Property prices are a sensitive topic in Australia.
The suggestion from some is that SMSFs have been partly responsible for driving up residential prices, diving into property in preference to an uncertain share market and low returns on cash.
However, the latest Class SMSF Benchmark Report does not support the notion that SMSFs are in a position to have a significant influence on the residential market. Extrapolating data from Class SMSFs, the value of residential property in all SMSFs (both direct and indirect holdings) represents less than 1% or about $64 billion of the $6.7 trillion residential property market. Other investors, at 22% of the market, are much more likely to be having an impact on prices.
This is not as surprising as it may seem. There are a number of reasons why holding an investment property outside an SMSF is more attractive to investors, including more favourable negative
gearing tax breaks outside super and the ban on SMSFs using equity in one property as collateral for another.
The Benchmark Report also found that SMSFs as a group do not appear to be highly exposed to property investments. Almost 73% of SMSFs (by number) do not directly hold any property at all, either residential or commercial.
However, those SMSFs that do hold direct property have a very significant exposure to it – about half the fund’s assets, on average, are direct property investments.
To get your copy of the Class SMSF Benchmark Report, click here.