Forget foreign buyers as the bad guys driving Australian property prices higher and making housing less affordable for average Australians.
The reality is that the culprit is a lot closer to home with the Australian Tax Office Annual Report showing that Australia’s Self-Managed Super funds have more than tripled their exposure to the property market.
The ATO’s annual report says that limited-recourse borrowing, the type allowing SMSFs to gear into property, has increased from $2.5 billion at 30 June 2012 to an estimated $8.7 billion at 30 June 2014.
Even if you assume that SMSF’s have super-sized loans of $500,000 rather than the national average the ABS reports closer to $300,000 that is an extra 12,400 property purchases direectly related to SMSF’s over the past 2 years.
The ATO said that as a result of this “we will continue to ensure these arrangements are appropriate and meet all legislative requirements”.
That’s ATO speak for we have our eye on you!
There has been much debate recently about macro-prudential rules specifically targetting investment buyers and the Murray Inquiry has floated limited or ending this type of borrowing. The ATO annual report shines a light on the gusto with which SMSF Trustees have embraced property and help distort Austrlaia’s housing market.