The $3.3 trillion savings pool is an attractive target for politicians wanting to boost home ownership, fund infrastructure or wean people off government pensions in the decades ahead.

A McKell Institute report released on Wednesday models the effect on the housing market should Australians be given access to super for a home deposit, as advocated by federal government MPs such as assistant minister Tim Wilson.

Housing prices have increased significantly during the pandemic, helped by record low interest rates. Rental costs have also risen.

A standard 20 per cent deposit for a house in Sydney - where one-fifth of Australia's population lives - is now around $300,000, or close to five times the median annual earnings for an individual.

Housing affordability is an enormous challenge but the use of super won't help, McKell Institute executive director Michael Buckland said.

Allowing access to $60,000 or more in superannuation savings would see more prospective buyers transition to home ownership, but would inflate house prices in the major cities, the report found.

The proposal would add nearly $69,000 to the price of the average house in Sydney, $108,000 in Melbourne, and $159,000 in Adelaide.

Australians who opt for a house deposit instead of keeping their money invested in super would retire worse off, because cash invested in super offered more sustainable long-term returns than housing.

"Subsequent rounds of prospective home buyers would therefore face higher levels of prices still, and demands on their super would need to be higher again to compensate," the report said.

Mr Buckland said the Mortgaging Our Future report was a sobering reminder of what was at stake.

"Young Australians need their retirement savings quarantined and compounding. Using these savings to fuel yet another housing market feeding frenzy would be policy madness," he said.

It is already possible for individuals to save up to $30,000 within their super account through additional voluntary contributions, for the purpose of adding to a home loan deposit.

This allowance is additional to regular savings, and is limited to $15,000 in any one year under the first home super saver (FHSS) scheme.

The report found allowing prospective buyers to access between $10,000 to 30,000 towards a house deposit would have no material impact on the overall rate of home ownership.

Australian Associated Press