First home buyer plan could do more harm than good

First home buyer plan could do more harm than good

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Industry figures have reacted cautiously to a government proposal to let young buyers use their superannuation to fund their first purchase.

Treasurer Joe Hockey said he is concerned about the difficult position faced by first home buyers, and that Australians “need to have these conversations”.

"I get a lot of people approaching me saying that young people should be able to use their superannuation to fund a deposit … on their first home," Mr Hockey said.

Mr Hockey’s proposal comes after independent senator Nick Xenophon said last July that he would recommend a similar scheme to the parliament.

Senator Xenophon said the scheme would be like a Canadian arrangement that lets borrowers take up to $25,000 from their superannuation and repay it over 15 years.

However, Century 21 chairman Charles Tarbey said he was opposed to allowing first home buyers access to their super.

“I think super was put in there for a reason and I think it should be left alone,” Mr Tarbey said.

“Buying a property today means that they might get capital gain and it might be good for them, but it also could mean that they make a bad decision and the marketplace could change and they’re in trouble.”

One Agency chief executive Paul Davies told Real Estate Business he was open to any idea that could make life easier for first home buyers.

“There’s a big concern that prices are getting such that people just won’t be able to get into the market at all in inner-city areas,” Mr Davies said.

“I think in principle it’s a good idea if it helps people into home ownership earlier rather than later. But my concern would be that they would then be able to liquidate the property and the money wouldn’t go back to their super where it should reside.”

Warwick Williams from Warwick Williams Real Estate said he supported Mr Hockey’s idea in principle, although he also voiced concern about protecting people’s retirement savings.

However, he said one potential flaw with the plan is that it could send the wrong message to younger Australians about the importance of saving.

Mr Williams told Real Estate Business that he was also concerned that it might trigger higher prices.

“As soon as the government gave us some benefits on stamp duty and first home buyer grants, it was like turbocharging the market,” he said.

[Related: Has the first home buyer crisis been exaggerated?]

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