With home ownership moving further out of reach for many young Australians, there are increasing calls to make superannuation available for home deposits.

But research from the Association of Superannuation Funds of Australia (ASFA) shows that most young people don’t have enough in their super to bridge the deposit gap even if that were allowed.

“While superannuation may seem like a tempting pot to raid, our analysis shows it will only benefit those young people who are already more likely to be able to afford a home, and not solve the crippling supply-side deficit that is fuelling our housing crisis,” ASFA CEO Mary Delahunty said.

ASFA delved into ATO and ABS data over median-priced house and unit deposits (20 per cent of valuation) and the spread of superannuation balances among those aged between 25 and 34.

What it found was that of those in that age group, both in couples and single, no one could come up with the cash for a home deposit using their super balance.

That applied to those living in Melbourne and Sydney, even if they drained their super completely.

In Melbourne, the research found that only a couple in the top 20 per cent of superannuation balance holders could gather a deposit for a unit by using all their retirement savings.

In highly priced Sydney the situation was worse.

There, a couple with the median amount of superannuation would be more than $150,000 short for the deposit on a median-priced house if they withdrew and used only their super.

The research effectively means that the only people likely to benefit from allowing first-home buyers to access their super for housing would be a minority of people with high superannuation balances.

And they are the ones who would likely be able to buy a home anyway.

“Accessing superannuation is not the silver bullet to solving Australia’s housing crisis,” Delahunty said.

Another problem with accessing super for housing would be the extra cash sloshing around the property market would simply push up prices further.

Research done in February by the Super Members Council put figures onto those price rises.

The model showed prices would hike in all capital cities, with the Sydney median ballooning by almost $80,000, in Melbourne by nearly $70,000 and Brisbane by $78,000.

In Perth, where a small market and mining boom incomes are at play, SMC found that access to super would push up prices by as much as $86,000.

Using retirement savings for house deposits would unleash a massive upward move in prices, SMC CEO Misha Schubert said.

“That would mean higher and longer mortgages for Australians – and would quickly make capital cities even less affordable for new home buyers struggling to get into the market,” Schubert said.

Independent economist Nicki Hutley said it was increasingly important “not to use our super for anything other than for what it is intended”.

The ageing population means that it is important for people to build up as large a superannuation balance as possible.

“There is a demand on the budget created by people ageing and that could become untenable,” Hutley said.

Encouraging people to retire with superannuation savings as high as possible reduces the call on the public purse for the aged pension and other services, she said.

Covid raids

During Covid people who claimed to be in financial difficulties were able to withdraw as much as $20,000 from their super.

About three million people – mainly younger – applied and as many as one million cleaned out all or the vast majority of their super accounts.

Rather than make early withdrawals it was far better for young people to contribute to super through their working lives.

“Making contributions early allows compound interest to work on building balances for longer,” Hutley said.

SMC analysis showed that a 30-year-old couple who withdrew $35,000 each from their super could retire with about $195,000 less in today’s dollars.

A Mercer Global Pension Index report found that countries that allow early access to retirement savings for housing did not have higher rates of home ownership than Australia.

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