Dipping into your super to buy your first home?
A few days before the Federal election, the Coalition has announced another policy plan to let first home buyers tap into their superannuation savings.
While it may seem a good idea, particularly for those who want to gain entry into the property market, the proposal is getting initial criticism that it will drive up house prices.
At this stage, it is still early to say what the impact will be on house prices as well as buyers’ appetites. At the same time, there are still many details to be threshed out.
In his initial and concise analysis of the Coalition’s proposal, Wealthi co-founder Peter Esho said, “While not as aggressive as the John Howard era Federal grants, which were free money, opening up super to buy your first home will have a significant impact on the sub $1m residential real estate market.”
He added, “On first impressions, it seems that many first home buyers can already access high loan to valuation ratio mortgage products, so this effectively gives them the deposit to get in the market and stimulate further demand.”
Whether this policy plan will deliver more votes for the Coalition or not remains to be seen. But as Peter said, “If it does work, it will provide a huge boost for market sentiment.”
If ever, Australia will not be the first to allow people to tap into their superannuation or retirement savings. Singapore has a similar scheme called Central Provident Fund (CPF), which is a compulsory comprehensive saving and pension plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare, and housing needs in Singapore.
If you would like to discuss the Australian property market in more detail, please reach out to the team to organise a time to have a conversation about how Wealthi can help you build a successful property portfolio.