Forced sales a super issue
Property a sticking point
TENS of billions of dollars worth of assets could be in the firing line if property is caught up in the federal government’s potential $3m cap on the asset holdings of super funds, with experts warning investors could be forced to sell into a weak market.
There are also concerns around how property would be valued, with long-term holdings in particular difficult to accurately assess.
The most recent figures from the Australian Taxation Office show that the nation’s more than 1.1 million self-managed super fund members own $47.86bn in residential property in Australia, and $88.74bn in non-residential property.
The need to sell other assets, such as the $241.3bn in listed shares also held in SMSFS, could also be very real. However selling illiquid assets such as real estate is both timeconsuming and expensive, and any forced sales would remove the ability for sellers to time a sale to their advantage.
The SMSF Association head of policy and advocacy Tracey Scotchbrook said a hard cap would raise investment issues for members, especially those who have illiquid assets.
“How much time will fund members have to act and what will be the potential disruption to markets with people being forced sellers?” she asked. “There is also the issue of the impact on fund administration and management costs, as well as the effect it could potentially have on other members of the fund.”
Australian Landlords Association president Andrew Kent said valuation of property – but also of other assets such as art – was a thorny one.
“It’s a watching brief. The valuation of property is really only known at the time of purchase and the time of sale,’’ Mr Kent said. “One of the concerns around this is what valuation method is being used.
“That’s definitely a factor, and I think everyone knows their council valuation doesn’t necessarily track the market.”
A cap could also force professionals such as doctors and lawyers to sell their operating premises, which are often owned through their SMSF, to a third party.
AMP chief economist Shane Oliver is predicting house prices will have fallen 20 per cent from their peak by September this year, with the market already stressed by interest rate rises and cost-of-living pressures.