Self-managed superannuation funds (SMSFs) are not significant drivers of residential property prices and are no threat to homebuyers in Australia given the low proportion of SMSFs that held property, Class Super research found.
The Class SMSF Benchmark Report for the December 2016 quarter revealed SMSFs owned less than one per cent of residential properties in Australia compared to the 22 per cent owned by non-SMSF investors and 68 per cent by owner occupiers.
Releasing the report at a breakfast at the 2017 SMSF Association conference in Melbourne today, Class chief executive, Kevin Bungard, said: “SMSF property purchases are just too small a part of the market to be having a big impact”.
“Drawing conclusions that self-managed super funds are somehow driving property prices seems a bit of a stretch.”
The SMSF residential property market share was about $64 billion of the $6.7 trillion estimated value of the total residential market.
The analysis of over 125,000 funds showed 72.9 per cent did not directly own property while their property exposure was from real estate investment trusts (REITs), and other indirect investments and was in line with the nine per cent property exposure of Australian Prudential Regulation Authority (APRA)-regulated funds and seven per cent on a look-through basis.
However, property exposure was significant amongst the 27.1 per cent of SMSFs that held direct property. For those with exposure to only residential property, 47 per cent had exposure to residential real property including limited recourse borrowing arrangements (LRBAs). For those with exposure to only non-residential property 51.3 per cent held exposure to this asset class, including LRBAs.
“These figures are worthy of further discussion and analysis but we should not simply conclude that the members of these SMSFs with direct property are overexposed to this asset class,” Bungard said.
“Many of the members of these funds would have investments outside of their SMSFs as well, so you would need to look at the totality of their wealth to be able to draw conclusions about the risks they are taking.”
The average size of SMSFs with just residential property was $1.2 million compared to $1.9 million for SMSFs with only commercial property and $3 million for SMSFs that had both.
