SMSF borrowing plateaus amidst property downturn, lending changes
Limited recourse borrowing arrangements saw a significant slowdown in growth during 2018, with the total value of LRBAs increasing by just 1.6 per cent, versus the 45 per cent jump in value the previous year, according to the latest ATO data.
The ATO’s SMSF quarterly statistical report for December 2018 indicates that the total number of SMSFs has now climbed to 597,009 while the total number of members has now reached 1,127,304.
The estimated total in SMSF assets saw a slight decrease, falling from $728 billion down to $726 billion.
The latest statistics also indicate that the total value of LRBAs jumped by just 1.6 per cent from $42.2 billion up to $42.9 billion.
Between December 2016 and December 2017, LRBAs increased by 45.2 per cent from $29.1 million up to $42.2 million.
According to the CoreLogic home value index results released at the beginning of March, national dwelling values have seen a cumulative decline of 6.8 per cent since property values peaked in October 2017.
Weaker housing market conditions have hit Sydney and Melbourne particularly badly, with the dwelling values down by 10.4 per cent in Sydney and down by 9.1 per cent in Melbourne in the 12 months to the end of February this year, according to CoreLogic.
In addition to a weaker property market, there were also significant changes to SMSF lending in 2018, with Westpac, CBA and AMP all withdrawing their SMSF loan products for residential properties.
The government also introduced a bill in May last year which will amend the calculation of a member’s total superannuation balance for certain types of LRBAs.
The top asset types held by SMSFs continue to be listed shares and cash and term deposits, which comprise 28 per cent and 24 per cent of total estimated SMSF assets, respectively.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.