The Super Home Buyer Scheme is a policy to help allow first homebuyers to withdraw up to 40% of the funds in their superannuation. Prospective first home buyers must have at least 5% of the deposit saved already, without accessing their super.
The Prime Minister has unveiled a brand new policy to help first homebuyers unlock up to $50,000 of their super. Workers will be able to withdraw up to $50,000 but the scheme won’t start until 1 July, 2023. There are no income or property caps under the scheme, with eligibility restricted to first homebuyers who must have separately saved five per cent of the deposit.
The proposal was first floated when Mr Morrison was Treasurer and championed by Housing Minister Michael Sukkar but vetoed by former Prime Minister Malcolm Turnbull.
It’s also been championed by Liberal MP Tim Wilson under a “home first, super second” policy.
For many under 30s, the scheme would wipe out their super savings but for older workers not buying a home until their early 40s, it would have less impact.
But while the policy has received praise from some commentators, there are also concerns that the Super Home Buyer Scheme could lead to an increase in property prices in the short term and mean longer-term impacts on participants’ retirement savings.
Proposed scheme would come into effect on 1 July 2023, and would allow first homebuyers to withdraw up to 40% of the funds in their superannuation, up to a maximum of $50,000, for a house deposit.
Prospective first home buyers must have at least 5% of the deposit saved already, without accessing their super. The purchase must be a first home, and it must be for an owner-occupier purchase. Buyers will be required to live in the home for at least 12 months after utilising the scheme.
There are currently no restrictions proposed for a minimum superannuation balance to access the scheme and also no cap on income, meaning first home buyers from any earnings bracket could potentially make use of the scheme.
Buyers will be able to use it in conjunction with other programs such as the First Home Guarantee scheme and the First Home Super Saver scheme.
Couples seeking to make use of the scheme will both be able to access it, and dip into their superannuation individually for a single house purchase.
Reactions to the policy announcement have been mixed, with praise from some experts along with concerns from others that the proposal might have the opposite of its intended effect, and could in fact “supercharge” house prices, making it more difficult for first home-buyers to get into the market.
Speaking to ABC News in the wake of the announcement, Glen McCrea of the Association of Superannuation Funds Australia cautioned that such a thing could happen.
“Basically, if supply is fixed and you’re putting more money in people’s pockets, it’s going to put prices up,” he said, adding that Industry Super Australia had estimated a potential price rise of anywhere from 8% to 14%.
Mr McCrea also questioned the benefit of the scheme for young people, given that many may have low superannuation balances and little money to draw on in the first place.
“We’ve just come out of COVID and we had the early release scheme, and there are a million people who now have less than $1,000 in super. A lot of young people and low-income people may not be able to take advantage of the scheme for the reason they don’t have very much super at all.”
Likewise, current Superannuation Minister Jane Hume noted this new policy would “probably push prices temporarily”, though she said this would be offset by other benefits such as fewer people having to rent.
CoreLogic’s Head of Australian Research, Eliza Owen, said the fact that this would be an ongoing scheme, rather than a temporary measure as some first home incentives are, means demand “may not be as concentrated under the Super First Home Buyer Scheme”.
Ms Owen added that existing incentives and other favourable conditions that have attracted first home buyers into the market recently could limit how much additional activity this new scheme could generate.
“First homebuyer demand may have been brought forward through homebuilder, low interest rates and the FHLDS, which may further reduce demand-side shock from the Super Home Buyer Scheme.”
The Super Home Buyer Scheme was announced alongside a proposed expansion of the downsizing contributions system in super to include those over the age 55 from 1 July 2022, something the Liberal Party has said will help boost the supply of housing for younger families. Currently those over 65 can make a one-off contribution of up to $300,000 into their super from the sale of the family home, outside of the standard contribution limits. The age limit was already scheduled to drop to 60 this year, and it’s possible reducing this age further to 55 may increase the supply of housing in Australia somewhat going forward.
if you have any doubt or need more clarification on how to use super for home deposit? . Speak to our expert mortgage broker in Melbourne today.
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