SMSF purchases not inflating property market

The SMSF Professionals' Association of Australia (SPAA) has come out against claims that property purchases in SMSFs are playing part in the surge of property prices, saying it is negatively geared independent investors who are the bigger influence.

Director technical and professional standards of SPAA, Graeme Colley, said that despite talks of SMSFs flooding residential property, it's actually still a significantly small part of the market.

Of the $500 billion worth of assets under management, it's a small percentage that make up residential property purchases, Colley said.

“At June 30, property in SMSFs consisted mainly of non-residential property such as commercial property ($58 billion) compared with residential property ($17 billion) out of total of $495 billion. At $17 billion, that’s 3.4% of all SMSF assets," he said.

“In addition, gearing is not the issue its critics allege.  According to ATO statistics, geared property in SMSFs makes up less than one half of one per cent (0.4848%) of their total investments."

Compared to individual investors using negative gearing, it would take a "huge shift" in investments to influence the market.

“Property is not an inappropriate investment per se, but it must be appropriate to the fund and consider the member’s circumstances, just like all investments whether they are via an SMSF or personal investment decisions outside superannuation," he said.