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Australians are sceptical about housing affordability

Superannuation  |  29/05/2017  |   3 min read

The Turnbull government has proposed a new savings measure to help first home buyers get into the market. As outlined in the latest federal budget, super fund members will be able to make additional salary sacrifice contributions which they can use towards their home deposit. This money will be taxed at a maximum 15%, rather than the higher marginal rate.

Response to the plan has been mixed, and the general consensus is it will make little impact in cities such as Sydney and Melbourne, which have seen median prices jump to $805,000 and $605,000 in the last year.

According to John Flavell, the CEO of Mortgage Choice, the programs falls short. “At best, a couple who salary sacrifice a portion of their income into their super might be able to scrape together enough money to pay for the stamp duty charged in markets like Sydney and Melbourne.”*

This isn’t the first time the government has tried to give first home owners a helping hand. Back in 2008 the Rudd Government implemented its own savings scheme. It was axed in 2014 with just under 50,000 participants and average balances of $12,800. Well short of expectations.

We recently polled the public to get their take on the proposed initiative, here are some of their replies.

“House prices are so high that even the $30,000 isn't enough for a deposit. I would rather it stay invested in super for retirement.”

“The value of leaving that money in super will be far greater over the length of the investment than housing.”  
“Super is for retirement. We need to unwind existing policy such as capital gains tax and negative gearing to reduce demand rather than Super.”

“Super is a long term investment vehicle, it doesn't suit short term investing (which is what this plan is).”

“Isn't super meant to be used to save for your retirement, not provide a further stimulus to an over-priced property market

Despite the above sentiments, and the general scepticism around the scheme, our survey showed that the majority of people would take advantage of the option if it was available, with 60% saying they’d make additional contributions.

Before any of that can happen, the legislation needs to be passed in parliament. We’ll keep you updated.

*The NSW state government has since announced plans to scrap stamp duty for first home buyers purchasing properties for under $650,000. 

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