WESTERN Australian property players have given a mixed response to the federal government’s willingness to debate whether first home buyers should be allowed to use their superannuation to buy a house.
Earlier this month, Prime Minister Tony Abbott said he was happy for the proposal to be debated in parliament, qualifying that statement by saying the Liberal-National coalition had no firm plans to allow it.
The suggestion was quickly shot down by Labor’s treasury spokesperson, Chris Bowen, who warned that allowing first time buyers to use their super to buy property would result in house price rises and the erosion of retirement incomes.
But RE/MAX WA managing director Geoff Baldwin said last week price rises or reductions in retirement funds would be overcome by making a proviso that all funds, plus a levy, must be returned to the super fund when the property is sold.
Mr Baldwin said the levy should be based on the capital gain of the property at sale after costs.
“This would also encourage people to hold their property for a longer period and in doing so have a more settling effect on the market and a more sustainable effect on individual borrowings,” Mr Baldwin said.
“Using properties purchased under this system as security for other borrowings should also be disallowed ensuring that future equity remains unencumbered.”
Mr Baldwin said much of the opposition to the proposal was from the financial services sector, which viewed it as a threat to their income.
“They see money drawn from super funds for home deposits as money on which they will not be earning fees,” he said.
However, QWest Patterson chairman Warwick Hemsley maintained any system under which first home buyers would be able to use their super to buy property would result in an increase in demand for housing, and in turn push up house prices.
“Lack of affordability is driven in no small part by lack of appropriate housing supply,” Mr Hemsley said.
“It’s a simple equation; unless you increase the supply of housing, prices will continue to escalate
“Give people more money and there will be even more demand for housing.
“That will completely defeat the purpose of providing the opportunity to access super in the first place.”
Mr Hemsley urged the government to look for other ways of improving affordability by increasing supply, rather than looking for a quick fix.
“Looking at ways to speed up approvals processes and encourage more affordable development of housing rather than standing on the supply hose would be beneficial here,” he said.
“Reconsidering how stamp duty is applied is another option to assist affordability and encourage people to move to appropriate housing, such as down or upsizing, to help with the natural flow of housing supply.
“Rather than using superannuation that is important later in life, maybe the government should be looking at reforming taxes and charges on purchasing a new home.”