Allowing young people to dip into their superannuation to buy their first home would only push up house prices and undermine retirement savings, Labor says.

Over the weekend Treasurer Joe Hockey said Australia needed to make the super system more flexible, even suggesting it could be used to help first home buyers.

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Labor’s treasury spokesman Chris Bowen has dismissed the idea as a “thought bubble”.

“We need superannuation more than ever before because we are living longer,” he told ABC radio.

“It could have the perverse impact of making housing affordability worse and undermining retirement incomes for people on lower and middle incomes.”

Industry groups have also spoken out against the idea, saying it would erode retirement savings.

“We certainly need to have a conversation about super but I think opening up for home loans or anything else is not the way to start,” chief of the Australian Institute of Superannuation Trustees, Tom Garcia, told ABC radio.