Self Managed Super Funds (SMSFs) have been going from strength to strength, taking a larger and larger share of the investment market despite the Global Financial Crisis. With the ability to invest funds in a range of investment vehicles including property, the SMSF sector has been growing and makes up the largest sector in the superannuation market according to latest figures released by the Australian Prudential Regulation Authority (APRA). In fact, the SMSF sector accounts for more than 30 % of all assets in superannuation – ahead of both retail and industry funds.
As the effects of the GFC start to recede, investment in property continues to rise with 14.7% of SMSF assets in property in March 2013 up from 10.7% in June 2006. Investment in property understandably most appeals to investors in their late thirties and forties which is a strong time to maximise the capital growth and income potential before retirement age.
“We’re seeing more experienced and sophisticated investor deciding to put property into super’, says Rob Gould, Principal of Fortune Financial Accounting. “The GFC took the gloss off shares and now that the property market is on the move we’re seeing increasing interest in not only investment property but putting business premises even business assets into super to protect from future property prices.”
While there has been some negative press around property in SMSFs, between 2006 and 2013 SMSF property assets grew to more than $73 billion – a higher growth rate than any other asset class. Arguably, with this level of growth SMSF investors are making sound decisions when it comes to putting property into super.
Rob Gould concurs. “While some regulators raise concerns about risky property investments putting super in jeopardy, SMSF trustees tend to be risk averse and well informed. The highest risk end of the market is property purchases using limited recourse borrowing arrangements (LBRA) but with only 0.5% of SMSF investments using this vehicle, media reporting seems to have been exaggerated.”
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