This report argues that the impact on the housing market of early release of superannuation for housing deposits would be an increase in house prices. As take-up of the measure increased, additional purchasing power available to a broader group of potential first-home buyers would be competitively bid into higher house prices, exacerbating the upswing of the current house price-credit cycle.

The measure would risk reducing access to, and affordability of home ownership for some. People who have relatively low superannuation balances and thus have a relatively low amount of funds available for a housing deposit, could in effect be priced out of the market for a first home – even with access to those additional funds.

Indeed, given that the measure will lead to higher house prices, and thus require higher deposits, the prospect of home ownership could become even more out-of-reach for those with low superannuation balances – a cohort which would largely comprise low-income earners.

Severely unaffordable housing and declining levels of home ownership cannot be solved by superannuation policy and without careful consideration may be exacerbated by it. To improve outcomes housing affordability must be tackled more holistically.

Key findings:

• None of the comprehensive reviews of superannuation have recommended the early release of superannuation for housing deposits, while several have made recommendations to the contrary.
• Early release of superannuation for housing deposits is fundamentally inconsistent with the objective and central principles of superannuation. It would also be ineffective in improving housing affordability and increasing rates of home ownership.
• The direct effect on the housing market of early release of superannuation for housing deposits is that increased purchasing power would be near fully capitalised into higher house prices, exacerbating the upswing of the current house price-credit cycle.