Pass go, collect mortgage: Why the Government’s latest first home buyer’s scheme is crap

“Sorry, but what the f**k is the point of a first home buyers scheme if we need another first home buyers scheme to access it?”

That was the question that came out of my best friend’s mouth whilst we waited for our post-pilates morning lattes today. It’s been bouncing around in my brain as I went through my morning routine, so when 9am rolled around I decided- today’s the day for an opinion piece.

The exorbitant cost of home ownership in this country has long been a point of contention in the media, amongst policymakers and of course, the general public.

Whilst millennials have been chastised for their love of avocado toast (and pilates, and lattes..), it’s clearly no longer the root cause of our lack of home ownership. Australia’s home ownership rate is falling, with only 66% of us owning a home. Half of those households own their home outright, without a mortgage.

In 2011 the average NSW house price was $540,800. If you bought property then you’re probably laughing whilst feeding caviar to your dog in your now $1.1 million value home.
Nationally, the capital gain over the past ten years is a whopping 70.27%.

Stagnated wages and a disgustingly high inflation rate have seen home ownership dreams dissolve for many. Despite being largely unattainable, home ownership is still touted as the ultimate financial goal for all young Aussies. Pass go, collect your mortgage.

Maybe it’s because a house and land is more tangible an asset than stock, or maybe because everyone is aiming towards it…Regardless, it’s obviously high on the agenda for politicians, especially with the election looming.

The Coalition should have gone to Specsavers because their latest idea is incredibly short sighted. I’m talking about the scheme that will allow first home buyers access to their super to help fund a down payment.

*record scratch*

So now instead of avocado toast vs home ownership, its long term financial wellbeing vs home ownership…

Leaving aside the fact that we already have a first home buyers scheme that is largely tokenistic and unhelpful in today’s climate, the proposed policy will allow up to 40%, to a maximum value of $50,000 to be withdrawn from super, a figure that the average person doesn’t accrue until they’re at least 35.

The policy will mean young Aussies face a paradoxical conundrum since one of the best protections for retirement is home ownership, because the pension is only enough if you aren’t still paying rent…

Another layer is the massive jump in house prices that will follow. Experts surmise that Sydney house prices will jump an average of $134,000 almost immediately in response to the policy.

One commentator said that in the long term the policy won’t affect people’s super savings too badly, since, thanks to legislated super minimums, “Australians save too much anyways”. Sorry, what? 

Aside from super balances, young Aussies actually don’t have that much in savings. The average savings balance of a 25-34 year old banking with Westpac was just under $8,000, enough for a used Honda Civic… boujie!

In a time where instant gratification is the status quo I am genuinely concerned that those hell bent on buying a home will dip into their super, shafting their future retired selves and their peers, all in the pursuit of a roof over their heads. Why is this a choice we have to make about the simplest, most crucial consumer need- a home?

In the face of this policy, I’m calling it- home ownership is overrated, and the cost of homes is why I’m a huge proponent of focussing on investing instead. 

If you thought your 5-6% value increase per year on property was good, take a look at investing where a solid, well balanced portfolio can yield you an average return of 10% per year. Plus, if you need cash tomorrow you can liquidate, just like that. You don’t need a huge amount of capital to get started and don’t have to worry about things like property maintenance, taxes or insurance costs. 

Investing gives you options but many people cast it aside, relegating the whole venture to the ‘too hard basket’. I’ve encountered this attitude time and time again, and I worry it pushes more people into the have-to-buy-a-home trap. 

I genuinely think we need to improve financial literacy amongst young Australians, now more than ever to decondition that home buying reflex. At the same time support first home buyers through well considered schemes that don’t force us to choose between a home and our super balance. 

Government, do better.