How does the Coalition’s super scheme for first-home buyers work and would it drive up prices?

·5-min read
<span>Photograph: Mick Tsikas/AAP</span>
Photograph: Mick Tsikas/AAP

Will it make housing unaffordable, as critics claim, and how does it compare with Labor’s Help to Buy scheme?


All wage-earners in Australia are required to build up a nest egg for their retirement with at least 10% of their income paid into superannuation savings.

But as housing has become less and less affordable, some commentators have suggested that workers’ savings should be put towards a home first and super second.

At the Liberal party campaign launch on Sunday, Scott Morrison announced that first home buyers would be allowed to access a “responsible amount” of super for housing under a re-elected Coalition government.

But how would this scheme work?

Who can access it?

Only first-home buyers can access super for housing under the policy. They must have saved a 5% deposit for the home already without accessing super.

It must be for an owner-occupier purchase and the first-home buyer must live in the home for at least 12 months.

Related: Scott Morrison uses Liberal party campaign launch to set up housing battle with Labor

There is no floor on what your super balance must be before you can access it, and no cap on income, meaning even very low or very high-income earners can use it. It can be used in conjunction with the first-home buyer guarantee or first home super saver schemes. The scheme will start by 1 July 2023.

Couples can both access the scheme, and one partner being ineligible does not prevent the other from accessing it.

How much can they get?

Buyers could withdraw up to 40% of their superannuation, to a maximum of $50,000. That means it would not be possible to clean out your account – at least 60% of your super balance would remain untouched.

How would this help getting into the market?

Allowing people to access up to $50,000 would mean a larger deposit, sooner, for first-home buyers. The Coalition estimates the scheme would cut the time taken to save a deposit by three years on average. The scheme is for both new and existing housing.

What would happen when I sold?

When the property is sold, the invested amount would need to be returned to the superannuation fund, including a share of any capital gain.

That means if a first-home buyer accessed the full $50,000 and lived in the house for 15 years and the price doubled, $100,000 would have to be returned to the worker’s super fund.

The Coalition argues that this means the scheme doesn’t destroy retirement savings but supports them.

Any capital gain associated with the first-home investment would be exempt from tax on repayment to their superannuation fund.

Related: Coalition announces $300,000 super concession for over-55s who sell home

But if the price of the house falls, the amount paid back also decreases proportionally. For example, if a $500,000 home with a $50,000 super payment is sold for $450,000, the amount returned to super would be $45,000.

How does this compare with Help to Buy?

Labor’s Help to Buy scheme allows the government to contribute 30-40% of the cost of a home, equity that must be paid back when the property is sold or the buyer’s income reaches a certain threshold ($90,000 for singles; $120,000 for couples).

The Labor scheme is capped, with only 10,000 people able to access the scheme each year.

In his speech, Morrison compared the Coalition scheme to Labor’s, quipping:

There is no limit on who can use it. You don’t have to sell it if you get a pay rise, or someone wants to go back to work full-time. There are no complex rules about income thresholds or who gets what. When you do an improvement, you don’t have to check with the government every time you go to Bunnings to buy a can of paint.

The policies are also different in the event of death: under the Coalition scheme, nothing is repaid to the super fund; under Labor’s, the government investment is repaid by the estate.

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Won’t this lift house prices?

Industry Super has suggested that allowing people to access super could add up to 16%, or $134,000, to the cost of a home in the most expensive market, Sydney. In Melbourne, it is estimated price rises would be $55,000 and in Brisbane $35,000.

However, this modelling was done in February 2021 – before the details of the Coalition scheme were announced.

The government counters that there are an average of about 100,000 first-home buyers each year, and the combined value of their home purchases would be less than 1% of the total value of the housing market ($9.9tn).

Hasn’t this been proposed before?

Yes. It has been proposed many times, most recently by the Master Builders Australia and through a long-running social media campaign by Liberal MP Tim Wilson. Similar schemes exist in New Zealand, Singapore and Canada.

What did people say about it then?

In previous iterations, even Coalition figures were scathing about the idea:

  • “Increasing the amount of money going into real estate by facilitating access to super savings pre-retirement will not improve housing affordability. It would increase demand for housing and … would actually drive up house prices by more.” – then finance minister Mathias Cormann in 2014.

  • The former prime minister Malcolm Turnbull reportedly called access to super for housing a “thoroughly bad” idea in Fairfax Media in 2016.

The environment minister, Sussan Ley, had this to say in 2017:

What does Labor say?

On Sunday the shadow assistant treasurer, Stephen Jones, said:

Labor’s housing spokesperson, Jason Clare, called the scheme “the last desperate act of a dying government”, arguing that it wouldn’t make housing more affordable and young people haven’t obtained enough super to access the policy.

“This would be like adding kerosene to a fire ... their super will supercharge the property prices ... We’ve got to make it easier for Aussies to buy their own home.”

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