Retirement ‘fix’ for first-time homebuyers will push prices up

The fact that the government has come up with so many different ways to pump money into the housing market (the median home price in Sydney is now $1.4 million and $1 million in Melbourne) is the biggest warning of that government intervention is adding to housing affordability problems. not solve them.

Charging

The only redeeming part of the newer policy is the requirement that, when selling their home, people using the scheme must return to their super the amount they invested plus a portion of the capital gain.

But this immediately creates a second round effect.

In five or 10 years, when it comes time to move from suburban Mill Park or Woodcroft to a bigger, better equipped, more expensive home, our first-time buyers won’t realize the full capital gain from the sale of their first home. At your disposal.

By intervening in the first-time buyers’ market, the government is posing a problem for the second-round market.

But this policy has to do with the here and now.

Both the Coalition and the Labor Party could have devised a policy to pay local councils an “increased supply” bonus for changing planning laws to increase the amount of housing available in their areas. It would add to the supply, it would do so at a much lower cost, and it would not have such large flow effects in areas like retirement.

Unfortunately, that is too sensible.

Less than six weeks ago, a parliamentary committee led by Liberal MP Jason Falinski discussed the idea of ​​using super for housing, and did not recommend the form the government is now proposing.

He backed first-time buyers who used his supermarket as collateral, arguing there were problems taking money out of retirement accounts and putting it in the middle of a suburban home auction on Saturday morning.

Charging

“Allowing first-time home buyers to access or borrow part of their super to buy a home, in the absence of a greater supply of homes, will likely increase demand and lead to higher property prices,” he warned.

Last week, Morrison attacked Albanese for backing a 5.1 percent increase in the minimum wage and warned it would lead to higher interest rates while rising inflation.

What effect would an extra $50,000 in the hands of first-time buyers have on home prices? It is inflationary and would push up interest rates.

And those with the minimum salary – almost all renting instead of buying – will be priced further away from the real estate market.

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