Carolyn Cummins | SHM | March 24, 2012
Strata developers are now focusing on the residential market, with the aim of preparing properties that will be attractive to the self-managed superannuation fund (SMSF) sector.
While SMSF investors are pouring cash into the commercial strata market thanks to changes in the tax regulations, they are still attracted to the traditional residential market.
Changes by the tax commissioner say that ”the only real estate you can transfer into your SMSF is business property”.
But that does not disqualify an SMSF trustee from purchasing a residential property directly.
This is not lost on the major property developers, who are all looking at the strata market to help offset any weakening in retail and office assets. The the principal of SuperShift Australia, Nic Ellis, says the recent passing of the mining tax legislation, which paves the way for the gradual superannuation guarantee levy (SGL) to rise to 12 per cent, has been touted by some as a ”historic” day for Australians.
He said an increase in the SGL would presumably take the pressure off the age pension and assist more working Australians to a better quality of life in retirement.
”It has been forecast by the Association of Superannuation Funds of Australia [ASFA] that the rise in the SGL rate to 12 per cent would lead to an 0.33 per cent increase in [real] GDP by 2025,” Mr Ellis said.
”Whilst such headlines are interesting to read, one of the really significant headline-grabbers that should be in the eye of the public is the rise of SMSFs and just how property, as the new preferred-asset class, is guiding average Australians out of the retirement-planning quagmire of the GFC.”
Mr Ellis said the impact of the SMSF sector on property would be significant, with more than 15 per cent of Australians moving to an SMSF by the year 2020 (currently the rate is 3 per cent).
”It has been forecast that the SMSF sector will have over $1.5 trillion of the $3 trillion super pie by the year 2020,” he said.
”We have estimated that by 2020, SMSF’s holdings of both residential and commercial property will be between 40 and 50 per cent of all the other asset classes held by the fund, up from the current 5 per cent.
”As a result, more average Australians will be able to participate in the long-term growth of property via a tax-advantaged, family-wealth-creations structure and, as a result, will be less reliant on government support in retirement.”
Mr Ellis said that in the long term, rental shortages in many Australian areas would dissipate as new homes were built to satisfy the growing hunger from SMSF property investors. ”This will be at a tremendous rate not experienced for many years in this country,” he said.
Real estate agents say that properties such as those offered for sale at Woolloomooloo Wharf are popular with the SMSF sector, as are sites in the satellite areas of North Sydney and Parramatta.