Superannuation and Housing: Not so Scandalous

The last few weeks in Australia have been dominated by talk of a housing bubble, and potential government measures to improve affordability, including the use of superannuation. 

On balance, we support the superannuation idea, even though from an affordability perspective, it won’t “work”. Be that as it may, there are definite advantages when looked at from a freedom, competition, innovation and engagement perspective.

Those who argue it undermines our retirement system are being disingenuous, as home ownership is as critical a component of retirement outcomes as one’s superannuation balance.

Furthermore, there has been an enormous increase in the number of pre-retirees and retirees with substantial mortgage debt, an inevitable outcome given Australians are forced to put 9.5% of their income into super.

Given the tax sacrosanct nature of the family home, many of these people are using their super to pay off their mortgage, with negative implications for the aged pension.

All that and more, including the existing exposure to property in Australian superfunds, and the “risk” in growth funds here.