Prime Minister Tony Abbott is happy to debate allowing young people to invest their retirement savings in a home, but denies his government has plans to introduce the change.

At the weekend, Treasurer Joe Hockey suggested the significant change to superannuation to help out first home buyers.

Labor and industry groups have criticised the idea, saying it would push up house prices and erode retirement savings.

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But the prime minister described the proposal as “perfectly good and respectable”, and one that had been adopted by countries like Singapore.

“It is something that I am very happy to see further debated but there are obviously some issues around it, and let’s fully consider it,” he told reporters in Perth.

“At this stage we don’t have any plans to introduce it.”

Labor’s treasury spokesman Chris Bowen dismissed the idea as a “thought bubble” that would only harm the superannuation system.

“We need superannuation more than ever before because we are living longer,” he told ABC radio.

“It could have the perverse impact of making housing affordability worse and undermining retirement incomes for people on lower and middle incomes.”

Chief of the Australian Institute of Superannuation Trustees, Tom Garcia, welcomed debate about retirement savings.

“But I think opening up for home loans or anything else is not the way to start,” he told ABC radio.

The Association of Superannuation Funds of Australia warned that raiding the nest egg early could come at the expense of a comfortable retirement later on.

– with AAP