Allowing first home buyers to access their superannuation for a home deposit would increase inequity between higher income home purchases and lower income purchasers, according to a report.
The Association of Superannuation Funds of Australia (ASFA) said higher income purchases would be able to gain homeownership by utilising super tax benefits, while lower income purchasers would be less able or unable to take advantage of these benefits.
ASFA also said the direct effect of the early release of super for housing deposits was that increased purchasing power would be near fully capitalised into higher house prices. This would exacerbate the upswing of the current house price-credit cycle.
The association said other potential effects of using super for a housing deposit were:
“The measure would also be likely to precipitate increased superannuation fund asset allocations to cash and other highly liquid assets to fund redemptions,” the report said.
“The effect of this would be to decrease investment returns to all superannuation members, as well as diminishing aggregate returns in the system and placing pressure on the Age Pension.
“As well, where an individual redeems their entire superannuation balance (or a significant proportion of it), for a lengthy period post-withdrawal, they will not have the benefit of superannuation as a form of insurance against genuine financial hardship.”
The association also called for an independent review into housing affordability.
Future Group is set to take on nearly $1 billion in funds under management (FUM) and welcome more than 100,000 new members following two significant successor fund transfers.
Insignia’s Master Trust business suffered a 1.9 per cent dip in FUA in the third quarter, amid total net outflows of $1.8 billion.
While the Liberal senator has accused super funds of locking everyday Australians out of the housing market, industry advocates say the Coalition’s policy would only push home ownership further out of reach.
Australia’s largest superannuation fund has confirmed all members who had funds stolen during the recent cyber fraud crime have been reimbursed.