This paper examines the impact of allowing superannuation withdrawals for housing purchases in New Zealand and its implications for the 'Super for Housing' proposal in Australia. It includes expert analysis of the New Zealand policy in action – setting out its effects on house prices, retirement savings, pension outlays and investment returns for super fund members.

To increase the buying power of first home buyers, the Liberal and National Parties (the Coalition) have proposed a Super Home Buyer Scheme under which people would be allowed to withdraw up to 40% of their superannuation savings, up to a maximum of $50,000, towards a deposit for their first home. New Zealand has had nearly two decades of lived experience with a scheme conceptually similar to the Coalition's proposal. 

Key findings

• Since withdrawals from New Zealand’s KiwiSaver scheme began in 2010, house prices in New Zealand have risen by 1.5 times the rate as Australia.
• Allowing withdrawals from New Zealand’s KiwiSaver scheme for a first home purchase has failed to lift home ownership rates across any age group. It corresponded with a fall in home ownership rates, particularly among younger New Zealanders.
• Since KiwiSaver housing withdrawals commenced, and house prices began to surge, New Zealand first home buyers have been forced to borrow more to buy homes.
• In part to manage KiwiSaver withdrawals, New Zealand retirement funds hold more liquid assets than their Australian counterparts and generally deliver lower long-term risk-adjusted returns than alternative growth asset classes.
• In Australia, retiree reliance on the Age Pension is falling, while in New Zealand it is increasing. Introducing the Super for Housing policy in Australia as proposed would see a substantially higher cost of Australia’s pension system.