House prices could surge by as much as $86,000 in some Australian capitals if aspiring homebuyers use their superannuation to put down a deposit.
Under the federal opposition's housing proposal, Australians could withdraw up to 40 per cent of their retirement savings - to a maximum of $50,000 - to buy their first home.
But modelling by superannuation fund collective Super Members Council found this would hike prices across Australia's five largest capital cities.
The median Sydney price would swell by $80,000, Melbournians could pay $70,000 more, costs in Brisbane would grow by $78,000 and house prices in Perth would increase by $86,000.
Super Members Council chief executive Misha Schubert said this would worsen the affordability crisis.
"We all desperately want more Australians to own their own home, but this idea won't achieve that," he said.
Grattan Institute program director Brendan Coates said these estimates "seemed excessive" but acknowledged such a policy would push up prices on the margins.
Investor Jonathan Ng told a Senate inquiry that the financial benefits of home ownership would outweigh the costs to Australians' super due in part to its value as an investment.
However, this policy would still drive up demand and prices without addressing supply, Centre for Independent Studies' chief economist Peter Tulip said.
"Housing affordability is arguably our biggest social problem, you really don't want to be making it any worse," he told the Senate committee.
Instead, Australians should be given the choice to use their superannuation as collateral for their loan.
This would help first home buyers jump over the deposit hurdle without jeopardising retirement balances.
Superannuation would only be drawn upon in the event of foreclosure, which Dr Tulip said was "extremely rare".
Using super to directly take out a loan is also unlikely to help demographics where home ownership is falling, Mr Coates said.
The poorest 25 to 34-year-olds and 35 to 44-year-olds have close to no super and the next second-poorest quintile generally has only $15,000 in their superannuation fund.
"I'm just not sure it will help the groups that most need the leg up," Mr Coates said.
Withdrawing money from super can also have an adverse affect on Australians, particularly younger people, modelling from the McKell Institute found.
During the COVID-19 pandemic, the previous government allowed Australians to access their super which resulted in $36 billion in withdrawals.
This would have grown to $41.1 billion within one year if it had remained untouched, McKell Institute's Victorian executive director Rebecca Thistleton said.
Instead, anyone who withdrew the maximum amount, $20,000, would have forgone more than $3000 in retirement savings within 12 months.
"People have been able to access (super) early, and have ended up losing it longer term," Ms Thistleton said.
