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Super home findings common abroad


Allowing citizens to go into their retirement accounts to help them afford their first home is a common practice abroad, but experts say it’s hard to know to what extent they’ve raised housing prices.

The Morrison government’s proposal in the run-up to the election to allow Australians to pick up part of their super for first home deposit has sparked fierce debate, with the pension industry and some housing advocates arguing it would lead to higher house prices.

Through the ditch Kiwis have been able to plunge into their Kiwisaver retirement accounts for their first home deposit since the individual retirement account program began in 2007.

New Zealanders can withdraw almost all of these accounts, leaving on them only 1,000 New Zealand dollars. For people earning less than a certain amount, the New Zealand government allocates several thousand dollars – a maximum of 20,000 New Zealand dollars for a couple who buys a new home or builds their own.

“Withdrawing KiwiSaver here is certainly a common and acceptable option to help people gain access to the market,” said Kelvin Davidson, chief real estate economist at CoreLogic New Zealand.

In the 12 months to March 31, 2021, New Zealanders withdrew a total of $ 1.4 billion from Kiwisaver’s first deposit accounts. At the end of the year, the scheme’s assets amounted to $ 81.6 billion.

“In terms of the impact on house prices, unfortunately, it’s very difficult to be sure – on margins, it probably pushed them because it allowed more buyers into the market who might otherwise not make a purchase,” Davidson told AAP. in email.

But the effects of the housing withdrawal scheme are different from basic government subsidies for first-time home buyers, he added.

“In this case, sellers know what a subsidy is, and try to just raise the asking price by the same amount. But this does not apply to withdrawals from KiwiSaver, as it is a personal matter,” he said.

In Canada, citizens can borrow up to 35,000 Canadian dollars (38,000 Australian dollars) from their registered retirement savings plan for their first home deposit. But the withdrawal must be repaid within 15 years and is only available to Canucks, who earn less than 120,000 Canadian dollars (133,000 Australian dollars).

Americans can withdraw up to $ 10,000 ($ 14,000) from their individual retirement accounts on their first deposit.

In the UK, Theresa May’s government in 2017 introduced a scheme for adults under the age of 40, known as lifelong individual savings accounts, also known as the “Lisa”. They are clearly intended for savings on both retirement and housing deposits. Contributions are voluntary, but investment growth is not taxable.

The Morrison government’s super-homeowners’ scheme, published last weekend, will allow first homeowners to withdraw up to 40 percent of their pension, up to $ 50,000, to buy their first home.

Ray White chief economist Nerida Conisby says both the coalition plan and the Labor Party’s “equity” scheme, in which the government essentially buys part of the property with the homeowner, will lead to higher house prices.


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