Use 40% of super to buy home

Discussion in 'Property Market Economics' started by marty998, 15th May, 2022.

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  1. marty998

    marty998 Well-Known Member

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    Apologies for the political thread. Seemed appropriate to put it here though (move if not appropriate please).
    Liberal Party campaign launch - policy to allow people to use 40% of their super, up to $50,000.

    Appears that the super fund will own a portion of your home, and when you sell, you pay back the % amount to your fund.

    I don't know whether there is an income component or just the capital growth. Any details on this would be helpful e.g. does the fund, say Australian Super, or Colonial First State, have to value your house every year?

    Seems like a monumentally stupid idea to me that will result in more asset rich old people going on the age pension but happy to be corrected. Also requires a change to the SIS Act... sole purpose test and all that. Also might further push up prices in the FHB market. Can't see how it adds to supply, just pours more fuel on the demand fire.
     
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  2. datto

    datto Well-Known Member

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    This will be good for the market.
     
  3. Dmash

    Dmash Well-Known Member

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    Terrible idea but fortunately it Won’t happen because liberal won’t get in
     
  4. Marg4000

    Marg4000 Well-Known Member

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    The report I read said it was for first home buyers only.
     
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  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    For most people the two most significant assets they'll ever own are their home and super. They buy their home because they want a roof over their head, they contribute to super because they aren't give a choice.

    If you allow people to use super to buy a house, house prices go up further and the average person has that much less super. Both are bad outcomes.
     
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  6. GX1

    GX1 Member

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    I'm not convinced that this will be a popular policy amongst first home buyers.
     
  7. Arthurark

    Arthurark Well-Known Member

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    Honestly it’s a conflicted talking point but won’t mean much as this government is in tatters. Last minute desperate headline grab imo
     
  8. thatbum

    thatbum Well-Known Member

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    Is the actual policy written out somewhere to read in detail?
     
  9. Redom

    Redom Mortgage Broker Business Plus Member

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    Fairly big idea. That’s some serious punch. Not sure it’s the greatest economically, but ideologically it does set up for a contest of views.

    I know a few people who’ve flipped their vote already on this. Haha may be too little too late as others have suggested.

    nonetheless it’s understandable, the concept of being forced by a government to save and not be able to purchase a home is frustrating. For those waiting years to save up a deposit it’s very annoying given their balance sheet is overall stronger than other groups who may be picked as winners artificially by grant levels/etc. Also they are pretty annoyed the other party is selectively choosing other groups to buy a house for (always an issue with arbitrary caps, the government is saying ‘you get a house, but you don’t’).

    Between the two:
    - one party is saying use your own money to buy a house
    - the other party is saying the government will buy it for you

    Overall you can see why housing does well in Australia. Anytime it gets into a whiff of trouble the govt are out blowing petrol onto it!

    Broadly speaking this will have a much bigger positive demand factor than labor’s policy which is highly targeted and much smaller.

    Does set up for more of an idealogical test over the next week - use your own money to buy what you want, or have the government buy homes directly for you…will be the summary pitch.

    And while the integrity of the super system is weakened, I’m not sure retirement incomes are. Home ownership in retirement is directly correlated with better retirement outcomes, and this should mean more retirees own homes than not and it has payback provisions +growth. Leveraged growth too given loans will be taken.

    Separately the other policy to increase incentives to downsizers is exactly the type of productivity boosting and supply side policy responses required
     
    Last edited: 15th May, 2022
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  10. Redom

    Redom Mortgage Broker Business Plus Member

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    Also separately I think this idea is likely coming to Australia at some point. Whether it’s now or later…

    When prices are this high and many people can have super balances but can’t afford a home it’s a fairly obvious solution and generally cheaper to the bottom line than direct intervention (perhaps not if the government just buys houses for everyone directly over time!). I think the electorate will want it so it’ll be a matter of time before it’s allowed and someone does it.

    Treasury have floated (and advised AGAINST) this idea before.
     
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  11. Redom

    Redom Mortgage Broker Business Plus Member

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    theres a bit on their website
    Couples can do 100k (50k each).
     
  12. thatbum

    thatbum Well-Known Member

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    I can't find it. Can you link?
     
  13. Properwin

    Properwin Well-Known Member

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    Surely using your own money makes the most sense?
     
  14. thatbum

    thatbum Well-Known Member

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    I wonder what happens when you move out eventually and rent the house out? Income split with your super fund?
     
  15. Robert Chatsworth

    Robert Chatsworth Well-Known Member

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    You have to wonder if creating a bigger asset bubble is good financial management?
     
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  16. New Town

    New Town Well-Known Member

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    A crap idea! The super is your share market exposure and a house is your property exposure. You'll weaken your share market position while paying for property at a price you inflated.
     
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  17. datto

    datto Well-Known Member

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    This should push Mt Druitt house prices closer to the magic million dollar mark. It’s symbolic really. Revenge of the Bogans!
     
  18. thatbum

    thatbum Well-Known Member

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    I mean you can invest in property with your super funds if you want to - and lots of people do in various forms. So while it might be a crappy idea, I wouldn't say it's crappy just because of this reason.
     
  19. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    I think so too. If 25 year old me had a choice between super and govt I would have chosen super as I would never have wanted to give 40% capital gains away. Super interesting to see how Millenials compare the 2 options.
     
  20. Tony3008

    Tony3008 Well-Known Member

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    Historically (past performance ...) super has grown by about 8% on average so what you're being offered is a top-up mortgage from Bank of Self at 8%. Makes no sense.