The Coalition has conceded its plan to allow first homebuyers access to superannuation will push up prices, as industry super and progressive thinktanks warned it could add tens of thousands to the cost of a home.
The policy, unveiled at the Coalition launch on Sunday, to allow first homebuyers access to up to $50,000 of retirement savings has prompted warnings that house prices in Sydney could increase by as much as $134,000.
The scheme has already been rubbished by Labor and the former prime minister Paul Keating, the architect of Australia’s compulsory super system, setting up a major policy fight in the last week of the federal election campaign.
Scott Morrison defended the policy in a round of interviews on Monday morning, arguing it would help first homebuyers get off “the sidelines where they see house prices go up” but would not hurt their super balances because the investment in the home would go back in after it was sold.
But the superannuation minister, Jane Hume, told Radio National there would likely be “a bump in house prices” in the short term, as “a lot of people bring forward their decision to buy a house”.
At a doorstop in the Queensland Labor seat of Blair, Morrison claimed that the price impact of the policy would be “marginal” but ignored calls to release modelling underpinning the claim.
Morrison said the Property Council had “disagreed with some of those analyses that others have done”. “I simply don’t agree with the assertion [prices will rise],” he said.
Earlier, Morrison told ABC Brisbane the government is aiming to “minimise” any potential price impact with supply-side policies aimed to encourage older Australians to downsize house and limits on how much super can be withdrawn.
Labor’s housing spokesman, Jason Clare, seized on Hume’s admission and claimed the Coalition policy would increase house prices. He called the policy proposal “the last desperate act of a dying government”.
“It just pushes prices up,” he told ABC News Breakfast.
“If they really thought this was a good idea, do you think they would plant it six days before an election? They have been in office for almost a decade.”
Labor’s superannuation spokesman, Stephen Jones, tweeted that the policy would “blow up the housing market in Australia”.
Under the policy homebuyers at any income level will be able to access 40% of their super, up to a maximum of $50,000, to buy a property that must be owner-occupied, provided they have already saved a 5% deposit.
In January the McKell Institute modelled the impact of allowing prospective homebuyers access to superannuation in conjunction with researchers from the Centre for Housing, Urban and Regional Planning at the University of South Australia.
They found allowing access to $40,000 from super would encourage the take-up of $73.6bn in new housing debt as renters entered the market to buy, causing a one-off price surge in the first year of the policy.
The biggest price impact would be in Brisbane, where the median house price was estimated to rise $99,346, followed by Hobart ($92,796), Adelaide ($84,534), Perth ($57,413) and Sydney ($45,342).
The report also concluded that “given the historical stronger performance of super compared to real housing market returns, the effect of compounding over a long time period (30 years) means that individuals accessing super for housing are likely to end up financially worse off in the end”.
Industry Super Australia estimated the effect could be even larger, basing its predictions on a model of pent-up demand for homes and the observed take-up of the previous early super release scheme during the pandemic.
It found that allowing couples to take up to $40,000 from super could push prices in Sydney up by 16%, adding $134,000 to the median price; Perth by 14%, adding $60,000; Darwin by 10%, adding $45,000; and Melbourne by 9%, adding $55,000.
The ISA chief executive, Bernie Dean, said: “Throwing super into the housing market would be like throwing petrol on a bonfire – it will jack up prices, inflate young people’s mortgages and add to the aged pension, which taxpayers will have to pay for.”
The McKell Institute’s executive director, Michael Buckland, said the data showed the policy amounted to a further intergenerational transfer of wealth from young people to existing, older homeowners.
“What first homebuyers desperately need is a little calm in the overheated housing market,” he said. “This proposal would kickstart yet another house price spiral, stripping young people of their super savings and doing virtually nothing to improve real affordability.”
Earlier, Morrison told Channel Seven’s Sunrise the policy would “absolutely not” run down workers’ super, and they “may well have more” retirement savings because the initial investment and a portion for any capital gain “goes back into their super” if they sell.
The prime minister accused Labor of opposing the policy because “they don’t treat super like it is your money”.
“It’s your money, you earned it and saved it … and we want to help you get into your own home without impacting on your long-term superannuation.”
On Sunday the assistant treasurer, Michael Sukkar, argued the policy was “calibrated at a level that’s not going to have a material impact, but it will help people buy their first home”.
Asked if prices would surge, Sukkar told Sky News: “No, not in a material way because when you look at the size of the Australian housing market – $9.9tn – you look at the number of first-homebuyers there are a year and there are about 100,000, about a third of all new homes or less than a third of all new homes.”
Clare also noted many young people hoping to buy their first home may not have much in their superannuation account to withdraw.
“The average person in their 20s has only got about $20,000 in their super. Some of them less,” he said.
