The head of a real estate group has criticised the shadow treasurer for trying to stop first home buyers gaining access to their superannuation.
Chris Bowen said last week that Treasurer Joe Hockey’s plan to let young buyers dip into their super to help fund a purchase was a “really bad idea” because cashed-up buyers would use their retirement savings to inflate property prices.
However, Geoff Baldwin, Western Australian managing director of real estate group RE/MAX, said Mr Hockey’s plan would damage neither the market nor the super system.
“Any argument that this would cause people to pay more for a property, as argued by Chris Bowen, is clearly wrong,” Mr Baldwin said.
“A buyer using a super fund deposit would be restricted by their borrowing capacity as are most buyers, so saying that everyone will suddenly find ‘another $30,000 and pay more’ is rubbish.”
Mr Baldwin said the way to protect retirement savings would be to insist that first home buyers repay any superannuation they borrow plus a levy.
The levy would be based on the capital gain of the property at after-sale costs: if it netted 20 per cent more than the purchase price, an additional 20 per cent would be repaid.
Mr Baldwin did say, however, that a safeguard needs to be established to prevent superannuation-funded properties from being used as security for other borrowings.
This would encourage first home buyers to hold their property for longer, which would make for a more stable market, he said.
“In the right format, this proposal is a good one and does not need to harm the superannuation system.
“In fact, with people reimbursing their super funds with the amount borrowed plus a levy, it could be argued that the super system will be boosted over the longer term,” Mr Baldwin said.
Much of the opposition to Mr Hockey’s proposal had come from people in the financial sector with a vested interest in share trading, he added.
“They see money drawn from super funds for home deposits as money on which they will not be earning fees,” he said.