Heavily contested changes to this year’s budget have vowed that the property market be opened up to first time buyers looking to get their foot on the ladder with super savings. Knowing what these changes mean, however, is crucial – especially if you can take advantage of them.
What Changes Have Been Made?
Since the 1st July 2017, people have been able to make voluntary contributions to their superannuation funds, allowing them to withdraw the savings from July 1st 2018 onwards. Individuals can make up to $15,000 in voluntary contributions each year, with a total maximum contribution set at $30,000. They’ll then be permitted to withdraw this $30,000, with couples allowed to combine saving potential in the form of single deposits, reducing the time until they have a deposit large enough for a property purchase.
These changes have been implemented in order to combat the widespread lack of affordability for first-time buyers within Australia. The project is estimated to cost $250m to the Australian government over 4 years.
Why Should Changes be Made to Super?
The global financial crisis broadcasted a loud and resounding warning about an inflated real estate market, but Australia seems to have batted the advice to one side. Property prices in Sydney have risen by 113% since January 2009, with Australia’s combined increase over the same period set at 72.4%.
Wage growth hasn’t been able to keep up with this across the board price inflation, leaving house prices as a major concern for Australian politicians.
The change in voluntary contributions is a change that’s been hotly debated, as some experts have claimed it’ll only further increase house prices, as well as decrease the value of super, negating its entire purpose of forming a financial foundation for retirees who are able to withdraw their super tax-free from age 60.
However, the government and other experts have claimed it’s a worthwhile change, as the increase in first-time buyers will only further supplement the Australian economy.