[staringclown]

A super (bad) idea

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These efforts to pump up the market could be simply written off as the normal activities of groups looking out for the best interests of its membership. Fair enough.

But then there's the Real Estate Institute of Australia's growing push to give first home buyers access to their superannuation to fund otherwise unaffordable purchases.

The REIA put the idea to the Commonwealth Government in a budget submission in April, with the (original) suggestion that first home buyers be permitted to use their ''voluntary'' contributions.

By October, the group was advocating a new policy that would potentially allow full access to the funds in a super account, taking its inspiration from the ''success'' of a similar plan in Canada.

The REIA want to get at your retirement savings. Never stand in between a real estate agent and a bucket of money.

[savagegoose]

yeah its a battle between the cocks eho want the prices to always go up, and the battlers just starting out and want cheaper affordable houses.
of course bringing in more money just drives up prices, and the cocks are already ealthy so have the f*cks in governments ears already

[Dose]

I'd suggest the battlers who have been taught that the simple act of buying a house will make them rich. "Affordability", as a factor, never was part of the buying decision. Until they couldn't afford it!

It's like non-skier buying at Falls Creek. Who cares as long as it goes up!

[booboo]

Most of the proponents seem to be in the group that think Super is a rotten investment to begin with (see the MacroBusiness article on the same REIA craziness a while back). Of course, there's a few that genuinely (and naively) think that giving everyone $25k will increase "affordability", but thankfully most people have learnt their lesson after the FHOB only resulted in fevered bidding up of houses from FHBs. Not to mention the leverage affect, when they use the grant as part of a desposit on a 95% LVR loan, then pay > 60% of their salary to their loan.

Hopefully there is now a wide enough realisation amongst the plebs that throwing money to stimulate demand doesn't help affordability, which would mean that "policy" like user Super wouldn't actually buy any votes, so therefore will not occur.

My favourite comment was:

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Another great idea from the REIA. We need more ideas like this, after all, those BMW 3-Series leases don't pay themselves off. Just in case there were some prudent types out there who hadn't yet thought of blowing their retirement savings on real estate speculation, thqank goodness the REIA is here to assist.

Come to think of it, do first homebuyers really need both kidneys? I think not. Perhaps a little something to think about ahead of next year's request for more hand-outs aimed at keeping the market inflated.

[zaph]

booboo, on 29 December 2011 - 12:06 AM, said:

Hopefully there is now a wide enough realisation amongst the plebs that throwing money to stimulate demand doesn't help affordability, which would mean that "policy" like user Super wouldn't actually buy any votes, so therefore will not occur.

the plebs still don't get it. i doubt they ever will. for years and years marketing has included something for free, built into the price, and plebs fall for it. give me a house partly for free, even if it is my own money? where do i sign?

i hope that the greens/independents get it, so there would be no chance of getting it through.

with all the talk of squeezing budgets because of an ageing population i doubt this will get a guernsey.

[Dose]

zaph, on 29 December 2011 - 12:23 AM, said:

with all the talk of squeezing budgets because of an ageing population i doubt this will get a guernsey.

Enabling retirement savings to sell more houses in Canada has created a situation where FHBs who couldn't afford to buy a house in fact did. Many are struggling to pay it back which will eventually translate to a higher tax bill which will impact their ability to save for retirement.

There is also the issue of eliminating all diversification in an individual's retirement planning. You now have 100% of your "savings", ahem, "invested" in your PPOR...which is not an investment because you need to live in it...

It was a sh*tty idea but a tough one to claw back as removing it reduces the pool of available FHBs and thus reduces home values of the very people who initially bought houses they could not afford.

The Canadian Boomer retirement situation is getting interesting:

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If you witnessed some intergenerational angst over the holidays, join the club. It’s now endemic, as it is in my extended family. Adult Boomer children hanging around like a virus, often endured, if not nurtured by Mom, while Dad looks at a scary economic landscape and wonders how the hell to finance a looming retirement, let alone carry the offspring.Seems like a phenom. School’s over. Puberty’s but a memory. But no job, no immediate prospects and no appetite to move out and try to live on McWages. After three, four, five or more years of university training, many Boomer kids have expectations of professional lives and fat salaries. Many seem content to suckle, until the big offer materializes.

How many? According to a recent TD Canada Trust survey, a staggering 17% of Boomers are delaying plans to sell their homes and downsize because their basements are populated with the boomerangs. And another 12% say they’ve shelved plans to move entirely, since they expect adult children to be living with them after retirement. Worse, almost 40% of all Boomers confess that when they retire (in short order) they’ll also still have a mortgage.

This is not a happy financial picture. And it’s about to get worse.

Remember, 72% of Canadians have no corporate pension to look forward to, which means they’ll have to survive on their own investments, plus the peanuts the government doles out. And those nuts are about to shrink.

Call of Duty

The REIA has a problem on their hands...FHBs cannot afford to buy houses. Priced out forever, indeed!

[Crest]

Dose, on 29 December 2011 - 02:50 AM, said:

The REIA has a problem on their hands...FHBs cannot afford to buy houses. Priced out forever, indeed!

REIA has about as much of a problem on its hands as Toyota has when it cant sell its base model Corollas for $250,000. In other words there is no problem.

There will be plenty of buyers if housing prices drop 40%.

REIA just need to grow up and rethink their business model. Rather than a model based on ever increasing levels of household debt fueling house price inflation they'll just need to provide decent products at an affordable price... just like most other sectors of the economy do.Its not that hard... Really, it's not.

[staringclown]

I was thinking this might get a guernsey.

It is housing stimulus without affecting the budget "surplus" and could be sold as helping "affordability". Everything the goose could want in a policy. Just a bit more intergenerational wealth gets transferred.

[Mr Medved]

I think most here can see the pitfalls of such a policy. What is perhaps more important is, how to profit/gain from the impending stupidity?

[savagegoose]

whats not to love, gov gets more taxes, REA get more fees, olldies get to screw their young. and wait ... the fresh out of school, get to flee over seas to america where houses are cheap, with their uni degree intact anf a giant f*ck YOU to all of the above.

[Dose]

savagegoose, on 29 December 2011 - 09:25 AM, said:

whats not to love, gov gets more taxes, REA get more fees, olldies get to screw their young. and wait ... the fresh out of school, get to flee over seas to america where houses are cheap, with their uni degree intact anf a giant f*ck YOU to all of the above.

I'm thinking there's some wisdom there. Besides, it all goes to sh*t if prices are falling.

[savagegoose]

looks like ato already has an escape clause for super to pay off house

http://www.ato.gov.a...nt/00185321.htm

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<a name="Content">You can apply to the Australian Prudential Regulation Authority (APRA) for a release under compassionate grounds.

For more information, you can go to the APRA website: http://www.apra.gov....on-Benefits.cfm

Circumstances where you may be granted a release under compassionate grounds include where you need to:

• pay for medical treatment or medical transport for you or a dependant of yours
• make a payment on a loan to prevent you from losing your house
• modify your home or vehicle to accommodate the special needs of yourself or a dependant as a result of a severe disability
• pay for expenses associated with a death, funeral or burial.

The amount the trustee can pay is limited to what is reasonably required or, in the case of the payment of a loan in relation to your house, an amount equal to or less than three months' repayments or twelve months' interest on the outstanding balance.

[tom]

I am not sure how a trustee comes into the equation around compassionate grounds for a release of your super.

One thing that concerns me around this is if banks are explaining these rights to people prior to repossessing the home. It is likely that for most people if they are about to be repossesed having 12 months grace is only going to mean they are 12 months more away from bankruptcy but in the latter case they have no super.

Surely this is not in their interest and only in the banks? Like prventing banks from offering credit card increases they should also be prevented from offering this little gem of advice IMO for the greater good.

I could understand it in a few limited circumstances but in most of these the bank would allow the interest to capitalise anyway, say a short term injury which prevented the breadwinner working for 6 months but with an otherwise good employment history / payment history etc.

[savagegoose]

on the tax ofic e site it had the compassionate grounds is only aceseible if the super funds trust deed allows early withdrawal for such

i did like the deaht clause

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<a name="Content">Death

In most cases, a super fund must pay out the member's super interest/s on the death of the member. The legal personal representative of the member should contact the member's fund as soon as possible.

in most cases hehehehe must be some really dodgey super finds out there? macquarie bank maybe, where dying doesnt get you access to super

[tom]

savagegoose, on 08 January 2012 - 01:50 AM, said:

in most cases hehehehe must be some really dodgey super finds out there? macquarie bank maybe, where dying doesnt get you access to super

Maybe if the listed benificiary of the super upon the account holders death is a minor they retain management of it till they come of age. Ultimately this is the best place for it anyway if this is allowed.

[mattau]

Personally, I don't think tapping into FHB's super will make houses more affordable. Rather, it may make the increased capital of FHBs to actually increase the prices of housing.

As mentioned above, it's pretty much using your own money to help bump up the prices and keep the prices high.