Would using super for a house deposit actually help first-home buyers or just push up prices?

A new study claims that allowing first-home buyers to dip into their superannuation for a deposit could drive up property prices by 7.4% to 10.3%, potentially making homeownership even harder. 

The research was released in response to a Coalition proposal that would let first-home buyers withdraw up to $50,000 from their super to put toward a house deposit.

Conducted by University of South Australia Professor Chris Leishman and funded by the Super Members Council (SMC), the research found that median house prices in capital cities could rise by as much as $92,500, with home buyers paying an extra $260 per fortnight in mortgage repayments.

Housing demand to go up? What the research says

The study suggests that demand would outpace supply, driving prices up. If more first-home buyers suddenly have extra funds, competition increases and housing becomes more expensive. Buyers could end up in the same position as before but with less super.

SMC, which represents profit-to-member super funds, says the findings match previous research. 

Chief executive, Misha Schubert pointed to New Zealand’s experience, where a similar policy saw house prices rise at twice the rate of Australia’s, while homeownership rates for buyers in their 30s fell.

Mortgage broker Brett Sutton from Two Red Shoes Mortgage Brokers believes the price impact is realistic, given how the Australian market operates.

"Like most incentives for first-home buyers, it’s likely to just raise the entry point to the market further," Sutton said. "The challenge is that when the policy is introduced, people already eligible will take advantage straight away, adding significant demand. Prices could surge in the first 24 months, and by the time demand moderates, the damage is already done."

Is this a real concern or just super funds protecting their interests?

SMC says it advocates for super fund members, but as a group representing industry super funds, it also has a strong interest in keeping retirement savings in the system. Some critics argue the study reflects industry concerns more than a neutral assessment.

Sutton acknowledges the funding source is worth considering but believes the research has merit.

"It’s easy to point out that the study was commissioned by the Super Members Council, potentially because they’re concerned about reducing capital balances," he said. 

"But dismissing the findings as just an agenda push would be too simplistic. Professor Leishman is a respected housing policy expert, and from what I understand, a rigorous academic approach was taken."

At the same time, he says predicting how many first-home buyers would take up the policy is difficult, which affects how reliable the forecasted price increases are.

The trade-offs for first-home buyers

The key question is whether this policy would genuinely help buyers or just make homeownership harder in the long run. If prices rise as predicted, the extra funds could quickly be absorbed, meaning deposits would still fall short.

Sutton says there are positives, but the risks need to be weighed carefully.

"While I still believe that accessing superannuation with the right constraints is a positive way to help first-home buyers enter the market, if this modelling is accurate, it may not provide the net win that it hopes to achieve," he said. 

"It could just be another scheme that pushes up the entry point to the marketplace, making it harder for the exact people it’s trying to help."

Here’s how the trade-offs could play out:

• It could make housing more expensive. If prices rise as predicted, first-home buyers could need even bigger deposits, making it even harder to enter the market.
• It may still help some buyers. Those with larger super balances, particularly in their 30s or 40s, could get over the deposit hurdle sooner.
• Retirement savings would take a hit. A 30-year-old withdrawing $35,000 from super today could retire with $195,000 less in today’s dollars, according to SMC estimates.
• Alternative policies may be needed. Critics argue that boosting housing supply and addressing affordability directly would be more effective than unlocking super.

Bottom line

The study raises concerns that using super for a house deposit could push prices up rather than improve affordability. Would first-home buyers actually be better off, or would they still be struggling to afford a home, just with less super to fall back on? That’s the question policymakers will need to answer.

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