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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

SPAA says Criticism of SMSFs and property ill-founded

25 January 2014
Liz Ward

As the heated debate regarding SMSFs and residential property investment increases, the SMSF Professionals’ Association of Australia (SPAA) has claimed that recent reports were not based on true figures.

Late in 2013, the central bank questioned SMSFs’ increasing use of borrowing to invest in property in its recent Financial Stability Review, which noted that the increasing trend towards property gearing by SMSFs could inflate property prices. Assistant Treasurer Arthur Sinodinos weighed into the debate commenting that, “he would look at creating a more “level playing field” between key groups in Australia’s superannuation industry, including the industry and retail funds.”

SPAA’s head of education Liz Ward, has hit back claiming that,  “evidence to date suggests SMSF trustees are cautious investors when it comes to property”, and “much of the criticism of SMSF trustee investment in residential property is ill-founded.”

Ward reiterated that, “that once the true numbers are published, it will fundamentally show that the funds’ investment in property continues to be small in comparison to other investment classes.”


  • Treasha Lim
    February 1, 2014 at 10:51 am

    I was concerned that if people weren’t allowed freedom to invest with their Superfunds in residential property, they would have no choice but to stick only with shares. Any investment is risky however residential property appears to me to be a safer asset class otherwise we all should be selling our homes. It seemed logical to want to own a residential investment property as everyone needs a roof over their heads. It’s just whether they rent or buy. With some deferring home buying till later in life, renting is the only choice and they need investors to supply apartments for rental. If rental properties are too few, rents would go too high. If someone worked hard to build up their super and decided to be proactive and leverage with their hard earned savings into a residential property that in turn supplies this rental community which seems to be growing…I can’t see the negative of letting people use their SMSF funds. It’s still their savings. Whether its in a standard savings account or in an SMSF saving account, its still their savings. I would not like to tell my neighbour they are restricted on the type of things they can buy with their savings especially when so many don’t have enough for retirement. Some need to leverage. So if for example someone has $200,000 in an SMSF and the bank is willing to lend them $200,000 to investment in a $400,000…. at least this SMSF investor has the chance of using the banks (leverage) to have $400,000 worth of what we hope would be an appreciating asset. With this higher value asset, we may not need as robust a market to enjoy decent growth. e.g. If the property only averaged 5% p.a. in growth over a 15 year period. $400,000 x 5% gives them a potential net worth increase of approximated $20,000 p.a.
    For their $200,000 in the SMSF invested in shares to deliver this same result, it would need to average 10% growth over this same time frame. Putting more pressure on the portfolio to perform or on the market to be doing well etc. Also, I have always seen some investing in property as a way of creating jobs for the building industry. Trades people, conveyancers, all sorts of people indirectly or directly. That’s some of the positives I see. Thank you.

  • Mentor Education
    August 13, 2014 at 11:04 am

    Good point Treasha!

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