Property is an investment that most Australians understand and trust. They can touch it, feel it, drive past it, and more importantly leverage it to maximise return on investment.
Over the last few years of uncertainty in the market, there has been a shift towards investors looking to capitalise on the possibility that property investment can provide for their superannuation to assure their retirement plans.
According to the ATO, the SMSF lending market experienced 50% growth between 2017-2021 and currently sits at ~$65billion of total lending. The current growth rate is 10% annually with a lot of headroom for growth into property as 16.9% of the asset allocation is held in cash and term deposits equating to $146.86billion.
Key SMSF stats:
- Total SMSF Assets $869 billion
- Total SMSF investment in property ~ $167 billion
- Median age of newly established SMSF funds in 2020-2021 was 46
- 603k SMSFs with 1.1m members
- Residential property investment is highest in funds in the range of $200k-$2m based on percentage.
- Investment in non-residential property increases as fund size grows, peaking in funds $5-$10m based on percentage asset allocation.
- Average SMSF has $1.5million in assets with an average of $791k per member.
SMSF lending provides an opportunity to have meaningful conversations with your customers about their plans for the future investments and transition to retirement. We are seeing in a lot of cases that people are treating their SMSF loan as a set-and-forget product, as it is out of sight and out of mind as it doesn’t impact their regular cash flow. As a result there is a big opportunity to save your customers significant amounts (quite often 2-3%), the compounding effect of this over time in their funds puts your customers in a much better position in retirement.
Tips and Tricks:
- Educate yourself on the rules, regulations and options available to you.
- Ensure that you are having the conversation about transition to retirement and future investment with all of your customers – regardless of age.
- Surround yourself with a trusted team – Finance and Property professionals and lenders etc.
- Educate your referral partners – Financial Planners, Accountants, Investment Property Sales – about how you can help their clients.
