Australian federal election 2022 live: Wong says PM ‘wants you to gamble your superannuation’

CoreLogic, a property data company, has just released their take on the Coalition’s twin-pronged housing policy unveiled by PM Scott Morrison on Sunday at the campaign launch.

To summarise: CoreLogic says the ability to access superannuation for first-homebuyers will boost demand for houses and raise prices (as superannuation minister Senator Jane Hume conceded this morning – see earlier post, and Paul Karp’s piece here.) It will also increase inequality.

And as for the “downsizing” component of the plan, which Morrison touted this morning as part of the “balanced” housing policy because it will increase supply, CoreLogic is dismissive, noting that the existing scheme has not had a big impact.

In more detail, the data group says:

Allowing first homebuyers to access superannuation for their upfront housing costs on a broad basis will add to demand, and this could increase the cost of housing. This may be good news for homeowners looking to protect their wealth, or sellers in an environment where housing market conditions are starting to soften, but for first homebuyers it could erode some of the benefit of dipping into their super.

Overall,

It is a very challenging time to be incentivising more housing demand in the face of supply-side constraints. Housing construction costs have risen significantly, adding to the cost and timeline of new builds.

But on equity, CoreLogic makes this important point that actually very few young would-be buyers would have much super to tap into in the first place.

According to ABS data, the median superannuation balance in Australia was around $55,000 at June 2020. First homebuyers are typically younger, and the median super balance was just $25,000 for those aged between 25 and 34 years of age.

In other words, with the cap at 40%, the scheme would offer just $10,000 at the median level, or the equivalent of some state-based first homeowner grants. “CoreLogic data shows the current median dwelling value in Australia is $748,635, meaning the scheme could help increase the size of a standard deposit by around 1%.” Not so large.

Unlike the first home loan deposit scheme, or Labor’s proposed shared equity scheme, there are no income caps associated with the [Coalition’s] super homebuyer scheme, making it far more advantageous for young first homebuyers on higher incomes.

And as for the supply component, the data crunchers imply downsizing will not do much to increase the amount of homes on the market – which Morrison has stressed is a key part of the equation.

CoreLogic notes those over 65 years of age can already make a once-off contribution of up to $300,000 (per person if a couple sells), with the government previously proposing to cut this threshold to 60 by July. This will now be open for those 55 and over, if the government is re-elected.

CoreLogic says some 1.3 million households would be eligible for the scheme, but note that the existing scheme (for those over 65) came into effect in 2018 but hard triggered many takers.

[Only] around 22,000 had utilised it between July 2018 and May 2021,” the firm notes.

It seems that downsizing is a nice idea, but unless other deterrents – such as stamp duty hits – plus the fact that people quite like living in their existing home, suggest the greying hoards (this correspondent included) probably aren’t going to leap at the one.