A new report by respected economist Saul Eslake says it is “incontrovertible” that allowing prospective homebuyers to access their super will result in house prices rising at a faster rate.

The report says there is a growing sense in Australia of a “housing crisis”.

Housing costs have been a major contributor to the rise in inflation since the end of the COVID-19 pandemic, with rents rising by 16.4 per cent and new dwelling purchase costs by 36.2 per cent over the two years to the June quarter of 2024, compared to a 10.7 per cent increase in wages.

Almost 122,500 people were estimated to be experiencing homelessness at the time of the last Census, in August 2021, a 50 per cent increase from 2001.

The proportion of low-income rental households (those in the bottom 40 per cent of the income distribution) spending more than 30 per cent of their income on housing rose from 21.6 per cent in 2009-10 to 46.7 per cent in 2019-20.

The proportion of low-income owner-occupier households with a mortgage spending more than 40 per cent of their income on housing rose from 21.6 per cent to 37.4 per cent over the same period.

There has been a long-term decline in home ownership. This is not surprising, the report says, when we see the relationship between housing prices and the cost of housing. The ratio of house prices to household income rose from 4.5 times to 13 times between 1980 and 2024.

This has had two highly detrimental consequences for aspiring home buyers. First, they need to accumulate much larger deposits in order to qualify for a mortgage. Second, first time buyers are required to take out and service much bigger mortgages.

Eslake says there is now almost six decades of evidence pointing unambiguously to the conclusion that, policies which enable Australians to pay more for housing than they would otherwise be able to do result in more expensive housing rather than in a higher proportion of the population owning housing.

In the light of that evidence, he says, it is incontrovertible that allowing prospective homebuyers to access some proportion of their superannuation, as proposed by the Liberal and National Parties during the 2022 election, and subsequently, will result in residential property prices rising at a faster rate than they would otherwise.

“In practice, the scheme proposed by the Liberal and National Parties would be of little benefit to people in the ‘traditional’ first-home buyer age cohort of 25-34 years, because their accumulated superannuation savings are typically too small for withdrawing even the stipulated maximum of 40 per cent to make a material difference to their prospects for attaining home ownership.

Also, most people who would be likely to take up such a scheme would end up having lower disposable income after housing costs and much lower incomes in retirement.