POWERED BY MOMENTUM MEDIA
Super property investments a “high-risk endeavour”
A spike in the growth of self-managed super funds (SMSFs) has seen a dramatic rise in borrowings for property by these funds, with RiskWise Property Research chief executive officer, Doron Peleg, warning it’s a dangerous road.
The 200 per cent rise in borrowing on super funds to feed into property has meant that many individuals have fallen into debt, and Peleg said the “high-risk endeavour” could force the Australian Labor Party to ban borrowing against SMSFs if they were successful in the next election.
RiskWise research showed off-the-plan (OTP) properties were popular with SMSFs, predominantly due to their suitability for tenants, but Peleg said there were risks involved.
“Many OTPs carry a high level of risk largely due to potential oversupply - leading to squashed property values, high vacancy rates and a cooler market,” he said.
“The three major types of risks associated with over-supplied OTP high-risk suburbs are Equity Risk, Cashflow Risk and Settlement Risk and they all add up to potential disaster for the anyone staring retirement in the face.”
Peleg advised that when considering buying property through a super fund, investors must consider the loss of income if there was an oversupply in the area.
“Super is the only asset class you can leverage against but using it to buy property is definitely high risk if things go wrong and, frankly, an accident waiting to happen,” he said.
Recommended for you
The two funds have announced the signing of a non-binding MOU to explore a potential merger.
The board must shift its focus from managing inflation to stimulating the economy with the trimmed mean inflation figure edging closer to the 2.5 per cent target, economists have said.
ASIC chair Joe Longo says superannuation trustees must do more to protect members from misconduct and high-risk schemes.
Super fund mergers are rising, but poor planning during successor fund transfers has left members and employers exposed to serious risks.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
88.01 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.46 3 y p.a(%)
4
Pengana High Conviction Equities B
39.12 3 y p.a(%)
5
Pengana High Conviction Equities A
39.05 3 y p.a(%)
