However, the move into property investment seems to have found an extra gear and one of the key drivers of this move is clearly our superannuation.
In the past, a large percentage of our superannuation was invested in shares. However, the performance of the stock market in recent times has caused many investors to rethink their strategy. With close to one third of retirement funds now being held in Self-Managed Superannuation Funds, many individual tax payers are taking control of their retirement investment and looking closely at placing their funds in the residential property market.
Of course, thanks to changes in the way SMSF’s are regulated that came into effect in 2010, investors are now able to borrow in the name of their superannuation in order to secure a larger property holding. Residential property is primarily considered to be a capital growth-based asset, and because of its relative stability when compared to shares, it can provide a reliable to boost the value of your SMSF in the long term.
Many investment advisors advise their clients that investing in a mix of residential property and shares is a sound strategy for SMSF investors as it can maximise capital growth as well as providing an income stream.
It should also be remembered that many people who borrow in order to fund the purchase of a residential property in their super fund tend to borrow conservatively. It is not uncommon for investors in this category to only borrow around 50% of their purchase, as opposed to other investors who tend to borrow a much higher percentage.
Of course, all of this information is a general overview only, and is not in any way advice on the merits or otherwise of property investment. If you are considering making an investment of any kind, we would always recommend that you obtain independent expert advice that is tailored to your specific circumstances before making any decisions.