How gaps in the Coalition’s super for housing plan could see affordability skyrocket

If the Coalition returns to the driver’s seat in Canberra, they promise to give eligible first-time buyers immediate access to $50,000 of their super to purchase a home.

Liberal leader Peter Dutton confirmed this month that the Coalition was making the key election pledge with the goal of “restoring the dream of home ownership”. The opposition is positioning the plan as a main player in their campaign to win the 2025 election. 

“Entering the property market shouldn't be limited to those who can rely on the bank of mum and dad,’ Mr Dutton said during the early stages of his campaigning. “That's why a Coalition government will allow Australians to access up to $50,000 of their super to buy their first home. And we will extend that policy to assist separated women.”

While announcing the policy point, Mr Dutton claimed first-home buyers had suffered under the current government. 

“Under this Albanese Labor government, I've seen the mood of Australians change,” he said. “For so many Australians, aspiration has been replaced by anxiety. Optimism has turned to pessimism and national confidence changed to dispiritedness.” 

Comparing Liberal and Labor offerings

A win by the opposition could allow Australians to access a $50,000 lump sum to use as a deposit to buy their first home. According to the proposal, the money initially withdrawn from an individual’s super would need to be returned to the fund when that house is sold, in order to support retirement.

Under Labor, today’s first-home buyers can already access their super, but in stages, with the Federal Government’s First Home Super Saver (FHSS) scheme. Rather than a one-off dip-in for a deposit boost as the Coalition is proposing, the current program has been set up as a more tax-efficient way for first-time buyers to save for a home compared with a traditional savings account. By making voluntary before-tax contributions, first-home buyers can reduce their income tax.

They can withdraw as much as $15,000 of the voluntary contributions from any one financial year, up to a total of $50,000 across multiple years (plus associated earnings) to buy a home. Although eligibility is assessed on an individual basis, two people could contribute to their own super then access their FHSS to buy the same property, effectively doubling the total to $100,000.

Super is not a stand-alone solution

The average Gen Z and Gen Y worker has less than $100,000 in their super accounts, according to research from the Association of Superannuation Funds Australia (ASFA). If those Aussies were to access their super in one hit, like the Coalition is suggesting, it would halve their retirement savings.

A recent study also by ASFA revealed that allowing early access to superannuation for housing would not necessarily make homeownership more attainable for the majority of hopefully first-home buyers, especially those with low super balances.

“While superannuation may seem like a tempting pot to raid, our analysis shows it will only benefit those young people who are already more likely to be able to afford a home, and not solve the crippling supply-side deficit that is fuelling our housing crisis,” said ASFA chief executive Mary Delahunty in a 2024 report.

A potentially bigger deposit would give first-time buyers a leg up, said REA Group executive manager of economics Angus Moore, but supply is the crucial ingredient in the housing dilemma.

“Saving a deposit is a really big challenge for first-home buyers in particular. To put it in some context, if an average income household was saving 20% of their income they would need to save for about five and a half years to afford a median priced home,” he told Mortgage Choice.

“If we're thinking about who this is going to actually help, a lot of younger households aren't going to have very large super balances. And those who do have bigger balances are probably in a position where they do not need to use their super because they're earning higher incomes.”

Mr Moore said the Coalition’s plan would help some first-home buyers alleviate the deposit constraint a little sooner, it’s not a magic bullet for all first-home buyers.

"When we're talking about housing affordability, the most important thing – which isn't going to happen in the short term but is the only sustainable long-term solution – is building more homes. That's the only way we're going to make housing more affordable.”

REA Group executive manager of economics Angus Moore says building more home is the only way to halt the housing affordability crisis. Picture: supplied

National home prices fell in January, according to PropTrack's latest Home Price Index report, the second monthly fall after 23 consecutive months of growth which have pushed mortgage holders to their limits.

Property industry insiders appear to be onboard with first-home buyers dipping into their super but agree it’s not a housing cure-all.

“This policy acknowledges the reality that for many Australians, saving for a deposit is the greatest hurdle to entering the housing market. Allowing first-home buyers to access their superannuation provides a practical and targeted solution to this challenge,” said Housing Industry Association managing director Jocelyn Martin.

“The decision to enable Australians to invest in their own homes acknowledges the importance of housing as a foundation for financial security and community stability,” she said. 

“Superannuation is designed to help people plan for their future retirement; there is no better security in your future than owning your own house. Beyond this measure, we need to see policies that address land supply, reduce regulatory costs, and boost housing supply to meet the growing demand.”