Property Conversation Cheat Sheet

SMSF Borrowing Ban

One of the biggest talking points this week is the Federal Government's ban on SMSFs borrowing to purchase residential property.

While Treasury estimates there were only around 4,300 new SMSF residential loans nationally in 2024, developers argue the real number is much higher. Eight major investment and project marketing groups say they alone facilitated more than 4,000 SMSF residential loans over the past year.

Why does this matter?

SMSF buyers often play a critical role in helping apartment developments reach the pre sale targets needed to secure construction finance. Fewer SMSF buyers could mean fewer projects get off the ground, adding further pressure to Australia's already constrained housing supply.

Existing Owners Are Protected

The changes only affect new residential borrowing through SMSFs.

Existing SMSF residential loans remain unchanged, and SMSFs can still borrow to purchase commercial property.

Residential property represents around $62.7 billion of SMSF assets, compared with $120.1 billion held in commercial property.

Will House Prices Fall?

A significant nationwide price correction still appears unlikely.

Australia continues to face a housing shortage, strong population growth and a limited pipeline of new housing, all of which continue to support property values despite softer auction clearance rates and more cautious buyers.

Watch the First Home Buyer Markets

One area to keep an eye on is the more affordable suburbs that benefited from expanded first home buyer schemes.

These markets have outperformed over recent years but could now experience more pressure as investor demand eases following the recent Federal Budget changes.

Rural Property Continues to Strengthen

Australian farmland has reached a record median value of $11,032 per hectare.

Interestingly, sales volumes have fallen by 35%, with many landowners choosing to hold rather than sell due to strong livestock returns and healthy farming conditions.

Conversation Starter

"There's been plenty happening in the property market this week. The biggest change is the ban on new SMSF borrowing for residential property. While it won't affect existing owners, many believe it could slow apartment construction by reducing one of the key buyer groups that helps projects get underway. Despite that, Australia's ongoing housing shortage continues to support property prices across much of the country."