Coalition's Proposed Plan To Enable First Home Buyers to use Up to $50k in Super Towards House Deposits

Well, another genius bit of vote buying responsible fiscal management has been announced. First home buyers will be able to withdraw up to $50,000 from their super, not to be confused with the FHSS scheme, where the money had to be voluntarily added to your super fund first.

So the price of housing increases purely because people will instantly have more money to buy with, same as it did with first home buyer scheme, covid building grant scheme etc. On top of that, we will have people taking out huge chunks of what is meant to sustain them in retirement, missing out on a tonne of compounded investment returns.

Do people actually buy this rubbish? So they actually think this is a responsible thing to do?

Link here thanks to Hybroid

Comments

    • May be not pissing off people who can take away their jobs is a powerful motivator.

  • Does anyone know how many houses/plots there are in Australia? Or total bedrooms?

    • +1

      384,9375

  • +3

    Coalition plan to allow first homebuyers to access super ‘will jack up house prices’
    Allowing access to up to $50,000 of retirement savings ‘like throwing petrol on a bonfire’, industry super group warns
    https://www.theguardian.com/australia-news/2022/may/16/coali...

  • +1

    $50k Able to Be Used from Super for House Deposits

    This is not correct.
    This relates to a 'policy announcement' (only) in the lead up to an election. For this to be valid:
    - LNP need to be re-elected
    - LNP need to deliver on their 'announcement'

  • +1

    This is the worst, as others have said yes short term it might help people get into a home, but it can only inflate prices. Long term that 50k out of your super is something like 500k after 30 years. You are needing to take from your retirement to fund a place to live in today - not cool. This just a real telling sign that housing is simply unaffordable, and its no longer a Sydney/Melbourne problem. We need to look at the core problems that are leading to this and address them rather than kick the can down the road.

    • -2

      Long term that 50k out of your super is something like 500k after 30 years.

      People who buy real estate in prime locations can easy 11x the $50,000 in 30Y.

      • +8

        So a $333k property will be worth $3.6M in 30 years. How's that for housing affordability. Also don't ever sell because $2.5M of that will be then locked back into super, good luck affording another property when you have to cough the rest up yourself.

        • -1

          People shouldn't be too worried about paying it back. That part of the policy can change in future

          • +4

            @rektrading: Cap gains from housing are no replacement for retirement funds. Any profit is simply tied up in your property.

            Also the idea that houses are going to be 11x in 30 years is purely dystopian. No one would be able to afford a property.

            • @Autonomic: High net individuals, family offices and funds have more 💵 than 99% of the population. They're the ones that will buy up the prime homes and 11x the price.

              People that can get in now will be able to tag along for the 🚀 to the 🌕.

              • +5

                @rektrading: In 30 years, only 1% of the population will be able to afford a house? And that's a good idea to you? And what are you going to do with all that $$$ from your house anyway, now that you have nowhere to live? Oh that's right, buy another house for the exact same price.

                • @Autonomic: No, it's not a good idea.

                  This is why young people should take out 💵 from the pension funds and buy now instead of waiting x years.

                  They can always put the 💵 back into the fund later if they want.

                  • @rektrading: This whole conversation is based on the idea that the Liberal policy will go ahead. Please, try to keep up.

                      • +1

                        @rektrading: Yes, taking money out of super to use a house deposit is the Liberal's policy which we are discussing right now.

                        • @Autonomic: Yes.

                          It's a great policy for young people to be able to make decisions that can benefit them financially.

                          • +1

                            @rektrading: Except it's only going to hurt them in the long term and decrease housing affordability in the short term.

                            • -1

                              @Autonomic: They don't have to do it but giving them choose is better than no choice at all.

                              They're adults and can make decisions on how to spend their 💵.

                              • @rektrading: You're the one advocating for it. Don't backpedal now.

                                • -2

                                  @Autonomic: 👍.

                                  I like this policy that allows people to take out $50,000 from their pension funds to buy hard assets like a home.

                                  The more people that withdraw the better.

                                  • +3

                                    @rektrading: Which is a terrible idea as per this discussion.

                                    • @Autonomic: Everyone has an opinion. The only thing that matters is who wins the election and if they honor the policy.

                                      I would vote ✅ for the policy if I was able to vote.

                                      • @rektrading: You do know that Labor has an alternative, don’t you???

                                        • @grr1701: It doesn't interest me which party has what.

                                          The one that can sell the best policy and wins the election is what matters.

                  • @rektrading: So they can’t save for a deposit, but they’ll pay money back into Super?

                    • @grr1701: It sounds like this policy will give people the choice to prop up the pension funds or buy a home.

                      I would choose the latter.

            • +1

              @Autonomic: Particularly since REAL wages have been going backwards for 9 years!

            • @Autonomic: In the last 30 years house prices have increased around 8x in the ACT. Not that far off.

    • -1

      Based on houses doubling every 7 years. Your money is 10 times better with property. Remember, growth predictions in super, are just that. GFC,Covid can wipe out any gains made in the past years overnight. All well and good if your young you can make it back in your working life, tell that to people on the cusp of retiring….

      • +5

        Inflation adjusted, Sydney property has gone up roughly 5x since 1970.

      • +1

        There are MANY places in Australia where this doesn’t apply. Look at Mackay prices over that period of time as one example. If you’re only looking at capitals, you might be right.

  • +5

    Also rips ound millions from industry super funds.

    Genius move politically.

    Absolutely stupid move in reality.

  • +2

    Property developers were worried about their investments dropping in price recently. This move, done just before the election, was to appease them by insuring prices would now continue to rise with more demand from a preciously untapped source.

    Nice one scomo. Way to look after your own.

  • This policy is a 👊 on anyone that wasn't born in the last 40Y and they don't like it.

  • +9

    If it was such a great idea why did it take the government to introduce it 6 days before an election, when they've been in power for nearly 10 years?
    Simple - its a desperate bid to retain power by appealing to short term thinking
    I look forward to Labor bringing in a federal ICAC - it will revolutionise political party paradigms

    • +1

      The LNP haven't introduced this as legislation. It is purely a pre-election announcement.
      Given the LNP past performance, this may or may not eventuate, even if the LNP are re-elected.

      • +2

        Well, its being treated as policy on the assumption they get in
        I don't expect them to get in - even placed a large bet on Labor I'm that confident
        They've left it too late - over a million are pre-poll voting

        • +5

          I agree.
          The LNP 'strategy' of only announcing this days before the election is deliberate, to prevent a decent amount of review, analysis and validation. Instead, it is all just talking points and the media are just repeating everything the LNP tells them to.
          Although, some LNP are confirmed this will drive up property prices.

          It seems that you can have either a house or super, but not both.

    • -2

      Also notice how Labor is suddenly very quiet on lockdowns and restrictions in lieu of the election.

      Apparently saving lives is less important than saving votes.

      • +1

        Red herring, as lockdowns stopped months ago & restrictions stopped weeks ago & both are a state issue.
        FYI, Libs are in power in NSW

        • -1

          The states enact policies based largely on their parties. So yes, COVID restrictions in Victoria or SA are a relevant talking point when discussing what Labor might do to the entire country if they had the power.

          Both parties have suddenly stopped talking about it yet nobody actually believes they'll keep this up after the election.

          • +1

            @SlavOz: I guess the policies of NSW Libs are also a talking point
            Tied yourself a neat little knot haven’t you?

            • @Boogerman: You're first mistake is assuming I support the LNP. Why does everyone jump to this conclusion any time someone isn't like "OMG I want Labor inside me!!11"

              It's just religious nonsense. You think anyone who doesn't vote for your party is automatically your enemy. Tribalism as it's finest.

  • +3

    Both Liberal and ALP policies are demand-side, which will only sustain house prices or only slow down the fall. A sensible policy for the long term would be supply-side, such as disincentivising investment property ownership.

    • +1

      disincentivising investment property ownership is demand side…

      • Could you elaborate on this?

  • -1

    Funny everyone citicitising this scheme for it's obvious economic flaws also supports UBI and minimum wage increases - huge party points for Labor/the Greens despite having the exact same impacts.

    If you raise people's wages, prices will go up. If you give them free money, prices will go up. If you make it easier to get funding for houses, prices will go up.

    • +1

      Agree, but given OZB lefty leanings, it wont get any negative votes.

    • Don't worry they will come around when they realise it is money in their pocket. Or these people are just UBI and minimum wage renters. Maybe everyone is cause faux making $250k a year on OzB not really.

      Economics work differently on the internet.

    • When has Labor said they want to introduce a UBI? Jim Chalmers the man who'd be the treasurer has come out saying he'd be against it, same as the shadow treasurer before him.

      https://www.theguardian.com/australia-news/2017/sep/25/labor...

    • Nah. Prices stay the same cause you tax the ass out of those greedy bastard high income earners to fund the socialist agenda.

      Net zero effect.

      Lots of votes from lazy Australians who want others to fund their lifestyle.

      And by God there are a lot of them.

      Middle class welfare is just out of control.

  • +1

    It's a great policy.

    Labor's alternative is basically them taking all your capital gains away when you sell it.

    With this scheme, those who already have a home (2/3rd of households) will benefit from house price increases.

    Those who are FHB's, they can shave years off being able to purchase their first home. And when they sell it, they need to put it back into their super so your retirement is still fine. I would rather have access to my super earlier to start house ownership than in 40 years time trying to pay rent with it.

    And the even better news is that the CGT from selling your house is TAX FREE, whereas your super gains will be taxed at 15%. Double bonus there.

  • +2

    I wonder how many people who withdrew from their super accounts during Covid, paid it back. The Liberal Government LOVES this idea. Super gets taxed going in (15%??) and they tax you heavily when you make an early withdrawal. Then they MIGHT tax you again if you ever get around to repaying it (unless you salary sacrifice those contributions.) If you don’t pay it back, you’re likely to be very poorly off in retirement (after you calculate the compounding interest on the money that should have stayed in your super account.) But the current government won’t be in power by that time, so they give a damn about your future.

    • If you don’t pay it back, you’re likely to be very poorly off in retirement

      Think most people haven't thought of the idea they'll have $300k in super and living in a $3m home. If they trade down they'll have a chance but most people won't (because now can you admit to your friends at BBQs you need the money) and then they'll bang on about raising the pension.

      • +1

        Depends who is in government when you 'expect' your pension. I wouldn't bet on a LNP government even maintaining the current pensions.

        • +1

          I got told in Uni the government will be bankrupt long before I will get to pension age. That is why I'm pay up to the upper limit every year ($25k now $27.5k).

          • @netjock: Interesting, I thought the general consensus was in the nearish future we would all be on a pension due to automation. Everybody getting a stipend in order to keep the robots in work feeding and housing us.

            • @tonka:

              general consensus

              The masses of people want this. The 1% doesn't.

              Think about it. Captain of industry would have to pay for the robots, then taxes to be dished out to people so they can keep those said robots working. Might as well do away with the trouble and put all the said billions into ETF and then live off the dividends.

              You'd think non for profits would have a competitive edge against the private sector, seems the theory doesn't hold.

              • @netjock: Captains of industry are salivating at the idea of automation and have been jumping on all avail options for decades
                The only real commodities are food, shelter, healthcare, leadership/security and education/entertainment.
                The first 3 should be able to be automated with no real cost after initial capital investment.
                After a massive initial adjustment the economy keeps churning with the gov't using taxes and royalties to keep redistributing wealth from the robot owners (shareholders) and landholders to the consumers.
                This continues until we have only the uber wealthy and consumers.
                At some point the consumers realize they have the greater numbers and after sacrificing many thousands to robot drones they manage to chop off the uber wealthy's heads.

                • @tonka:

                  The first 3 should be able to be automated with no real cost after initial capital investment.

                  You buy a house and never have to pay for maintenance? No additional capital investment is just wishful thinking.

                  The only real commodities are food, shelter, healthcare, leadership/security and education/entertainment.

                  You enjoy being a farmer, plumber, electrician, plumber, police officer, teacher or a clown? Too many people chasing after too few jobs will drop pay.

                  This continues until we have only the uber wealthy and consumers.

                  We have ultra wealthy now, they are squeezing us now. You think they will just pay more taxes to give you free money to spend? You give me $10 and I'll pay you to pick up my pizza.

                  At some point the consumers realize they have the greater numbers and after sacrificing many thousands to robot drones they manage to chop off the uber wealthy's heads.

                  If that is going to happen why bother? Just trying a failed experiment for the sake of it.

                  I get your joke but I wouldn't suggest putting ideas into people's heads.

                  • @netjock: Maybe do some research on this. Nobody knows exactly what automation will look like but you are being dismissive of real change that is expected to happen.
                    eg. 'Too many people chasing after too few jobs will drop pay', of course that is why they are expecting to need a universal income.

                    Not a joke, not my idea, you may have picked the wrong course in Uni.

                    • @tonka:

                      Maybe do some research on this. Nobody knows exactly what automation will look like

                      Exactly the point. Nobody knows what it will look like. You should see the prediction in the 60s of today, we'll all be driving cars powered by mini nuclear reactors.

                      You are just reading people writing academic papers. If half the stuff turns out per the literature than whooopie. I'd be happy for people to pay me to get a good 9 hours of sleep a day and spend 4 hours at the gym then read a book for another 4 hours. In between having some food, socialise and what not. But then a lot of people think they are prepared to drop their job and do nothing in retirement and get bored or find it financially unviable.

                      I'll leave it there. No point arguing because nobody going to pay me to sleep in the next 10 years, I'll hold out hope in 30 years and that is not with my super money but someone else's money.

                      • @netjock: We were talking about the state of things at your pension age if I refer to your original comment. I was presuming that wasn't in just 10 years if you were expecting a possibility the gov't would be bankrupt at that point.

                        • @tonka: Don't need you debating the state of the nation at my pension age. You look after yourself and I'll look after myself. I wouldn't be saving less because you tell me different.

                          If they are going to find universal basic income they got to sort out cost of Medicare and NDIS first.

                          • @netjock: Ok mate, I'm barking up the wrong tree here. You obviously have no idea what this conversation was even about.

                            • @tonka: I am pretty sure you responded to my comment with whatever you are on about. Obviously you are barking at me thinking I was your kind of tree. Obviously not. You figured it out after a while.

                              • @netjock: Worth it though, conversing with you is a great confidence boost.

            • @tonka: I was told that at Uni in 1975. Hasn’t really happened.

              • @grr1701: I feel like it has been happening though, but it's slow and insidious. Many jobs in primary industries being automated and replaced by bureaucratic jobs and the service and support jobs that flow on and are supported by those jobs. I know it's not quite the way it was described to us, but at the moment we are moving to a point where many essential jobs are becoming more automated, ie farming, prefab homes and the jobs we have and are paid for are less essential,less intensive but keep us employed.

  • +3

    the root cause of the housing bubble is supply and demand. There is not enough properties to meet demand so the price goes up. So allowing more people to enter the market without taking any action on the supply issue will mean the prices will go up, essentially eating away at any benefit from using Super.
    Even if this scheme was limited to new construction only, demand would still outstrip supply - even more than it does now.
    and what happens if you sell the house as a loss? What if you get divorced and half the sale profit goes to your partner (is profit to be split calculated after super is paid back?).

    I am apolitical, so my opposition is not a party issue. It's just a very badly thought out policy.

    • Just curious what the government is supposed to do in regards to people not wanting to live 2 hours travel to work? There's lots of supply, and houses are cheap if you live far away. But the demand is not wanting to spend 1,000 hours a year on commute. How does the government solve that issue? Genuinely curious what the options are to relieve the demand of the small slice of real estate that everyone is chasing after

      • +6

        “ How does the government solve that issue?”

        Improve transport infrastructure. Build fast/bullet train to reduce the travel time from those areas with “lots of supply” to the main cities.

        • +5

          Lol, you mean real leadership and country building policies instead of just endless political campaigning and facilitating the party donors.

        • +1

          I like this a lot! Would be amazing with tons of high speed rail around the cities and the sprawling suburbs

        • Bullet train is a great idea….but wait until the cost to use it. Let’s say they build one out from Goulburn to Sydney. Ends up being $20 each way trip. Whose going to pay $200 in travel each week ? Unless it’s heavily subsidised I can’t see it happening.

          • @82norm: I reckon there'd be heaps of people who would spend $200/week on a fast train if they could spend $200,000 less on their house.

            • +2

              @moar bargains: Housing in the country maybe cheaper, but having done a tree change for a few years, costs for other things can add up.

            • +1

              @moar bargains: Your math is good.

              Rest of the population. No. Most people ask how much they can borrow and then end up stretching that by tens of thousands if not hundreds of thousands on the day.

              • @netjock:

                Your math is good

                Thanks, the mathematics degree helped, just don't ask me to add up in my head 😁

                Rest of the population. No.

                Yes, I was probably a bit optimistic there. I am continually staggered at how many people just suck up their "big city" (Mel/Syd) commutes, instead of doing something different, like voting with their wallet. Which entirely proves your point.

      • Agreed.
        Saying that, 2 hours from Sydney is still seeing prices ballooning and supply not keeping up.

        I think there needs to be a fundamental shift in thinking. Instead of focusing on cost, look at some of the factors that are driving up cost and do something about them.
        For example, and not a well thought out idea, should developers get tax and fee incentives to only sell to first homebuyers? And First homebuyers should be penalised for selling within 5 years or so? Should overseas buyers be required to live in the property for X amount of yours or pay extra ongoing tax each year they aren't in it? Hell, should property be only sold to citizens/permanent residents/or something like that until the market starts to settle back to reality?

        I dunno, just focusing on the rising cost and throwing money at that doesn't seem to do much.

        • All good suggestions. After WW2 the government built houses for war veterans, why can’t the government build properties on crown land, vs opening it up to developers and giving them the freedom to profiteer from it.

          Not saying the government should just hand out houses, but home ownership should be about assurance and having somewhere safe to come back each day, not having to worry about being evicted or landlord wants to sell up etc. Wealth increase and incentive should be a secondary thought if we want equality.

  • +3

    I'd like to see a policy that lets empty nesters downsize without paying stamp duty. Help increase supply of family homes in urban areas. There are too many financial disincentives to selling the family home .

    • +1

      Yep, they should switch the stamp duty (paid at sale time) to a land use tax (paid annually with council rates) over the next say 5-10 years. Encourage people to downsize, and ease the sale of properties.

      • Isn't stamp duty paid by the buyer, not the seller?

        • The seller would need to pay it to be able to downsize to their next home.$90K
          eg sell a house in Sydney for $1.4mil = $35K agents fees, downsize to a nice location unit $1.3 mil = $56K Stamp Duty. Cost is 90K on taxes and fees.

        • Yes as tonka said, sellers are (almost always) buyers too, so they will end up paying it as well. And besides, if we're trying to encourage more people to be able to afford homes, I think more of the taxation onus should be placed on those already owning property. Perhaps if they're not going to switch stamp duty to a land tax, they should switch to sellers paying the SD, rather than buyers.

          • @moar bargains: To be honest, I'd like to see government stop taxing tens to hundreds of thousands off average joes home and go after corporate tax minimisation instead. Maybe they should just forget property tax (and interest rate hikes) and just up gst to 15%. Soak up some of the profit margin from Nike, Apple etc who aren't paying up their tax.

  • +3

    Many Australians already do not have enough super for retirement. This policy will set the stage to support the next agenda to increase pension age. Many people are not financially savvy enough to understand the implication of withdrawal ~30 years earlier than expected have on their retirement.

    • -1

      People who take money out aren't buying a sports car or going on a holiday. They're buying one of the hardest assets that have a history of only going up to the right.

      It's a financially justified investment for their future.

      • +3

        I'm just here to tell you, that you're dreaming. You make it sound like everyone is financially responsible. If they were no need for lock up period for super.

        • The best way to learn to swim is to get thrown into the deep end of the pool.

          All this cuddling is making people soft.

          • @rektrading:

            The best way to learn to swim is to get thrown into the deep end of the pool.

            Tell it to people who lost it all on LUNA. PSA: don't listen to what you say.

            Super rules are pretty consistent for people on low to medium incomes. All they've done is go for the top earners who can afford to make a lot of concessional contributions.

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