ASFA calls for independent review into housing affordability, warns using super for housing deposits would make a bad situation catastrophic

Analysis released today by The Association of Superannuation Funds of Australia (ASFA) shows using super for housing would put significant upward pressure on house prices and exacerbate housing affordability concerns for low-income earners.

“Australia already has some of the most expensive housing in the world. With the prevailing macro-economic conditions and surging demand for housing, using super for housing deposits would be disastrous and push prices even further out of reach of first-time buyers,” said ASFA CEO Dr Martin Fahy.

“Superannuation isn’t the reason young Australians can’t afford to buy a home of their own. A lack of supply, and the policy settings with respect to residential investment property has had a distortionary effect on demand. These are the real issues that must be tackled to generate improvements in housing affordability,” Dr Fahy concluded.

ASFA’s analysis found that:

• using superannuation for housing deposits would be inequitable and ineffective since it would most likely be used by higher income earners who can afford a home already
• the direct effect on the housing market—of early release of superannuation for housing deposits—is that increased purchasing power would be near fully capitalised into higher house prices, exacerbating the upswing of the current house price-credit cycle.

Dr Fahy went on to say “using superannuation for housing deposits is fundamentally inconsistent with the objective of superannuation to provide an adequate retirement income. None of the comprehensive reviews of superannuation over the last decade have recommended it, while several have made recommendations to the contrary.

Superannuation has been a key source of funding for increasing the supply of affordable housing. Patient, long-term superannuation capital has the capacity to generate increases in housing supply and improve tenure and affordability in the rental market.

ASFA’s research paper recommends that the Federal Government commissions a comprehensive and independent review of housing affordability, similar in nature to the Retirement Income Review, to establish a fact base and drive sensible, consistent policy across Federal, State and Local Governments.

For further information, please contact:

Jacqui Maddock, 0451 949 300.

About ASFA

ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system, so all Australians can enjoy a comfortable and dignified retirement.