I can think of many catchphrases to describe how people are generally feeling about the Coalition’s announcement of their housing policy.
As you heard earlier in the week, Scott Morrison announced a “controversial” policy that would allow first home buyers to withdraw up to 40 percent of their super funds, up to a maximum of $50,000 for a home deposit if the Coalition wins the election.
This policy could leave many Australians feeling caught between a rock and a hard place! And there’s another one! 😊
The general media sentiment is that first home buyers are divided over the proposed new policy that would enable them to use their superannuation funds to purchase a home.
Some people feel retirement is so far off and see this as an answer to getting into the housing market. On the flip side, others fear the negative impact it will have on their retirement savings.
There is an underlying fear that this scheme could push up first home buyer demands further, which will push up prices and consequently, does not address housing affordability.
Borrowing money now from your future will have consequences and people need to understand the full effect of taking down up to $50,000 out of their super, and what it means to rebuild that money – it will take a long time to rebuild.
It’s a bit like robbing Peter to pay Paul for a band-aid solution in gaining access to the property market. However, some people will have a “never say never” attitude and find the proposed policy welcoming.
What I personally like about the policy is that the government is putting rules in place to ensure that your super is returned into your account, should you sell the property, plus a percentage of any profits earned.
With property prices increasing at a steady 5% – 7% per annum, getting into your home sooner does make sense, especially given it’s the growth of the asset rather than the deposit that is crucial.
Having said this, anything you do with your super should be done with the ultimate care, and always with a long-term focus.
My advice is to make sure you understand the consequences of raiding your super now and speak to your financial advisor to fully realize what impact this could have on your future wealth.
If this sounds like you, we have an awesome adviser we can recommend should this policy come to fruition…