An analysis of New Zealand’s super for a house scheme has prompted the local superannuation industry to urge caution in implementing a similar plan in Australia to ease the housing crisis.
Super Members Council CEO Misha Schubert said the new research had shown Kiwi house prices spiked and home ownership rates fell after a policy to open super for housing was introduced.
Ms Schubert said the New Zealand lived experience showed such a policy would not help first home buyers get into the market in Australia.
“This real-world example shows home prices rose even faster and homeownership rates fell,” she said.
Ms Schubert said a Council examination of the detailed evidence from New Zealand showed that since the KiwiSaver HomeStart scheme started in 2010 house prices in New Zealand spiked in-line with withdrawals from KiwiSaver and home ownership rates fell overall, dropping sharply for people in their 30s.
She said mortgages steeply increased, as did debt levels among first home buyers.
“Since the policy’s introduction there, house prices in New Zealand have risen 134 percent from June 2010-June 2024, more than in the previous two decades and 1.5 times faster than house prices in Australia.
“The policy has not worked. A smaller share of New Zealanders become homeowners since its introduction, particularly among the first home buyer demographic, where ownership has fallen by about seven percent for people in their 30s.”
Ms Schubert said mortgage amounts had also spiked for first home buyers as they were forced to take on large amounts of debt to keep up with the rising house prices.
“Since 2014, the total number of first home buyers taking out loans with a loan-to-value ratio over 80 percent has tripled, and the proportion of high LVR loans taken out by first home buyers has risen from 25 to 75 percent.
“In a cost-of-living crisis, this means higher mortgage repayments and more financial stress.”
Ms Schubert said as house prices had skyrocketed, accessing retirement savings was no longer a choice for young New Zealanders, it was a necessity to get into the market.
“First home buyers accessing KiwiSaver to buy a home has risen from 65 percent in 2015-16 to 77 percent in 2023-24.
She said Australia should heed New Zealand’s cautionary tale and not make the same policy decisions.
“If you want to fix the housing crisis, then the answer is building many more new homes to expand supply, rather than telling young people that raiding their super is the answer.”
Ms Schubert said using super to purchase a home would also have impacts on future Government pension liabilities.
She said if KiwiSaver’s lower net returns were replicated in Australia. a 30-year-old Australian worker with $25,000 in superannuation today and earning the median Australian wage would be $132,000 worse off at retirement (age 67) in today’s dollars.
“Government spending in Australia on the pension is falling, while in New Zealand it is increasing.
“Introducing a super for house policy in Australia would see the cost of Australia’s pension system start to rise again, blowing out to a peak of $8 billion per annum and a total cumulative cost to the Budget of $304 billion by 2102.”
