He we go again, Bill Shorten playing around with super. Again!

Does this idiot realise that permitting super funds to borrow for housing actually provides houses for people to live in.

The next thing he will say is “where have all the investors gone”. How are we going to afford all this public housing?

Dear Rehctub,

I am not familiar with this Shorten guy or with what he said, but as I understand it, super funds (which is a bad idea to begin with, but nevertheless it exists) are meant to invest the money of their members, not to lose it. If you borrow money then you have to pay interest, so that's a loss. Why not simply buy the houses using the members' nest-egg money, then rent them out to profit the members?

Hi Yuyutsu.

I think your idea is unique, and it is better for me to rent the house out.

His announcement was targeted at self managed funds and is aimed at making houses more affordable. Apparently!

As it stands, a SM super fund can borrow money to buy an investment property and of cause claim the write offs.

The big difference is that CCt is calculated at 10% of the sell price and no credits are given for inflation. Of cause the income and profits must remain in the fund.

I have such a fund and have been investing since 2001.

Back then the fund could borrow, then the rules changed and asetts had to be either debt free, or borrowings had to be moved. Of cause this caused some panic and uncertainty.

So the rules changed agin meaning they could borrow agin, and now labor wants to reverse this once again.

This is one reason so many dont trust super and thats bad because after all, super was meant to one day replace the aged pension but that wont happen if funds can no longer borrow.

Crazy stuff.

I think a member of a super fund should be able to borrow sufficient from his super account
for a deposit on a home.
The deposit would remain fixed in the asset value of the house and the property of the super
fund and interest only could be charged and credited to the super account.
This means that the fund still has its cash value, is receiving income and the worker as able to raise
the deposit for a home, something that is beyond most people today.
It should be remembered that many workers, like my son aged 39 will never have enough super
to retire on anyway and you can bet the weekly stipend he will get will be assessed by the pension
office so his income would be just the same as if he were a full old age pensioner.
This way he has a chance to create an asset pool.

Let's see this drive the price of houses up some more and then watch it all crash and burn eventually. Then the rich will pick up all the pieces and make themselves richer. Billy boy is certainly in the rich elite of Australia, well done Bill!

Somewhat loose in the head some of you blokes. Super funds are invested in all sorts of things. Coles air a big borrower in super funds to grow their annual supply of tomatoes. The returns for super were better than other short term borrowings.

If super was invested in housing what makes you think it would raise prices, I think the opposite would be the outcome. We are talking about new housing, not existing.
The building price is far cheaper than the retail price of existing housing.

Doog, what raises the price of housing is the amount of eligible buyers. So anything that adds to the amount of buyers able to buy makes prices increase. Its basic supply V demand.

Chris, you say your 39YO son will not have enough in super to retire on. So tell me, how much of his own money has he invested in super.

If he has not, then why not, especially if he knows he will be short.

The incentives are there, its just that sacrifices have to be made and most wont do that.

As for using super for a deposit, the same applis as i saud to Doog. More buyers means increased prices. Its like a dog chasing its tail im afraid.

Butch you are just making that to suite yourself. Bill was not referring to individuals borrowing super. That is a coalition Kok arse idea.

Building company,s borrowing super as apposed to borrowing from a bank. Bricks and mortar investment has always been a winner. We are talking about new housing, not buying old stock.
There is not enough new stock on the market to service the demand for housing. As anybody knows to build a house costs far less than having to fight for an existing one.
So get the story straight.

If there was an excess of new houses on the market the bottom would fall clean out of overpriced established houses.

Doog, what Bill is talking about is self managed super funds borrowing directly. I have such a fund myself and since 2001 when i first borrowed through the fund, borrowing of this sort has been on/off then back on again. Billis wanting to once again change this.

Now my fund owns four properties and two of them provide permernant housing for families, so if the fund can no longer borrow where will these people live? Remembering, for every existing propery sold, many investors buy another. So if they cant borrow (assuming his laws are not retrospective)then the fund is less likely to sell and most certainly wont buy unless they use cash. Now given the rather poor rental returns on property, cashed up funds wont buy residential properties unless they steal them. This comes with its own set of problems.