A parliamentary review of housing affordability has revisited the question of whether superannuation savings should be put towards a home purchase, recommending that first home buyers be allowed to use their superannuation assets as security for a home loan.

And it recommended against any change to the current negative gearing rules, arguing that the tax break provides community benefits in the form of greater housing supply and lower rents, which outweigh the impact of the tax break on dwelling prices.

The House of Representatives Standing Committee on Tax and Revenue released the report of its inquiry into housing affordability and supply, The Australian Dream, calling on state and local governments to increase urban density and on the Australian government to provide incentives to states to encourage the delivery of more housing supply.

The committee, chaired by Liberal MP Jason Falinski, made a number of recommendations to increase the supply of affordable housing, including that the Australian government provide grants and subsidies to the states to increase the supply of affordable and crisis housing and provide incentives to the private sector to deliver discount-to-market rent-to-own housing.

It recommended that the states and territories replace stamp duty with land tax, which has been canvassed by New South Wales Premier Dominic Perrottet.

On the superannuation issue, funds would not be used for a deposit but as collateral. Super balance would only be reduced if the home buyer defaulted.

To avoid the risk that such a policy would simply push up house prices, the committee said implementation should be accompanied by policies to increase housing supply.

A number of submissions pointed out that the declining rate of home ownership was leading to poorer and more insecure retirement for many and carried significant implications for the welfare system. In this context it made sense to use superannuation balance to help people into home ownership.