A SILVER LINING TO HOCKEY’S NOT SO SUPER PLAN.

If you’ve been paying attention to the news and social media lately, no doubt you’ve seen the avalanche of criticism that has erupted over Joe Hockey’s suggestion that First Home Buyers be allowed to access their superannuation to help them purchase a home.

Mr Hockey isn’t the first politician to have made this suggestion. Last year, Senator Nick Xenophon mentioned a similar scheme he was planning on recommending to Parliament. While there are a number of different arguments about the merits of the scheme, most Australians are united in the belief that our superannuation should remain untouched.

This is obviously something people feel very passionate about. It has unleashed the same level of outrage that exploded in 2012 when Michael Bay announced he was planning on changing the Teenage Mutant Ninja Turtles into aliens. The internet blew up. Articles were written. Petitions were signed. And in the end, Bay backtracked and everyone’s favourite reptile martial artists emerged in 2014 with their original backstory largely intact. Unfortunately, they were still stuck in a terrible movie.

In all seriousness though, there are a number of very good reasons why people are upset over Hockey’s suggestion. Still, it is just a thought bubble and at this point in time it is a long way from becoming a reality.

The main argument against Hockey’s not so super plan is that superannuation was designed for a particular purpose and we shouldn’t mess with that. It’s there to ensure Australians have money during their retirement without having to rely on the pension. If First Home Buyers were to withdraw money from their super, how likely is it they will return the money? There would have to be very strict rules and regulations in place to ensure this happens, and even then, this wouldn’t prevent people from making bad decisions and losing all the money they withdrew. So the risk is they might not have enough retirement savings left for when they are older.

The more conspiratorially inclined among us think that allowing people to access their superannuation for anything other than the purpose it was designed for is a slippery slope. The government is already in the habit of appropriating money held in super funds for a number of years without being touched. The concern is a plan like this could open more doors for the government to raid our super funds for their own ends.

The other main objection people are voicing though, is actually rather inaccurate. Some commentators are concerned that the scheme would artificially inflate housing prices. They’re under the belief that armies of cashed up First Home Buyers will suddenly swarm open homes and auctions, driving up prices in a frenzy of unrestrained purchasing. This, of course, would not be the case. Not every young Australia is going to have enough money in their super to use as a deposit for a home loan. Those that do would still have to make decisions based on the amount they can borrow and their capacity to make repayments. Any money they might withdraw from their super is still their money and they’re not going to start throwing it around like confetti at the first opportunity. So any potential impact on the market would be minimal.

If we take a step back for a moment, one clear positive to come from all the heated discussion is that we are discussing it. It has gotten Australians to start talking seriously about housing affordability for young people, and in our book, that is a good thing. Investing in property is a great way to build wealth and financial security, and there are clear benefits associated with helping people purchase property and start building up equity earlier in their lives.

We’ve talked before about what First Home Buyers need to consider when they are looking to purchase a home and we’ve discussed some of the alternative paths they are taking into the property market. And while First Home Buyer numbers in the ACT are encouraging, they are not faring so well in the rest of the country. In January 2015, 48% of Independent Property Group sales were made to people purchasing their first home, but at the same time, according to the Australian Bureau of Statistics, the number of First Home Buyers as a percentage of total owner occupied housing commitments in Australia fell to 14.2%.

Obviously more needs to be done and while Hockey’s idea may not be the right way forward, we need to continue looking for ways to support young Australians on their journey into home ownership.

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