Why ‘Superannuation for Houses’ Isn’t Such a Dumb Idea…

We spent most of 2008 through to 2011 wailing about a housing crash.

We forecast that Aussie home prices could fall by 40%.

It was a bold call.

It seemed to be the wrong call.

House prices fell, but they didn’t crash (aside from in the Gold Coast and Western Australia).

Since then, we’ve seen exactly what the power of low interest rates and money publishing can do to house prices along with other asset prices.

Are Aussie home prices high? Yes. They’lso are among the highest in the world. Might Aussie house prices crash? Of course they could. All asset prices can fall in value.

In that case, why do we say which Aussies should have the right to buy a house using their superannuation money? We should be insane, right?

Well, maybe not…

Most of the mainstream has gone right into a fit at the thought of anyone utilizing their super savings to buy a house.

The mainstream press is (mainly) up in arms.

The opposition events are breathless with disapproval.

And not surprisingly, the funds management industry is having a coronary over the idea.

The thought that someone should get to invest their savings on whatever they such as is causing no end of uproar.

Remember, it’s YOUR money

But, the simple fact is that the money saved in your super fund isn’t special. There’s no mystery to it.

The profit your superannuation fund is just like the money in your bank account. The only difference is that the government stops you against using your super money in the way you’d like.

It’s foolish.

Super money is simply deferred earnings. It’s money that you could make use of today if the government didn’t forcibly quarantine it.

But what about the concept that if you could access the cash today that it would cause a large house price bubble.

It seems as though that could be true, however it’s not necessarily therefore.

Yes, it would mean that a bunch of individuals would have access to a new supply of savings. They could then use that money as a deposit to buy a house.

But it’s also true to say that there would be a lot more people who would be able to use their own super money to pay off a current mortgage.

If those folks could take $300,000 out of their super to pay for off a big debt, it would mean 1000s of dollars per year that they’re conserving in interest costs.

And it seems we’ng found an unlikely friend in this argument in Peter Martin through The Age. As he noted yesterday:

‘Can all of us give Joe Hockey a break? He says he is prepared to think about allowing us to dip into our super to buy houses. Exactly what on earth could be wrong with that? A house is far more useful in retirement than superannuation. Just ask anyone who has tried to survive without one.

‘When the Harmer pension plan review examined the question some time ago it found only Three per cent of home-owning single pensioners were in severe poverty compared as much as one quarter of those who rented.

‘Rent eats income. It’s why houses are important in retirement. They relieve us of the need to pay rent.’

To us, this is purely ideological. It’s immoral for any government to force an employer to quarantine 9.5% of your income. It’s the ‘nanny state’. It’s treating grown adults as kids — ‘We can’t believe in you to look after your own cash.’

But the government already takes away an adequate amount of your wages in taxes and other levies, without depriving you of some other big chunk of your money.

So any policy that places more money back in your pocket with regard to you to do with as you wish, is fine by us.

However, do we think this insurance policy will actually happen? No, not a chance. There are far too many powerful vested interests at work…

Powerful forces nipping at your super

You’ve seen the press (aside from Peter Martin).

And you’ve seen the outrage from the trade union movement and the funds management industry.

The very last thing they want is for you to convey more control over your own money. Because for them, allowing you to use your super to buy a house is just the slim edge of the wedge.

Once the doorway is prised open, folks will receive a taste for it. They’ll reception for more exemptions until before you know it the official super ‘pot’ is dried out.

Rather than the funds management business automatically getting hold of 9.5% of everyone’s wages, they’ll have to work for their fees. The horror!

The funds management firms really are a powerful lobby group, as well as so are the trade unions.

They’lmost all fight the proverbial tooth-and-nail to ensure that you never get your hands on your super cost savings.

This is why talk of the federal government allowing early access to super will turn out to be a cruel laugh. The real scenario (which is exactly what the unions and fund managers are pushing for) is the efficient confiscation of super funds.

That’s why they’re lobbying so hard. Instead of let you access your money, they’d rather make sure you never get it. The longer the money remains tied up in super, the longer they get to siphon off their fees.

It may sound odd for us to back the use of extremely to buy houses. Especially as we predicted a major Aussie home price crash.

But the simple fact is that we’d rather you had treatments for your money instead of the government.

Cheers,
Kris

PS. Absolutely nothing would please us more to be proven wrong on this subject. It would be great if the government really would allow you to access super to buy a house, or better still, to save or spend the proceeds as you wish. But it just won’t happen. Full blown confiscation is their ultimate plan. The current information stories are simply a diversionary strategy. Don’t fall for it. Prepare for the coming wealth grab when you can. Details here.