Allowing first home buyers to withdraw super for house deposits could see house prices hike by 7.4% to 10.3%, a rigorous new academic study from one of Australia’s leading housing economists has found.
Pouring retirement savings into house deposits would supercharge an already-inflated property market – raising capital city median prices by up to $92,500 and adding $260 a fortnight to a homebuyer’s mortgage.
The study, authored by University of South Australia Professor Chris Leishman and commissioned by the Super Members Council, uses two econometric models to estimate the price impacts of a Coalition policy proposal for first home buyers to withdraw $50,000 from super for a home deposit.
The Leishman study examined thousands of published studies on housing market modelling and selected two well-established models. These models use different mathematical approaches to analyse the complex economic forces that drive housing prices.
The modelling found the policy would increase house prices by between 7.4% and 10.3% (see Fact Sheet for more information)
The study built an econometric model of homeownership decisions based on the HILDA Survey to estimate demand for the scheme, providing a key input into both housing market models.
“The very close range of estimates despite using different data and methodologies for each means we are very confident in concluding the proposal would be inflationary,” Professor Leishman said.
“It is an uncontroversial finding - if you add demand to an inelastic market, prices are going to rise, with the unintended consequence of making housing less affordable” he said.
SMC estimates that, based on the Leishman model, median house prices could rise by an average extra $123,000, in Sydney, $80,000 in Melbourne, in Brisbane by $92,000 and by around $84,000 in Perth and Adelaide.
The average home buyer would pay an additional $260 per fortnight in mortgage repayments, adding up to $200,000 more over the life of the loan.
A recent detailed analysis of evidence from New Zealand found after that country introduced a super for house scheme, house prices took off – growing at twice the rate of those in Australia - and home ownership rates fell by 7 percentage points for Kiwis in their 30s, a key first home buyer demographic.
Super Members Council CEO Misha Schubert said a vast body of expert evidence was crystal clear that early withdrawals of super for house deposits would just push up house prices further and faster – pricing more Australians out of owning their own home.
“Raiding retirement savings for house deposits would just unleash a supercharged price hike in house prices, not create more new home buyers,” Ms Schubert said.
“That would mean home buyers in future would have to pay higher repayments on bigger mortgages for longer, worsening housing affordability and cost-of-living pressures on younger Australians.”
“The international literature is clear, the lived experience in New Zealand is clear, and detailed and rigorous econometric models are clear – taking super out for house deposits will just further drive-up house prices, fuel higher mortgages and debt stress in a cost-of-living crisis, and push the Great Australian Dream of home ownership even further out of reach for many young Australians.”
“And if people retire with less super, that will also push up age pension costs - a bill that every Australian taxpayer would pay.”
SMC analysis shows a 30-year-old who withdrew $35,000 from their super today could retire with about $195,000 less in today’s dollars.
The overwhelming majority of Australia’s leading respected economists say the housing supply and affordability crisis needs to be tackled with other policies – in a recent Economic Society of Australia survey, only 1 out of 49 top economists supported withdrawals of super for housing.
In a comprehensive report in 2024, respected independent economist Saul Eslake showed policies that allow Australians to pay more for housing just result in more expensive homes rather than a higher proportion of people owning housing.
Table 1: Estimated upper-bound price impacts from allowing first home buyers to access super for a house
|
Capital city |
Median |
Supercharged price hike |
Median after |
Additional mortgaged repayments |
|
|
Fortnight |
Life of loan |
||||
|
Sydney |
$1,193,200 |
$122,900 |
$1,316,100 |
$345 |
$269,400 |
|
Melbourne |
$772,300 |
$79,500 |
$851,800 |
$223 |
$174,300 |
|
Brisbane |
$893,600 |
$92,000 |
$985,600 |
$259 |
$201,700 |
|
Adelaide |
$819,400 |
$84,400 |
$903,800 |
$237 |
$185,000 |
|
Perth |
$809,900 |
$83,400 |
$893,300 |
$234 |
$182,800 |
|
Hobart |
$658,200 |
$67,800 |
$726,000 |
$191 |
$148,600 |
|
Darwin |
$502,600 |
$51,800 |
$554,400 |
$146 |
$113,600 |
|
Canberra |
$850,500 |
$87,600 |
$938,100 |
$246 |
$192,000 |
|
Combined capitals |
$897,600 |
$92,500 |
$990,100 |
$260 |
$202,800 |
Notes: Professor Leishman found that the policy would increase house prices by between 7.4% and 10.3%. The above estimates are based on the upper bound of 10.3%. Median house prices for each capital city are sourced from the CoreLogic Hedonic Home Value Index for January 2025, with prices rounded to the nearest hundred dollars. Property prices include both houses and units. Mortgage repayments are calculated using average lending rates for new owner-occupier, principal-and-interest loans as sourced from the RBA, and assume a 30-year loan term, and holding the deposit amount constant.
Source: SMC analysis; Leishman C., 2025, The housing market effects of borrowing from superannuation; CoreLogic Hedonic Home Value Index as at 31 January 2025; RBA Lenders’ Interest Rates for January 2025.
Contact details:
James Dowling: 0429 437 851