Coalition's Proposed Plan To Enable First Home Buyers to use Up to $50k in Super Towards House Deposits

brendanm on 15/05/2022 - 20:30
Last edited 16/05/2022 - 15:11 by 1 other user

Well, another genius bit of vote buying responsible fiscal management has been announced. First home buyers will be able to withdraw up to $50,000 from their super, not to be confused with the FHSS scheme, where the money had to be voluntarily added to your super fund first.

So the price of housing increases purely because people will instantly have more money to buy with, same as it did with first home buyer scheme, covid building grant scheme etc. On top of that, we will have people taking out huge chunks of what is meant to sustain them in retirement, missing out on a tonne of compounded investment returns.

Do people actually buy this rubbish? So they actually think this is a responsible thing to do?

Link here thanks to Hybroid

Financial Federal Election First Home Buyer Superannuation

Comments

  • avoidfullprice on 15/05/2022 - 20:31
    +12

    Add the bit that if this property is sold, the money withdrew has to be put back into super.

    And is up to 50k. The proposal is up to 40% of first home buyer's balance with 50k limit

    https://www.abc.net.au/news/2022-05-15/coalition-election-ca…

    • brendanm on 15/05/2022 - 20:35
      +13

      I said "up to $50k".

      Quite telling that the master builders association is right behind this idea.

      Add the bit that if this property is sold, the money withdrew has to be put back into super.

      Could work out well, could work out poorly.

      • avoidfullprice on 15/05/2022 - 22:11
        +22

        I'm against this scheme, as I'm hell sure people won't recognise this sale fine print, and become unprepared when they upgrade their place four years down the track.

        Quite telling that the master builders association is right behind this idea.

        What does quite telling mean?

          • conza on 16/05/2022 - 10:30
            +27

            @furakoph: See the issue I see is the following

            $50k today is neither, the investment result of $50k in super, nor $50k invested in houses over a period of time.

            So if you take $50k out of super, and then were forced to pay back in what $50k would be worth, had it been invested in the superannuation distribution you took it out from, sure, there's no 'harm' the the individual's life time savings.

            However, that doesn't appear to be the case, and even if it were, the withdrawing from super accounts diminishes the investment power of super funds, where they can buy shares in bulk at greater rates.

            So I don't agree with this policy as I understand it. It appears to be both mega inflationary and will boost house prices in the short term.

              • conza on 16/05/2022 - 10:48
                +15

                @furakoph: Yeah, there's 2-3 trillion in super depending on who and when you ask, and how you count it, but there's obviously also 1000s of funds, and within those 10s of thousands of accounts, so depending on how popular this policy became in terms of uptake, it could impact on individual funds power, and if that occurs it would impact funds and therefore accounts overall. I can't predict how bad this would be, only that this policy has the potential of doing so.

                I think the best plan for house prices, is for them to grow, at an extremely slow rate, we don't want them to fall (but occasionally a little would be fine) and we don't want them to rise significantly either. Houses should be places to live, not investments.

                • furakoph on 16/05/2022 - 10:52
                  -4

                  @conza:

                  Yeah, there's 2-3 trillion in super depending on who and when you ask, and how you count it, but there's obviously also 1000s of funds, and within those 10s of thousands of accounts, so depending on how popular this policy became in terms of uptake, it could impact on individual funds power, and if that occurs it would impact funds and therefore accounts overall. I can't predict how bad this would be, only that this policy has the potential of doing so.

                  I very much disagree with this. Young FHB's would not be making up a significant portion of total super. On average, 1 60yo probably has as much super as 50 FHB's in their 20's. And it needs to be put back into super when they sell their house.

                  It'll be far less than the 20k super withdrawal during covid.

                • starspawn on 16/05/2022 - 21:29
                  +19

                  @conza: Bingo. The whole notion that houses have been setup as investment vehicles has led to these exact problems that we are currently facing with housing availability and affordability.

                  • cameldownunder on 17/05/2022 - 13:10
                    +9

                    @starspawn: Agree: 1 household = 1 house. Speculating on House/appartments homes in immoral.
                    Some countries are pushing hard against "investment properties"
                    Also I think the original idea was that Investment properties had to be new buildings, which you could argue that investors create new dwellings, but if they invest in existing one's then they are taking it away from the market from people who don't own.

                    I suggest Heavy taxation on second ( non owner occupied ) properties.

            • bman20 on 16/05/2022 - 14:20
              +2

              @conza:

              diminishes the investment power of super funds, where they can buy shares in bulk at greater rates.

              I am not trying to be obtuse but you simply have no idea how shares work if this is what you think. You don't get a discount when you want to buy a higher amount of shares, if anything you pay more.

              • conza on 16/05/2022 - 14:35

                @bman20: Yeah so, I simplified, significantly. Trading has multiple costs associated with it and super funds make money from fees, if they're spending the same amount of time and money, with less money, they'll make less. But they won't make less, they'll find a way to pass on the difference to the accounts. If there are more accounts the cost of trading reduces.

                • furakoph on 16/05/2022 - 14:58
                  -1

                  @conza:

                  if they're spending the same amount of time and money, with less money, they'll make less. But they won't make less, they'll find a way to pass on the difference to the accounts.

                  Just pure speculation with nothign to back it up.

                  • conza on 16/05/2022 - 20:52
                    +1

                    @furakoph: Look if you're not aware of how super funds, I'm sorry but the comments section of an ozbargain post isn't the place. There are fees in superannuation, you can look them up in your own time, if you disagree with me, fine.

                    • furakoph on 17/05/2022 - 09:49
                      -1

                      @conza: I dont think you know super if you think withdrawls that a very minor is going to affect anything lol. You realise billions are withdrawn weekly as part of retirement?

                • bman20 on 17/05/2022 - 10:23
                  +3

                  @conza: You haven't simplified anything, you have misunderstood it. Everything you have said is based on rules you have created in your head and not the actual policy.

                  But they won't make less, they'll find a way to pass on the difference to the accounts.

                  Literally making stuff up.

                  Using your very abstract example of super funds needing greater scale to run more effectively (really bonkers line of thought in relation to this policy but i will indulge you). First home buyers taking out up to 50k for the purchase of their home, only to have to return it with the associated capital gains when they sell will have very little impact on the total amount of money in super. Your super is likely largely invested in property already however you are paying your super fund fees for the pleasure, as you have pointed out. Your super fund may well own properties just like the one you work from however they are charging their management fees to do this for you (as well as all the other expenses that apply to property ownership). When you take your $50k and put it towards buying your own home, there are no management fees for you to pay at all. You are investing your super into an asset that is very likely to outperform your super.

              • starspawn on 16/05/2022 - 21:30

                @bman20: Your superfund allows your money to be invested through bit parts of shares, which you can't normally do otherwise.

              • 811b11e8 on 17/05/2022 - 19:54

                @bman20: I think his reffering to block trades where large super funds can buy large amounts of shares without affecting the trading price. Often buying at a discount as the seller doesn't want to tank the share price off loading a significant amount of shares.

            • esosite on 16/05/2022 - 18:04
              +9

              @conza: Conservatively if you had a mortgage for 30 years, eg didn't sell your house over 30 years. That $50k at a very conservative 5% annual growth/profit in super would be worth ~$220k at the end of 30 years. If you push that up to say 7% annual return (such as Q Super balanced outlook account) and your at $380k at the end of 30 years.

              Raiding super for a non-productive asset (PPOR) is going to cost us in the future significantly, but Morrison et al will be either dead or in a nursing home with dementia by the time any of their (profanity) ups come home to roost, a few more years in the seat will be worth it for them im sure.

              • bman20 on 17/05/2022 - 08:48
                +2

                @esosite: While what you are saying is correct in isolation, it shows that you have not actually bothered to read the proposed rules.

                This scheme is targeted at younger Australians as a way to get in the market. If you put in $50k from your super and you sell your home in 10 years time for double the price (conservative growth in Sydney/Melbourne), you will need to put $100k back in to super. You do not get to keep the cash. You can then use the equity you have built since buying your first home to buy your second home without any help from super.
                Housing prices in Sydney and Melbourne have been growing at more than the 7% you mentioned from Qsuper. As a result, for most people using this scheme, your super funds will be better off by the time you reach retirement than if you had not taken advantage of the scheme.

                I will never get over how some folks that are financial neophytes feel the confidence to actually make judgements on such a policy without putting effort in to understanding it.

                • cameldownunder on 17/05/2022 - 13:23

                  @bman20: That is probably correct, what you are writing. But to access the "increased money from super" they need to SELL the house/apartment. So what we will see in future is house owners with less money they should have, and since homes ( currently ) are not considered when handing out pensions, more load will be put on to pensions, which is being forked out by taxpayers.

                  The other joke from SCOMO, is that money from the sale will not be assesses FOR 2 YEARS. Might be interesting for someone who knows he/she's about to pass, but for someone expecting to live another 15 years, not so much.

                  Better solution would be to waive the stamp duty for pensioner, who sell their property, to buy another ( hopefully ) smaller one, or not so close to the city.

                  • bman20 on 17/05/2022 - 14:23

                    @cameldownunder: The average duration of property ownership is 7 years in Australia. The chances of a 30 year old living in their first home for the rest of their lives, anecdotally, wouldnt be far off 0%. Speaking for myself (being in that age bracket), i dont know anyone that plans to remain in the home they own for the rest of their lives.
                    My point is that the chances of your scenario playing out isnt as significant as it may sound.

                    Regarding stamp duty, that is a state matter. The pension and this scheme are federal matters.

          • Drakesy on 16/05/2022 - 10:35
            +34

            @furakoph: Only thing is super is there to sustain you when you retire.
            That has been and will always be it's role.

            Taking money out of it will.
            1. Significantly reduce your superannuation payout at the end (by as much as 150%
            2. Kick the can down the road. Basically throwing more people onto the pension earlier (which super was brought in to phase out). hence will ultimately do what the current government wants and that is for you to keep working until you die, or at least live on rice and water for your retirement until you die.

            It's another short sighted policy treating the symptoms and not the cause.

              • Drakesy on 16/05/2022 - 10:51
                +40

                @furakoph:

                There's no point accessing my super in 40 years just wasting it away by paying rent.

                I think this is the issue with how liberals see super vs how Labor sees super

                Liberals see it as 10% of your wage that can be dipped in to anytime.
                Labor see it as 10% on top of your wage To be locked up until retirement to take away the burden from the taxpayer and pension system

                House price growth will stagnate if not go backwards as the recession hits, enabling people now will just push the peak further on and increase the pain when they realise they're in negative equity AND have no superannuation left.

                • furakoph on 16/05/2022 - 10:58
                  -7

                  @Drakesy:

                  Liberals see it as 10% of your wage that can be dipped in to anytime.

                  I should be able to access my own money to have a shelter and roof over my head that I call home. Especially if it means that I will be much better off in retirement.

                  This policy is a tax effective investment + australian dream into one. I don't see any better use of super than to be able to pay for your PPOR.

                  Labor see it as 10% on top of your wage To be locked up until retirement to take away the burden from the taxpayer and pension system

                  I would agree with this in general unless it is to pay for a house. When your super can't pay for rent anymore, it becomes even worse burden on the pension system.

                  House price growth will stagnate if not go backwards as the recession hits, enabling people now will just push the peak further on and increase the pain when they realise they're in negative equity AND have no superannuation left.

                  You're looking at a very short term view, you shouldn't be worrying about anything less than a 10year timeframe when it comes to property. And you can't argue that this will drive house prices up and also cry that people will be left in negative equity. Which one is it? Choose one.

                  • lunchbox99 on 16/05/2022 - 13:54
                    +13

                    @furakoph: All it will do is instantly drive up house prices even more so that you are no better off. You will just have $50k less in your super and pay $50k more for a house than today ,so it will do nothing to address first home barriers if everyone is doing it.

                    • furakoph on 16/05/2022 - 14:56
                      -4

                      @lunchbox99:

                      All it will do is instantly drive up house prices even more so that you are no better off. You will just have $50k less in your super and pay $50k more for a house than today ,so it will do nothing to address first home barriers if everyone is doing it.

                      That is only so if everyone buying has access to this scheme but they dont.

                      Only a small minority has access. It'll have negligible/small increase but not more than the amount of the super used to purchase the house

                      • lunchbox99 on 16/05/2022 - 18:38
                        +16

                        @furakoph: Come on, it's a stupid policy simply designed to stop house prices from falling or stagnating. What they should be doing is increasing supply of housing and remove generous tax treatment for investors. They won't cause there is an unwritten pact that they will do everything possible to prop up the housing market.

                        • furakoph on 17/05/2022 - 09:53

                          @lunchbox99: At the end of the day, politicians do what is popular.

                          Fact is majority of voters own a home and prefer house prices going up than down.

                          If it is the difference from a FHB owning their first home compared to having to rent, then i'm in favour of it.

                          From a pure investment pov, it is even more tax effective than super and may be a financially better option espeically if property rises more than super like it has past 2-3 decades.

                      • ankor on 16/05/2022 - 18:50
                        +7

                        @furakoph: You can say the same about first home buyer grants etc. not everyone has access to them but they have pushed up the cost of housing. All of your 'arguments' are pretty weak ones..

                        • furakoph on 17/05/2022 - 09:53
                          -2

                          @ankor: House prices are going up regardless of FHBG. Your 'argument' is pretty weak. Correlation doesn't mean causation.

                          Also you're assuming there is an issue with house prices going up? I like house prices going up. So do majority of voters.

                          The problem is having house prices go up whilst allowing FHB's to get in, win for everyone. And this policy does that.

                      • greatlamp on 18/05/2022 - 07:25

                        @furakoph:

                        Only a small minority has access.

                        That's where your predictions are falling over. You are thinking of real estate like any other market traded good.

                        It doesn't matter if only 10% of people have access to it, ALL houses will increase in price.

                        If a house in the street sells for 50k above average, the value of all the other homes in that street instantly increases as well.

                        So, do you still support this policy with the understanding that the only people who will actually benefit are those who are already wealthy enough to own a home, and banks?

                        • rektrading on 18/05/2022 - 07:29
                          +1

                          @greatlamp: People who own a home (outright or with a mortgage) aren't wealthy people.

                          • greatlamp on 18/05/2022 - 07:34

                            @rektrading: I didn't intend that.

                            However there is an entire generation now whose access to the housing market will depend on family wealth.

                            We are watching a class divide developing in this country in real time. The lucky country is dying.

                            People need a home. That home doesn't need to be worth $1 million dollars, that same home can be worth $300 k. If you are literally a millionaire, I think you are wealthy compared to someone who will likely be renting for the next 20 years

                        • furakoph on 19/05/2022 - 09:31

                          @greatlamp: That's wrong.

                          It's simple supply and demand.

                          If only 10% people have access to an additional amount, it's not going to drive up the price of property significantly compared to if everyone has access to additoinal 50k. The reason is that the demand does not go up as much as it can theoretically.

                          • greatlamp on 19/05/2022 - 11:29
                            +2

                            @furakoph: It's not simple supply and demand.

                            If the last comparable sale is 10% higher, the price of the area will be 10% higher.

                            It is not simple supply and demand because the suppliers will choose not to sell their home at the old price.

                            Demand will meet supply because supply will decrease until the 10% higher cost holds.

                            This is what is observed in the real world.

                            Manufacturers cannot choose not to sell their goods produced, they will continue to sell their goods until they are pricing them at marginal cost i.e. literally at $0 profit. They need to sell their goods to keep their operational costs paid.

                            Taking basic economic 101 theories which were developed to model the supply and demand of generic widgets in a competitive marketplace and applying them to the real world scenarios is problematic when you don't consider the assumptions those models include. They certainly don't represent the real estate market

                • johndoh89 on 16/05/2022 - 22:28
                  +8

                  @Drakesy: Liberals see super as another public service they need to gut and destroy. Let everyone raid their super, wait a few years. Tell everyone "Look how bad super is, we should just cancel it so everyone has to engage with private investments for their retirement"

                  Just like look how bad telstra are, look how bad the public hospitals and Medicare are, how bad the public schools are, how bad the public broadcaster is, how bad the public water, electrical or anything else providing a public service.

                  • ThithLord on 17/05/2022 - 09:00
                    +2

                    @johndoh89: You nailed it. Gut everything by a thousand cuts, point back to it a few years down the track and say "See? Labor's ideas are bad."

            • bman20 on 17/05/2022 - 08:54
              -1

              @Drakesy: When you sell the property you are required to put the proceeds plus associated capital gains back in to super. The vast majority of people that take advantage of this scheme will therefore likely have higher super balances come retirement than if they had not utilised this scheme.

              Your first home is very rarely the last home you buy. Folks aged 60 on the brink of retirement are very unlikely to be able to take advantage of this due to lack of financing options.

              Kick the can down the road - Have you given it any thought? You say it as though the government is allowing you to take 50k out of super to buy groceries. They are letting you use this money to help you buy a property, the single most important aspect of a comfortable retirement. Speak to a retiree that is renting… You will have security that your landlord is not going to evict you at 80 years of age and you will also be saving in not having to pay said landlord rent.

              • Drakesy on 17/05/2022 - 09:27
                -1

                @bman20: Property isn't going to appreciate faster than super, it hasn't in the past and it won't in the future.
                Yes we've had a couple of good years of property growth but super is still outperforming

                • tonka on 17/05/2022 - 09:40
                  +2

                  @Drakesy: If housing appreciation is 6.5% and rental savings is 5%, return is 11.5%. Average super return is about 8%. (And that 5% rental return may well double every 10 years).

                • furakoph on 17/05/2022 - 09:55
                  +1

                  @Drakesy: That's BS.

                  Over the past 15 years, the average Australian Superannuation funds have returned 5.19 percent per annum net, with retail Super funds at 3.84 per cent and industry funds at 5.59 per cent. Over the same period, Australian property has grown by 8.42 per cent.

                  We can't predict the future but to say super always beats property is false for the last 20-30 years.

                  • bman20 on 17/05/2022 - 09:59
                    +1

                    @furakoph: They're either dim or deliberately deceptive. Will give them the benefit of the doubt and go with the former. It is staggering.

                • bman20 on 17/05/2022 - 09:57
                  -2

                  @Drakesy: Again @Drakesy, stating made up facts. It has performed better than super in the past and there is no indication it will not continue to do so.

                  I appreciate that the performance of super varies drastically between funds and that the same applies to residential property. Across Australia (i.e including areas like WA that have been relatively stagnant over the last 10 years), property prices have increased by around 13.5% on average each year. Even if you use your very aggressive example of 10% growth rates within super (over the last 15 years growth rates have been around 7.5% on average), you tell me which is higher - 13.5% or 10%? In fact, a large portion of your super is likely invested in property already and the property it is invested in does not afford you any near the same tax breaks as investing in your PPOR.

                  I really cannot fathom why you offer input into something you do not understand at all. It wreaks or being a rusted on ALP voter that simply wants to throw their hands in the air at any policy the coalition announce.

                  Sauces for you:
                  https://www.australiansuper.com/superannuation/superannuatio….
                  https://www.9news.com.au/national/australia-property-and-hou….

                  • Drakesy on 17/05/2022 - 10:51

                    @bman20: *Past performance is not an indicator of future performance
                    And
                    Are you sure about that?
                    Perth Property Prices haven't gone anywhere in 10 years, imagine having zero growth on your super in 10 years?!
                    And Sydney and melbourne are only just starting to falter

                    • tonka on 17/05/2022 - 11:23
                      +1

                      @Drakesy: 'imagine having zero growth on your super in 10 years', or imagine losing it, I mean who would have thought borders would close and whole countries would lock down, it at least a house you can live in if the world tanks. There's pros and cons only the future can tell.

                    • bman20 on 17/05/2022 - 14:27

                      @Drakesy: Good grief.

                      Your original comment was preaching that the returns within super have been and always will be better than housing. I provided you with pretty clear evidence that the truth is exactly the opposite of what you have said and then you go on to say that the underlying metric, for which you used first, is flawed.

                      Good luck troll.

                      • Drakesy on 17/05/2022 - 14:45

                        @bman20: Can't argue with that!
                        Just saying
                        If you bought in perth the past 12 years you've technically gone backwards
                        And if you buy into Sydney or Melbourne now you're forgoing a lot of possible gains as the market peaks

                        But hey I'm not a financial advisor

                      • Drakesy on 17/05/2022 - 15:29

                        @bman20: see Here

                        Super has outperformed houses by roughly 0.5%
                        And thats when housing was going 'well'

                        • furakoph on 19/05/2022 - 09:29

                          @Drakesy: You are also not accounting for the increased leverage of a PPOR and tax free gains compared to super.

                          Even though property has actually beaten property last 2 decades,the actual net returns are far greater due to leverage and no 15% super tax.

                    • johndoh89 on 17/05/2022 - 19:57

                      @Drakesy: It's largely going to be luck of the draw. Is the super fund going to pick the right horse or are you? Depending on where you are, unless your super fund is yoloing your money on meme stocks, real estate could have been a big money maker for you. Other places your money could have stagnated.

                      If I'd been able to utilise this on the house I'm in now in 2019, my $50,000 would be worth about $90,000 if I sold today. In 2019 the house was worth $525,000, I bought the house in July 2021 when it was somehow worth $800,000. I thought it was a nearly insane price hike and almost walked away from the bidding.

                      Yet 6 months later a near identical, size and age house sold three houses down for $970,000. I've already fixed the only things that put this below the other. Nothing comparable has sold for less than what I paid since then. Even places with half the land and less bedrooms are closing in on my purchase price.

                      Without any meaningful knowledge on the subject, I'd guess it would be hard to find a super fund that did as well.

                      The best according to Canstar over 5 years was 11%

        • Mysterious Laptop on 16/05/2022 - 13:04

          That doesn't make sense at all. How is 'people not recognising the fine print' a negative for this scheme? It's everyone's responsibility to do due diligence..

          • Drakesy on 16/05/2022 - 14:00
            +11

            @Mysterious Laptop: I think given our current choice of government some Australian's aren't the brightest.

          • bman20 on 17/05/2022 - 10:15
            +2

            @Mysterious Laptop: it's code for i don't know what i am talking about but i dont want these guys to get re-elected.

      • iDroid on 18/05/2022 - 12:22
        +2

        Could work out well, could work out poorly.

        History suggests that any increase in buying power in turn increases house prices.

        It's a thinly veiled attempt to lessen the impact of interest rates rises masquerading as an assistance to home buyers.

    • deveshwar0 on 16/05/2022 - 08:22
      +4

      It's not just the initial money that has been withdrawn from the super which needs to be returned to it.
      From the policy:
      "whatever amount is invested will be returned to your super when you sell the home, including the share of the capital gain from the sale of that home".

      • rektrading on 16/05/2022 - 08:43

        People shouldn't be too worried about paying it back. That part of the policy can change in future.

        • Beef jerky time on 16/05/2022 - 10:49
          +23

          That part of the policy will change in the future as another tactic to keep house prices rising and to keep poor people poor. It's literally how the Liberals work.

            • FourBeanMix on 17/05/2022 - 12:49

              @SlavOz: “Earned”

            • bakemon0 on 17/05/2022 - 12:50
              +4

              @SlavOz: missed the part where you can buy back the government's shares of your own house when you can afford to? or are we just fear-mongering to push an agenda?

              also you're saying the government's share is proportional only when the prices goes up but not if it crashes? nice made-up policy you got there, you got anymore to draw out of a hat?

              • SlavOz on 17/05/2022 - 15:07

                @bakemon0:

                missed the part where you can buy back the government's shares of your own house when you can afford to?

                If people could afford anything when it comes to houses, we wouldn't need absurd policies like this in the first place. Most people who take up this offer won't be able to buy back the government's shares.

                Also not sure how much the government would charge to sell their shares. Would they charge you the original investment they put in or would they want it adjusted at today's prices?

                also you're saying the government's share is proportional only when the prices goes up but not if it crashes?

                As far as I'm aware, if the market crashed or the house sold for less than what it was purchased for, Labor would still be entitled to collect the money they paid in. So the loss is completely on the homeowner. The government can't lose. They can only profit.

            • Miss B on 17/05/2022 - 14:51
              +4

              @SlavOz: In another comment on this same post you were just talking about how great the scheme was for people because they were getting free money from the government.

      • postform on 17/05/2022 - 11:22
        +2

        Yes but.. the point of super is not just saving dollars, its the compounding interest effect of investing in ETFs that return 9-12% p.a. over a period of whatever years you held the home which you lose out on if this money was removed from your super.

        • rektrading on 17/05/2022 - 11:29

          Prime real estate 2x every 7Y.

          • tonka on 17/05/2022 - 11:30
            +2

            @rektrading: Plus 4-5% on rent saved

          • postform on 17/05/2022 - 11:33

            @rektrading: Prime real estate is out of reach for almost 80% of the population. I would think if you are able to afford 2m + property as a FHB, you would not be the target market for this policy.

            • rektrading on 17/05/2022 - 11:38

              @postform: A $500,000 or a $2M home shouldn't matter as long as they meet the requirements to take the 💵 out of the pension fund.

              • postform on 17/05/2022 - 11:43
                +1

                @rektrading: But you mentioned the metric 2x every 7Y for a "Prime" real estate. Have you looked at the so called non-prime real estate thats priced under 1m?? A lot of the new homes lost value, because most, if not all homes under 1m coming out for families (which this policy would be aimed for), don't have any land or small 200 sqm of land. The main premium end of the market all had 500sqm or more of land which attracted a large premium, as every tom dick and harry wanted to subdivide and sell them off 600-700k a pop. (Not saying thats wrong) but I do think the "7Y 2X" won't be the same going forward for those poorly built, small plotted homes which as you said "Shouldn't matter" but I think it will.. fundamentally if you look at units which at A $500k, they haven't performed at all. In fact they barely kept up with inflation in the last 7 years.

                • rektrading on 17/05/2022 - 11:45
                  -2

                  @postform:

                  https://www.smh.com.au/property/news/do-house-prices-really-…
                  Do house prices really double every 10 years?
                  By Elizabeth Redman
                  December 6, 2021 — 5.45am

                  Percentage increases in the 10 years to October 2021
                  -Do house prices double every 10 years?
                  146.4%
                  -Sydney
                  117.6%
                  -Hobart
                  108.2%
                  -Canberra
                  105.6%

                  • tonka on 17/05/2022 - 11:48

                    @rektrading: I have a cheap unit in Sydney, worth same as 10 years ago, it sux.

                    • rektrading on 17/05/2022 - 11:50

                      @tonka: How is the rent? 4% to 7% per year?

                      • tonka on 17/05/2022 - 11:54
                        +1

                        @rektrading: About 2.7% net after strata/council. Probably a very good example of supply stopping price growth. Liverpool.

                  • postform on 17/05/2022 - 11:51

                    @rektrading: So you are comparing the last 10 years RE vs stocks for the last 150 years?

                    Ok if we compare 2011 to 2021 for S&P 500 - we have a 244% increase in value. (Keep in mind those figures you mentioned don't consider any brokerage fees, council rates, repairs, body corp or any other fees to maintain - with index funds - even with the fees incorporated it would be still smoking it by an increase of 235% in the same period.) And this isn't even including dividend payouts that are generally in the 4.24% annualised amount (And its in USD).

                    Regarding your "rent" figures, sure. But you are forgetting if you live in your home, you'll be paying more in "interest" than rent in the same period of 2011- 2021 (sure the exception being we had crazy 1.9% loans which 80% people are hopping off and going to 3-4% loans in the next 3 months)

                    P.s. last 10 years probably the worst 10 years to base your judgement for future returns, as the last 10 years we've had the BIGGEST expansion of credit, and yet our GDP is slowly going negative. I wonder what happens when the party stops like it is now with interest rates rising and China/US posting very poor GDP figures. - Hint take a look at Canadian and NZ markets who pushed interest rates faster than us - bare in mind we're only 2 months away from where they are)

                    • rektrading on 17/05/2022 - 12:03

                      @postform: I'm not interested in 150Y of stonks prices but let's play the game anyways just for fun.

                      History Shows
                      The past 100 years show real estate prices have continued to rise and have been appreciated almost 1,000 times every decade. The prices doubled from the ’50s to the ’60s and nearly doubled from the ’60s to the ’70s. Once New York City came out of bankruptcy in the late ’70s, international buyers noticed New York real estate. Prices went up almost six times in the ’80s and more than double again in the ’90s. The average price for a sale in 2016 is $1,470 PPSF, while the average rent in Manhattan today is $4,374.

                      The 1910’s:
                      The surge in demand for housing, World War I
                      – Sale: $8 PPSF, Rent: $40/Mo.

                      2020
                      COVID-19 Pandemic
                      – Sale: $1,142 PPSF, Average Rent: $3,625 /Mo.

                    • rektrading on 19/05/2022 - 08:04

                      @postform: Gm frens,

                      My bags feels a bit heavy but it's not from stonks.

                      The S&P 500 is down 17.7% in the first 95 trading days of 2022, the 2nd worst start to a year in history. $SPX https://t.co/uOqgOKYU6s

                      It would be priceless if the SPX 2022 set a new record to beat 1932.

        • tonka on 17/05/2022 - 11:37

          What is the risk exposure on ETF? 9-12% every year seems a lot to lock in for 20-30-40 years

          • rektrading on 17/05/2022 - 11:41

            @tonka: The stonks market has been rekt since the feds said 👻 with rate hikes and QT.

            • postform on 17/05/2022 - 11:56

              @rektrading: And you don't think QT and rate hikes affect the property market?

              • rektrading on 17/05/2022 - 12:16

                @postform: Homeowners can't panic sell on Robinhood. It takes weeks and sometimes months to sell a home.

                This gives the homeowners time to find more money, get a second job, open a YT channel, Onlyfans, change their minds and continue to hodl.

    • Franc-T on 16/05/2022 - 13:49
      +5

      Its irresponsible, no impact apart from short term, will just have inflationary affect on house prices and depressing affect on super in long term leaving that money permently out of super till the house is sold.

    • morebunnings on 16/05/2022 - 18:36
      +4

      https://i.imgur.com/BhZEexG.jpg

      Average 25-34yo has $41k, so could take out $16k @ 40%.

      16k won't help much on a $1mil house.. Is this targeted at 35+ people?

    • grr1701 on 18/05/2022 - 10:39
      +2

      Average Superannuation savings for 25-29 year-old male is $25173 and for a female is $21774. Plunder 40% of those figures and they’d have $10069 and $8709. I doubt this would make them very competitive in most hosing markets; unless they want to move into small country towns.

    • iseeyou1312 on 18/05/2022 - 15:55
      +1

      It might have made sense if you could make an early withdrawal so that you could salary sacrifice and put that towards a deposit without counting towards the contribution cap, but the policy in its current form is just ripping off young people to prop up our property bubble.

  • Hybroid on 15/05/2022 - 20:36
    +18

    Short-term thinking has always been a human failing since we cannot guarantee the future. Else the fallacy of buying cheap Kogan products would no longer exist. It really depends on each person's perspective though and it'll surely benefit some people.

    Did read it was meant to be July 2023 though so gives rest of us a year to buy and with prices starting to go down lately, might be opportune time to do so now…

    Reference for others unaware: https://www.abc.net.au/news/2022-05-15/coalition-election-ca…

  • SF3 on 15/05/2022 - 20:38
    +23

    Yes, FOMO needs to keep the economy going into developers pockets.

    • MaxPowerz on 17/05/2022 - 07:01
      +6

      Who do you believe about the credibility of this policy? Numerous economists and experts that say it's crook, or a desperate PM who comes up with this brain "fade" in the dying days of this parliament and despite being asked on several occasions, refuses to acknowledge, let alone give details of the modelling he used to come up with this policy?

      Let's be clear about what this is - it's a sham policy intended to transfer more wealth to property developers and existing home owners.

      First home buyers risk raiding their super, with the inevitable result that house prices get pushed up by more than their super withdrawal (because the bigger deposit increases borrowing capacity).

      So end the result is higher house prices, a bigger mortgage and less super.

      • ThithLord on 17/05/2022 - 09:02
        +4

        higher house prices, a bigger mortgage and less super.

        After that happens: Liberals dust their hands job done

  • WreckTangle on 15/05/2022 - 20:40
    +74

    Watch house prices rise. The coalition only want to protect property prices. They can (profanity) off.

    • brendanm on 15/05/2022 - 20:41
      +9

      Labor is also doing a (similar but different) thing with their "co-ownership" idea. Injecting cash where there was none before.

      • MarsTitan on 15/05/2022 - 22:16
        +45

        Labor policy: 10K places for 600K properties sold in a year is 1.6% of sold properties (with caps) — hardly going to change much.

        Liberal: No cap AUD 100k (* 50K per partner) will put a rocket under the whole housing market (all 600K sold properties can expect a 50K to 100K rise once this policy is enacted).

        600K figure ref

        • avoidfullprice on 16/05/2022 - 00:35
          +12

          properties can expect a 50K to 100K rise

          The effect is an additional 50k to 100k deposit allows them to leverage 200k to 400k more in property price (assume less than 80% LVR) if buyer's income allows. Streched buyers with higher income figures can leverage higher, putting them under more mortgage stress.

          The problem isn't the propped up prices from this, but the deeper debt people get into! If they can't service the mortgage, the sell off will bring the prices back down (until investors come in and grab the bargain). The saving grace is with rising interest rate, the buyer has less borrowing power to afford higher property price.

        • Boshait on 16/05/2022 - 08:53
          +7

          The best thing about Labor's policy is that it does less. All policies to "improve affordability" implemented or proposed by either party since the 90s pump up demand and push the market even higher.

          No-one wants house prices to drop or even stabilize.

        • SlavOz on 16/05/2022 - 10:14

          You're omitting the fact that LNP's policy relies on people using their own funds. That in itself acts as a deterrent. Labor's supplement scheme is taxpayer funded - in other words it's free money they wouldn't have otherwise had.

          It's reasonable to expect that that everyone eligible will apply for Labor's supplement scheme. That's why they had to put caps on it. But I really doubt there's going to be over 100k new home-owners a year under the Coalitin's scheme. Young people don't have $50k in super to blow.

          • Drakesy on 16/05/2022 - 10:40
            +8

            @SlavOz: Lets be hones though, the liberal's policy would be tax payer funded in the long run when people who've burnt/dumped their super into a house miss out on years of compounding interest resulting in them going onto the TAXPAYER funded pension system earlier.

            So basically the future generation will once again have to shoulder the burden that this generation has created.

          • Miss B on 16/05/2022 - 18:06
            +5

            @SlavOz: Labor is not giving people money, they own a percentage of the house. If you sell, the government get their share -% not $. If your income goes over $90k ($120k couples) it appears you need to sell or buy them out. LNP can decide they will scrap it and force people to sell or buy them out.

            I'm looking to buy a house and would meet all of the requirements of the Labor scheme. While it would take pressure off in the short term, it is not a decision to be made lightly.

            I honestly can't say whether I would do it if I had the opportunity. If I did I'd be wanting to buy the government out at the first opportunity.

            • SlavOz on 16/05/2022 - 18:15

              @Miss B:

              they own a percentage of the house

              Because they subsidise your purchase and pay for a portion of the bill. So it is free money.

              Honestly, all housing policies from both LNP and Labor are just making things worse. Stimulating the market by helping people buy a home just raises demand even further, which is going to cause prices to increase.

              It's like nobody has the heart to tell them that they've got chewing gum on their bum. They're just making it worse. The best thing they can do is get the hell out of the housing industry and stop intervening.

              • 2ForTheMoney on 16/05/2022 - 18:29

                @SlavOz: Agree with you, although the best thing they can do is enact good policy to promote new housing supply.

                Remove draconian zoning blocks and piecemeal land releases. Lots of underdeveloped land in Sydney.

            • markathome on 16/05/2022 - 19:38

              @Miss B:

              I'm looking to buy a house and would meet all of the requirements of the Labor scheme. While it would take pressure off in the short term, it is not a decision to be made lightly.

              A third-party is offering to take a cash stake in an investment that is at an all-time high and that fundamentals of (interest rates) have now significantly deteriorated. Markets predict those fundamentals will worsen further over time - their view is supported by expert commentators on the subject, recent history and statements by the controlling entity. Regardless of who owns it, the investment will significantly reduce your day-to-day living expenses, dramatically improve your retirement outcomes and could even improve your love life. The question isn't if you should use the scheme if you're eligible, it's how many other people you should run over to try and get it.

              My plans to quit my job for a year in the hopes I may be eligible for the scheme make a lot less sense, but if you're eligible, this is an Alan-Bond-Channel-Nine-like investment proposal. An absolute no-brainer.

              Change my mind.

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