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Super to pass housing as your biggest asset?

Superannuation  |  8/08/2016  |   2 min read

Household superannuation assets have grown twice as fast as net home wealth in the 12 years to 2014, according to a recent report.

Melbourne University's Household Income and Labour Dynamics in Australia (HILDA) survey of more than 19,000 Australians said that average net home wealth (defined as mean home value minus mean home debt) grew 27% from $229,000 in 2002 to $291,552 in 2014.

On the other hand, household super assets over the same 12-year period grew 66% from $112,114 to $186,011.

HILDA Deputy Director, Professor Roger Wilkins, said the trend would likely continue: "I would expect house price growth to be lower than we've seen since 2002, and therefore I think super may possibly overtake the family home in the next twelve years."

Super's growth over the period occurred despite the impact of the Global Financial Crisis about seven years ago. According to ratings agency, CANSTAR, government policy has probably had the biggest impact, thanks to:

  • Increases in the minimum super contributions rate; and
  • Better tax incentives, for example, the Howard Government's 2006 legislation for a tax exemption
    to super investment earnings and drawdowns in retirement.

Unfortunately, the growth in super balances has not been evenly distributed, with less dramatic rises for people under 35. Professor Wilkins attributes this to subdued share market returns and lower work participation since the GFC.

For people approaching retirement, the growth of super balances relative to housing prices can have important long term implications. Speaking to a financial planner is a great way to understand your options, and how to make the make the most of your two biggest assets. You can learn more about Equip’s Financial Planning services by clicking here.

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