Hello. My name is Satasha Nabananga Bamblet. I'm a proud yor the Order Kerniye Whoalbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for
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There's been a lot of.
Chatter recently about a policy idea that could help first home buyers break into the market sooner. And if you've heard of it already, I'm sure you're thinking, Wow, VI, that sounds so great. But before we get too excited, what if I told you we don't actually have to guess how this is going to turn out. I'm Victoria Devine and today For this special bonus Saturday episode, you and I are going to look Across the Ditch to see what happened when New Zealand tried almost the exact
same thing. I'm just going to spoil it for you real quick here. It didn't actually go quite as planned. But first I want you to imagine a policy that makes houses more expensive, reduces retirement savings, and increased government spending.
Would you vote for it? Probably not? Well, actually, okay, we're friends.
Across the Ditch introduced a scheme that let first home buyers dip into their super which is actually keyw Saver over there to buy a home, which, in theory sounds fantastic because who doesn't want to help first home buyers get into their first home quicker? But let's talk about what actually happened. Let me set I guess the scene. You're a first home buyer. You have been diligently saving every single dollar you've been topping up your retirement fund.
You're super, your Key WE Saver, same same, You're going to stash away extra cash and then you're doing everything right. All of a sudden, the government says, hey, you can actually dip into your SUPER or your keyw saver.
For a house deposit. You're going to go, oh, my.
Goodness, this has been so hard, how good? I would absolutely love to do that, because this has been honestly a long slog, and it is getting further and further away from being reality. That three bedroom place in a really great suburb actually starts to feel a little bit more enrich But here's the catch. You're literally not the
only one with this idea. There are thousands of other first home buyers who are thinking exactly the same thing, And suddenly, at every single option, everyone's budget has an extra fifty grand in it. That house it was listed at six hundred grand, well now at six hundred and fifty thousand dollars. Prices rise, competition is heating up, and you know what happens in the end, you are still locked out of the market. And am I guessing no? Because that's exactly what played out for our friends in
New Zealand. After they introduced this policy, house prices started rising even faster, jumping from seven point six percent to nine point two percent per year.
Buyers suddenly had more money.
To spend, which in theory was a good idea, but so did their competition, so sellers just raised the prices to match with deposits Struggling to keep up, buyers had to borrow more money just to stay in the game, and the proportion of high loan to value ratio mortgages taken by first home buyers actually skyrocketed for from twenty five percent to seventy five percent since twenty fourteen. What does that actually mean. Well, people were stretching themselves really thin.
They were taking on bigger mortgages relative to their deposits, leaving them vulnerable to even more financial stress if interest rates rose, or life threw in an unexpected curve ball like a job loss or maybe an emergency expense. Many had not much financial cushioning to fall back on. But you know what the hardest hit was lower income earners and renters. They couldn't access as much from Keywi saver, yet they still faced skyrocketing house prices. Meanwhile, the biggest
winners they were the property investors. While first home buyers were dipping into their retirement savings just to get on the ladder, just to compete, investors sat back and they watched their property values climb higher deposits pushed prices up, making homes even more expensive and played right into the hands of those who already had multiple properties.
So instead of.
Leveling the playing field, this policy did the exact opposite. First home buyers were left with bigger debts, higher risks, and fewer opportunities to get into the market, all while the housing affordability crisis only got worse. And you know what, here's the wild part. If you didn't think that was wild, This policy wasn't just ineffective. It actually made home ownership
rates worse. In New Zealand, home ownership of people in their thirties dropped by seven percent instead of increasing, So despite all that extra money being pumped into the market, fewer young people were actually ending up owning homes. And here's something telling. Seventy seven percent of first home buyers in New Zealand now use their super to buy a home, up from sixty five percent in twenty fifteen. That means more and more young buyers have to dip into their
retirement savings just to compete in the housing market. Now, three hundred and seventy nine thousand and New Zealanders have collectively withdrawn in New Zealand dollars ten billion dollars from their retirement accounts. That's ten billion dollars not growing for their retirement and all for what to chase incredibly expensive homes in a market that's been artificially heated by the very policy meant to cool it down. Oh and did I mention that the New Zealand Treasury explicitly warned that
this would happen. They literally said this scheme would stimulate demand and increase house prices. And you know what, they weren't wrong. They work very on the money. Stay with me because after the break we're going to zoom out and we're going to look at what this could actually mean for Australians, not just home buyers. Welcome back, my friends. We have been chatting about the proposal to let Australians dip into their superannuation for house deposits and why the
New Zealand experience should make us stop and think. But it's not just about crisis, right, Let's talk about what happens to your suberannuation when you're not investing it optimally. Australian mysuperbalanced options achieve about seven point eight percent returns annually, compared to just six point six four percent for Keywi Saver balanced options. That difference might seem really small, but
over forty years of working life it is massive. Keywi Saver funds hold sixteen point five percent less in growth assets than Australian super funds, largely because they need to keep more money accessible for these housing withdrawals. That means funds take fewer investment risks and generate lower long term returns because of this policy. This affects everyone with super not just home buyers.
Right.
If Australian funds had to accommodate large scale withdrawals for housing, which they might have to, they'd likely be forced into taking more conservative investment strategies to make sure that they have enough cash on hand to deal with this. That means less money invested in high growth assets and over time law returns for literally all of their members, whether you're buying a home or not. And I need you to remember, our supersystem was designed to reduce the reliance
on the aged pension. Australia's pension expenditure is projected to decrease from two point five percent to two point three percent of GDP by twenty sixty. Meanwhile, new Zealand's pension costs are actually expected to increase over the same period of time. As one economist put it, it's rubbing your future self to pay your present landlord, except the landlord discharges more. Actually, speaking of economists, did you know how many support this idea?
Actually? Almost none.
When forty eight out of forty nine economists think something is a bad idea, maybe we should listen and stop playing into social media hype.
Here's the real issue. Australia is already.
One hundred undred, one thousand homes behind schedule every single year. That means even if every single first home buyer magically had a deposit tomorrow, there still wouldn't be enough houses to purchase.
That's the problem with this policy.
It doesn't build more homes, it gives buyers more money to compete for the same limited supply. And when more people are fighting over the same number of houses, do you know what happens? Prices go up, not down. So what would help with housing affordability? Okay, so stepping back first, we need more supply. That means planning reform, infrastructure investment, and incentives for building more diverse and affordable housing types.
New Zealand actually had success with this in Auckland. In twenty sixteen, they changed zoning laws to allow more housing types like townhomes and apartments and multi unit dwellings in areas that previously only actually allowed stand loan houses. The result of this was that rents in Auckland dropped by twenty eight percent compared to what they would have been without these changes. Impressive, right, More homes meant less competition,
lower prices, and better affordability. Unsurprisingly, Second, what we need to do is look at the tax rules that shape our housing market right now. Some policies make investing in property way more attractive than other types of investing, which doesn't exactly help with first home buyers trying to get
their foot in the door for the first time. We could boost first home by a grant or saving schemes that don't raid retirement funds, like expanding the first Home super Savior scheme without allowing direct withdrawals from the main superbalance. So what have we learned from our keyw neighbors across the ditch and their home ownership experience. The housing crisis is very real, but this policy is like trying to put out fire with petrol. Our system is literally the
envy of the world. Why are we so keen to break something that's working. The biggest winners in this policy are current homeowners who are going to see their property values increase even more, not first home buyers, who the policy is supposedly designed to help. We are all complaining about house prices while considering a policy that's proven to make them higher. Make that make sense to me. The Australian supersystem is doing what it was designed to do
help Australians build wealth or retirement. Let's not sacrifice our financial future security for a short term housing sugar hit that ultimately makes the problem even worse. If you also feel strongly about this, I would love if you could share this episode with your.
Friends, your family, and anyone who you think might be thinking.
Superfer housing sounds like a super idea, And don't forget like and subscribe so that I can he.
Bringing you the content that you love.
My friend, That is literally it from me on this Saturday. I am so worked up, but I hope that we are on the same page now. Hope you enjoy your weekend and I will see you. Write early on Monday for a Money Diary if I shared on She's on the Money is general in nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes and should not be relied upon to make
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