Property industry groups have raised concerns about proposed changes to self-managed super fund (SMSF) lending for residential property, arguing the measure could limit retirement investment options while doing little to address housing affordability.
The comments follow the Federal Government’s announcement of reforms that would prevent SMSFs from borrowing to invest in residential property as part of a broader housing package.
Property Investment Professionals of Australia (PIPA) said the changes would affect investors who have used SMSFs to build long-term wealth and diversify their retirement portfolios. The association noted that many self-managed funds rely on limited recourse borrowing arrangements because they do not have sufficient balances to purchase property outright.
“Ultimately, superannuation was always meant to enable Australians to retire with a better financial outlook than that of the old age pension. Our government’s willingness to trim the wings of those who are working hard to safely grow their wealth within an SMSF vehicle is disappointing,” Bakos said.
PIPA chair Cate Bakos questioned the decision, arguing it would restrict Australians seeking to improve their retirement outcomes through carefully structured property investments.
PIPA also pointed out that SMSF lending has historically been subject to stricter requirements than traditional residential borrowing, including legal oversight and formal investment strategies. The organisation said borrowing through SMSFs accounts for only a small share of the residential property market and expressed concern about the impact on investors pursuing long-term retirement strategies.
The Real Estate Buyers Agents Association Australia (REBAA) echoed concerns about the proposal, arguing that housing affordability challenges are more closely linked to supply shortages than investor activity within SMSFs.
“If SMSF residential property represents such a small percentage of Australia’s housing market, the real question isn’t whether SMSFs should be banned from borrowing. The real question is why we’re focusing on a fraction of the market while Australia’s housing supply challenges remain unresolved,” Solano said.
REBAA vice-president Zoran Solano said policymakers should focus on addressing the underlying causes of Australia’s housing shortage.
REBAA said investor sentiment had already shifted following recent housing and budget measures and cautioned against introducing further restrictions before the effects of existing policies have been fully assessed.
The proposed reforms have reignited debate about the role of SMSFs in residential property investment. Supporters of the changes argue they could reduce competition in the housing market, while industry groups maintain that increasing housing supply remains the most effective path to improving affordability.
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