WEBVTT - Why a Super-for-Housing Policy Could Actually Push Prices Higher

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<v Speaker 1>Hello. My name is Satasha Nabananga Bamblet. I'm a proud

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<v Speaker 1>yor the Order Kerniye Whoalbury and a waddery woman. And

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<v Speaker 1>before we get started on She's on the Money podcast,

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<v Speaker 1>I would like to acknowledge the traditional custodians of the

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<v Speaker 1>land of which this podcast is recorded on a wondery country,

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<v Speaker 1>acknowledging the elders, the ancestors and the next generation coming

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<v Speaker 1>through as this podcast is about connecting, empowering, knowledge sharing

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<v Speaker 1>and the storytelling of you to make a difference for

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<v Speaker 1>today and lasting impact for tomorrow. Let's get into it.

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<v Speaker 2>She's on the Money. She's on the Money.

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<v Speaker 3>Hello, and welcome to She's on the Money podcast. That's

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<v Speaker 3>helping you sort out your finances now so future you

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<v Speaker 3>can live their best life.

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<v Speaker 4>There's been a lot of.

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<v Speaker 3>Chatter recently about a policy idea that could help first

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<v Speaker 3>home buyers break into the market sooner. And if you've

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<v Speaker 3>heard of it already, I'm sure you're thinking, Wow, VI,

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<v Speaker 3>that sounds so great. But before we get too excited,

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<v Speaker 3>what if I told you we don't actually have to

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<v Speaker 3>guess how this is going to turn out. I'm Victoria

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<v Speaker 3>Devine and today For this special bonus Saturday episode, you

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<v Speaker 3>and I are going to look Across the Ditch to

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<v Speaker 3>see what happened when New Zealand tried almost the exact

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<v Speaker 3>same thing. I'm just going to spoil it for you

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<v Speaker 3>real quick here. It didn't actually go quite as planned.

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<v Speaker 3>But first I want you to imagine a policy that

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<v Speaker 3>makes houses more expensive, reduces retirement savings, and increased government spending.

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<v Speaker 4>Would you vote for it? Probably not? Well, actually, okay,

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<v Speaker 4>we're friends.

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<v Speaker 3>Across the Ditch introduced a scheme that let first home

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<v Speaker 3>buyers dip into their super which is actually keyw Saver

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<v Speaker 3>over there to buy a home, which, in theory sounds

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<v Speaker 3>fantastic because who doesn't want to help first home buyers

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<v Speaker 3>get into their first home quicker? But let's talk about

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<v Speaker 3>what actually happened. Let me set I guess the scene.

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<v Speaker 3>You're a first home buyer. You have been diligently saving

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<v Speaker 3>every single dollar you've been topping up your retirement fund.

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<v Speaker 3>You're super, your Key WE Saver, same same, You're going

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<v Speaker 3>to stash away extra cash and then you're doing everything right.

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<v Speaker 3>All of a sudden, the government says, hey, you can

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<v Speaker 3>actually dip into your SUPER or your keyw saver.

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<v Speaker 4>For a house deposit. You're going to go, oh, my.

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<v Speaker 3>Goodness, this has been so hard, how good? I would

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<v Speaker 3>absolutely love to do that, because this has been honestly

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<v Speaker 3>a long slog, and it is getting further and further

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<v Speaker 3>away from being reality. That three bedroom place in a

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<v Speaker 3>really great suburb actually starts to feel a little bit

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<v Speaker 3>more enrich But here's the catch. You're literally not the

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<v Speaker 3>only one with this idea. There are thousands of other

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<v Speaker 3>first home buyers who are thinking exactly the same thing,

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<v Speaker 3>And suddenly, at every single option, everyone's budget has an

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<v Speaker 3>extra fifty grand in it. That house it was listed

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<v Speaker 3>at six hundred grand, well now at six hundred and

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<v Speaker 3>fifty thousand dollars. Prices rise, competition is heating up, and

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<v Speaker 3>you know what happens in the end, you are still

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<v Speaker 3>locked out of the market. And am I guessing no?

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<v Speaker 3>Because that's exactly what played out for our friends in

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<v Speaker 3>New Zealand. After they introduced this policy, house prices started

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<v Speaker 3>rising even faster, jumping from seven point six percent to

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<v Speaker 3>nine point two percent per year.

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<v Speaker 4>Buyers suddenly had more money.

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<v Speaker 3>To spend, which in theory was a good idea, but

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<v Speaker 3>so did their competition, so sellers just raised the prices

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<v Speaker 3>to match with deposits Struggling to keep up, buyers had

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<v Speaker 3>to borrow more money just to stay in the game,

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<v Speaker 3>and the proportion of high loan to value ratio mortgages

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<v Speaker 3>taken by first home buyers actually skyrocketed for from twenty

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<v Speaker 3>five percent to seventy five percent since twenty fourteen. What

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<v Speaker 3>does that actually mean. Well, people were stretching themselves really thin.

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<v Speaker 3>They were taking on bigger mortgages relative to their deposits,

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<v Speaker 3>leaving them vulnerable to even more financial stress if interest

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<v Speaker 3>rates rose, or life threw in an unexpected curve ball

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<v Speaker 3>like a job loss or maybe an emergency expense. Many

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<v Speaker 3>had not much financial cushioning to fall back on. But

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<v Speaker 3>you know what the hardest hit was lower income earners

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<v Speaker 3>and renters. They couldn't access as much from Keywi saver,

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<v Speaker 3>yet they still faced skyrocketing house prices. Meanwhile, the biggest

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<v Speaker 3>winners they were the property investors. While first home buyers

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<v Speaker 3>were dipping into their retirement savings just to get on

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<v Speaker 3>the ladder, just to compete, investors sat back and they

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<v Speaker 3>watched their property values climb higher deposits pushed prices up,

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<v Speaker 3>making homes even more expensive and played right into the

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<v Speaker 3>hands of those who already had multiple properties.

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<v Speaker 4>So instead of.

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<v Speaker 3>Leveling the playing field, this policy did the exact opposite.

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<v Speaker 3>First home buyers were left with bigger debts, higher risks,

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<v Speaker 3>and fewer opportunities to get into the market, all while

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<v Speaker 3>the housing affordability crisis only got worse. And you know what,

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<v Speaker 3>here's the wild part. If you didn't think that was wild,

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<v Speaker 3>This policy wasn't just ineffective. It actually made home ownership

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<v Speaker 3>rates worse. In New Zealand, home ownership of people in

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<v Speaker 3>their thirties dropped by seven percent instead of increasing, So

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<v Speaker 3>despite all that extra money being pumped into the market,

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<v Speaker 3>fewer young people were actually ending up owning homes. And

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<v Speaker 3>here's something telling. Seventy seven percent of first home buyers

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<v Speaker 3>in New Zealand now use their super to buy a home,

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<v Speaker 3>up from sixty five percent in twenty fifteen. That means

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<v Speaker 3>more and more young buyers have to dip into their

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<v Speaker 3>retirement savings just to compete in the housing market. Now,

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<v Speaker 3>three hundred and seventy nine thousand and New Zealanders have

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<v Speaker 3>collectively withdrawn in New Zealand dollars ten billion dollars from

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<v Speaker 3>their retirement accounts. That's ten billion dollars not growing for

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<v Speaker 3>their retirement and all for what to chase incredibly expensive

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<v Speaker 3>homes in a market that's been artificially heated by the

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<v Speaker 3>very policy meant to cool it down. Oh and did

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<v Speaker 3>I mention that the New Zealand Treasury explicitly warned that

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<v Speaker 3>this would happen. They literally said this scheme would stimulate

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<v Speaker 3>demand and increase house prices. And you know what, they

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<v Speaker 3>weren't wrong. They work very on the money. Stay with

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<v Speaker 3>me because after the break we're going to zoom out

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<v Speaker 3>and we're going to look at what this could actually

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<v Speaker 3>mean for Australians, not just home buyers. Welcome back, my friends.

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<v Speaker 3>We have been chatting about the proposal to let Australians

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<v Speaker 3>dip into their superannuation for house deposits and why the

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<v Speaker 3>New Zealand experience should make us stop and think. But

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<v Speaker 3>it's not just about crisis, right, Let's talk about what

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<v Speaker 3>happens to your suberannuation when you're not investing it optimally.

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<v Speaker 3>Australian mysuperbalanced options achieve about seven point eight percent returns annually,

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<v Speaker 3>compared to just six point six four percent for Keywi

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<v Speaker 3>Saver balanced options. That difference might seem really small, but

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<v Speaker 3>over forty years of working life it is massive. Keywi

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<v Speaker 3>Saver funds hold sixteen point five percent less in growth

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<v Speaker 3>assets than Australian super funds, largely because they need to

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<v Speaker 3>keep more money accessible for these housing withdrawals. That means

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<v Speaker 3>funds take fewer investment risks and generate lower long term

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<v Speaker 3>returns because of this policy. This affects everyone with super

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<v Speaker 3>not just home buyers.

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<v Speaker 4>Right.

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<v Speaker 3>If Australian funds had to accommodate large scale withdrawals for housing,

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<v Speaker 3>which they might have to, they'd likely be forced into

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<v Speaker 3>taking more conservative investment strategies to make sure that they

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<v Speaker 3>have enough cash on hand to deal with this. That

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<v Speaker 3>means less money invested in high growth assets and over

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<v Speaker 3>time law returns for literally all of their members, whether

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<v Speaker 3>you're buying a home or not. And I need you

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<v Speaker 3>to remember, our supersystem was designed to reduce the reliance

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<v Speaker 3>on the aged pension. Australia's pension expenditure is projected to

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<v Speaker 3>decrease from two point five percent to two point three

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<v Speaker 3>percent of GDP by twenty sixty. Meanwhile, new Zealand's pension

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<v Speaker 3>costs are actually expected to increase over the same period

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<v Speaker 3>of time. As one economist put it, it's rubbing your

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<v Speaker 3>future self to pay your present landlord, except the landlord

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<v Speaker 3>discharges more. Actually, speaking of economists, did you know how

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<v Speaker 3>many support this idea?

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<v Speaker 4>Actually? Almost none.

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<v Speaker 3>When forty eight out of forty nine economists think something

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<v Speaker 3>is a bad idea, maybe we should listen and stop

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<v Speaker 3>playing into social media hype.

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<v Speaker 4>Here's the real issue. Australia is already.

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<v Speaker 3>One hundred undred, one thousand homes behind schedule every single year.

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<v Speaker 3>That means even if every single first home buyer magically

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<v Speaker 3>had a deposit tomorrow, there still wouldn't be enough houses

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<v Speaker 3>to purchase.

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<v Speaker 4>That's the problem with this policy.

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<v Speaker 3>It doesn't build more homes, it gives buyers more money

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<v Speaker 3>to compete for the same limited supply. And when more

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<v Speaker 3>people are fighting over the same number of houses, do

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<v Speaker 3>you know what happens? Prices go up, not down. So

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<v Speaker 3>what would help with housing affordability? Okay, so stepping back first,

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<v Speaker 3>we need more supply. That means planning reform, infrastructure investment,

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<v Speaker 3>and incentives for building more diverse and affordable housing types.

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<v Speaker 3>New Zealand actually had success with this in Auckland. In

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<v Speaker 3>twenty sixteen, they changed zoning laws to allow more housing

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<v Speaker 3>types like townhomes and apartments and multi unit dwellings in

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<v Speaker 3>areas that previously only actually allowed stand loan houses. The

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<v Speaker 3>result of this was that rents in Auckland dropped by

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<v Speaker 3>twenty eight percent compared to what they would have been

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<v Speaker 3>without these changes. Impressive, right, More homes meant less competition,

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<v Speaker 3>lower prices, and better affordability. Unsurprisingly, Second, what we need

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<v Speaker 3>to do is look at the tax rules that shape

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<v Speaker 3>our housing market right now. Some policies make investing in

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<v Speaker 3>property way more attractive than other types of investing, which

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<v Speaker 3>doesn't exactly help with first home buyers trying to get

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<v Speaker 3>their foot in the door for the first time. We

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<v Speaker 3>could boost first home by a grant or saving schemes

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<v Speaker 3>that don't raid retirement funds, like expanding the first Home

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<v Speaker 3>super Savior scheme without allowing direct withdrawals from the main superbalance.

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<v Speaker 3>So what have we learned from our keyw neighbors across

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<v Speaker 3>the ditch and their home ownership experience. The housing crisis

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<v Speaker 3>is very real, but this policy is like trying to

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<v Speaker 3>put out fire with petrol. Our system is literally the

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<v Speaker 3>envy of the world. Why are we so keen to

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<v Speaker 3>break something that's working. The biggest winners in this policy

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<v Speaker 3>are current homeowners who are going to see their property

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<v Speaker 3>values increase even more, not first home buyers, who the

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<v Speaker 3>policy is supposedly designed to help. We are all complaining

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<v Speaker 3>about house prices while considering a policy that's proven to

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<v Speaker 3>make them higher. Make that make sense to me. The

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<v Speaker 3>Australian supersystem is doing what it was designed to do

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<v Speaker 3>help Australians build wealth or retirement. Let's not sacrifice our

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<v Speaker 3>financial future security for a short term housing sugar hit

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<v Speaker 3>that ultimately makes the problem even worse. If you also

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<v Speaker 3>feel strongly about this, I would love if you could

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<v Speaker 3>share this episode with your.

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<v Speaker 4>Friends, your family, and anyone who you think might be thinking.

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<v Speaker 3>Superfer housing sounds like a super idea, And don't forget

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<v Speaker 3>like and subscribe so that I can he.

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<v Speaker 4>Bringing you the content that you love.

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<v Speaker 3>My friend, That is literally it from me on this Saturday.

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<v Speaker 3>I am so worked up, but I hope that we

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<v Speaker 3>are on the same page now. Hope you enjoy your

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<v Speaker 3>weekend and I will see you. Write early on Monday

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<v Speaker 3>for a Money Diary if I shared on She's on

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<v Speaker 3>the Money is general in nature and does not consider

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<v Speaker 3>your individual circumstances. She's on the Money exists purely for

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<v Speaker 3>educational purposes and should not be relied upon to make

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<v Speaker 3>an investment or financial decision. If you do choose to

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<v Speaker 3>buy a financial product, read the PDS TMD and obtain

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<v Speaker 3>appropriate financial advice.

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<v Speaker 4>Tailored towards your needs.

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<v Speaker 3>Victoria Divine and She's on the Money are authorized representatives

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<v Speaker 3>of money. Sheper pty Ltd ABN three two one IS

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<v Speaker 3>six four nine two seven seven zero eight AFSL four

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<v Speaker 3>five one two eight nine