The controversial decision to allow home buyers to dip into their super sparks debate
The unexpected success of the First Home Super Saver scheme (FHSS) presents a dilemma for the government, which has been resistant to utilising superannuation to support home ownership.
Recent figures obtained from the tax office reveal a significant surge in support for the scheme, with over 43,000 individuals applying to use their super tax concessions to purchase their first homes.
Initially, the FHSS scheme struggled to gain momentum, attracting a mere 2,000 users in its early months, prompting the Australian Labor Party (ALP) to propose its termination in 2019.
However, the scheme has since overcome obstacles and gained traction, enabling first-home buyers to save for property deposits by benefiting from reduced taxation within their superannuation accounts.
Despite the demanding requirements initially imposed by the Morrison government, younger Australians have embraced the scheme, using their superannuation savings to realise their homeownership aspirations.
In the 2022 financial year alone, 12,460 individuals requested FHSS releases, totalling $167 million.
As a result, the FHSS scheme has become a crucial component of the mortgage finance system, frequently recommended by advisers, particularly to high-income couples with the means to make voluntary super contributions.
The government now faces the challenge of reconciling its reluctance to leverage superannuation for home ownership with the scheme’s growing popularity and its integration into the financial landscape.
