Property growing in popularity for SMSFs

By Staff Reporter 17 May 2013 | 1 minute read

Self-managed super fund (SMSF) trustees are moving away from cash and are instead looking to house their money in direct property, a recent survey indicates.

The quarterly Multiport SMSF Investment Patterns Survey revealed that the overall asset allocation of property in SMSFs jumped 1.2 per cent to 18.6 per cent over the year to March 2013.

“Lower interest rates during the quarter and the possibility of further cuts have meant cash has become a less attractive investment, so trustees are ‘cashing out’ of cash and looking for other homes for their money,” AMP SMSF administration head of technical services Philip LaGreca said.

The survey covers around 1,950 funds, a sample of the SMSFs Multiport administers, and the investments held at 31 March 2013. The assets of the funds surveyed represent approximately $1.8 billion.

The March quarter also saw a significant increase in the use of limited recourse borrowing arrangements for direct property, where 34 per cent of direct property holders had a gearing arrangement in place, up five percentage points on the December quarter.

However, the average loan amount held by SMSFs fell in the March quarter to $248,000 compared to $268,000 for the previous quarter.

“Even though the number of loans is increasing, the loan value appears to be decreasing. This probably reflects on more conservative loan to value ratios, particularly with commercial property,” Mr LaGreca continued.

Average SMSF contributions for the March quarter increased slightly to $6,805 compared to $6,585 for the previous quarter.

RELATED TERMS

Interest rate

Interest rate is the percentage of the principal amount charged by a lender for the use of the amount loaned.

Interest rate

Interest rate is the percentage of the principal amount charged by a lender for the use of the amount loaned.

SMSF

A self-managed super fund is a private super fund that provides benefits to its members upon retirement, directly managed by an individual for their benefit and in compliance with super and tax laws.

Survey

A survey is a document that determines the position of boundaries or property lines which shows the land, structures and features that are legally owned.

Survey

A survey is a document that determines the position of boundaries or property lines which shows the land, structures, and features that are legally owned.

Survey

A survey is a document that determines the position of boundaries or property lines which shows the land, structures, and features that are legally owned.



Property growing in popularity for SMSFs
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