Why the “Super for Housing” Scheme Could Backfire – And What Policymakers Are Missing

There’s been a lot of noise again about allowing first-home buyers to dip into their superannuation to purchase a property.

It’s not a new idea—the Morrison government floated it in 2022, and now it’s resurfacing as a potential vote-winner for the Liberals ahead of the next election.

At first glance, it sounds appealing, doesn’t it?

Let young Australians use their own retirement savings to get a foot on the property ladder.

After all, homeownership is one of the strongest paths to financial security.

But here’s the catch — and it’s a big one: what seems like a helpful boost for first home buyers could actually inflate house prices and make affordability worse.

Let me explain.

A short-term sugar hit, a long-term problem

A recent Grattan Institute analysis warned that allowing young Australians to use their super to buy a home could push up house prices by as much as 10%.

That’s not a typo.

Ten per cent.

And it’s not hard to understand why.

This is because injecting more money into the market, particularly without increasing the housing supply, doesn’t magically make homes more affordable

It just drives prices higher.

We've seen this time and time again.

Whether it's first homebuyer grants, stamp duty concessions or other demand-side stimulus measures, the result is often the same: price inflation.

If everyone suddenly has an extra $50,000 or $100,000 to bid at auction, it simply raises the bar for all buyers.

And ironically, disadvantages the very people it’s supposed to help.

Grattan’s estimate suggests house prices could jump $75,000 in Sydney and $60,000 in Melbourne under such a scheme.

That’s a steep price for policies that promise to "help" aspiring homeowners.

Isn't superannuation my money?

Now I know what some people will argue — “It’s my super. I should be able to use it for a home if I want to!”

But we need to remember what superannuation is for.

It’s not a savings account.

It’s not designed for short-term needs.

Super is a long-term retirement vehicle, and it's one of the best tools we have to reduce future reliance on the aged pension.

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Using your super to buy a home today might solve a problem in your 30s, but it could create a far bigger one in your 70s when you’ve got limited savings to fall back on.

Treasury modelling has shown that a 30-year-old who withdraws $50,000 from their super today could be $90,000 to $100,000 worse off in retirement, even if you factor in the capital gains from owning property.

That’s because super grows tax-efficiently over decades, and compounding does the heavy lifting over time.

You don't want to rob tomorrow's comfort for today's pressure.

Especially when there are better solutions.

We don’t have a demand problem — we have a supply problem

The core issue here isn't that first homebuyers don’t have enough money.

It’s that we simply don’t have enough homes, especially the kind that younger Australians want to live in and can afford.

Policies like "super for housing" treat the symptoms, not the cause.

If governments were serious about tackling affordability, they’d focus on unlocking land supply, fast-tracking planning approvals, improving infrastructure, and creating incentives for build-to-rent and medium-density development in the right locations.

We need structural reform, not short-term sugar hits that just push prices up further.

So, what’s the alternative?

Instead of weakening our retirement system and heating up the housing market, let’s be smarter.

First-home buyers need help with education and strategic planning, not just more cash to throw at auctions.

That means:

• Financial literacy programs to help young Australians understand budgeting, saving, debt, and investing.

• Strategic buyer’s advocacy to guide them into the right kind of property — not just any property.

• Reassessing inefficient taxes like stamp duty, which are a major barrier to mobility and affordability.

And on the retirement front, we need to preserve and protect the integrity of superannuation, not treat it like an all-purpose piggy bank.

Final thoughts

We all know that homeownership is part of the Australian dream, and we want to help more people achieve it.

But dipping into super to fund house deposits is a short-sighted move that will likely push up prices, erode retirement savings, and fail to address the real affordability issue which is lack of supply.

Let’s stop looking for quick fixes.

If we really want to help young Australians succeed, we need policies that are sustainable, and strategic, and that make the system better for everyone