for a home and expand the opportunity for home buyers.
“What we found throughout this inquiry was the biggest hurdle to getting into the housing market is the deposit,” Standing Committee on Tax and Revenue Chair Jason Falinski told Sky News Australia. “Any mechanisms that we can provide that allow people to use savings that they have made … is a very positive one in terms of helping people.”
The measure would allow banks to take into consideration the super security on top of a deposit.
“We know that virtually no-one defaults on their mortgages, and, even when they do, the underlying asset that is security more than covers the cost of the loan from the bank,” Falinski said.
There has been significant resistance to the recommendation.
“The objection from Labor and the Greens and Climate200 is that ‘Oh, well, you would find people having their superannuation removed’,” Falinski said.
“The likelihood of that is that is so close to zero that it’s approaching it from the negative side,” he added.
But the policy should be implemented in conjunction with measures designed to increase supply, the report warned; otherwise, sole increase in households’ ability to borrow would likely increase property prices.
The report also suggested scrapping stamp duty in place of land tax across the country, and that the transition take place over time to avoid double costs.
Much of the report squarely blamed local and state government regulation around planning.
“[If] you wanted to cut the price of new homes in much of Australia you could do so by simply removing taxes and levies,” the report read.
