Australia’s superannuation landscape is changing. For decades, industry super funds have been the default choice, offering low-cost, diversified investments. But in recent years, more Australians are setting up Self-Managed Super Funds (SMSFs) and increasingly using them to invest in property.
SMSFs give trustees direct control over their investments. For many Australians, property feels more tangible and easier to understand than managed funds or equities. Property has also historically been one of the nation’s strongest long-term growth assets, consistently outpacing inflation and wages. Combined with leverage, possible through Limited Recourse Borrowing Arrangements, even modest growth can compound into significant wealth creation within super.
The tax advantages are another drawcard. Rental income in an SMSF is taxed at 15%, capital gains at just 10% if held longer than 12 months, and once in pension phase, both can be tax-free. For business owners, purchasing their own commercial property through an SMSF and leasing it back to their business is an efficient way to effectively pay rent to their future selves.
What’s changing now is mindset. Historically, superannuation and financial planning were focused on protecting and slowly growing wealth over time. But the cost of living, housing, and retirement expectations have shifted dramatically. More Australians are realising that simply relying on incremental growth may not be enough to retire comfortably, in some cases, to retire at all. This has driven a more proactive approach, with many using leverage inside SMSFs to accelerate their position and secure their financial future.
Of course, SMSF property investment is not without challenges. Property is illiquid, strict compliance rules apply, and a single asset can dominate the fund. Ongoing administration, audits, and advice are essential. But for those who have the right balance, structure, and professional support, SMSFs can be a powerful vehicle.
This trend is part of a bigger shift. AFR reporting shows that outflows from industry super funds into SMSFs have doubled since 2022. Governance concerns, desire for transparency, and the ability to pursue more growth-focused strategies are key drivers. Research has also shown that larger SMSFs, particularly those run with professional advice, can outperform industry funds, further fuelling the movement.
Australians have always had a strong preference for bricks and mortar. Now, with retirement needs rising and the environment changing, SMSFs are becoming the tool that allows people to combine that preference with control, tax efficiency, and leverage. For proactive investors, this is no longer just about managing retirement savings, it’s about building wealth with intent.
As always, consider speaking to a licensed professional before considering any investment discussion – at Greenock we have a network of highly experienced professionals who can assist further understand key areas such as SMSF space.
