Research from Money.com.au found that following the ban, 27 per cent of SMSF investors plan to buy residential property outside their super, while 26 per cent intend to invest in commercial property through their SMSF, where borrowing remains available under Limited Recourse Borrowing Arrangement rules.
Only 12 per cent of SMSF investors plan to buy residential property outright within their SMSF using existing funds.
From 10 August 2026, SMSFs will no longer be able to enter into new LRBAs to purchase residential property, and existing SMSF loans will be grandfathered, meaning current borrowers can continue under the existing rules and remain eligible to refinance their loans.
Nick Burgess, property expert for Money.com.au, said the looming borrowing ban is changing how SMSF investors will access property, not their appetite for it.
“The borrowing ban changes how investors can access residential property through an SMSF, but it doesn’t change the underlying appeal of the asset class, ” he said.
“SMSF investors are more than twice as likely to buy residential property outside their super or invest in commercial property than purchase residential property outright within their SMSF using existing funds. That reflects the reality that relatively few investors have enough cash in their SMSF to buy property without borrowing.”
He added that commercial property is likely to become a much bigger focus because it still allows borrowing through an LRBA. For many investors, it offers the closest substitute to residential property while remaining within the SMSF environment.
The research also found that despite the continued appetite for property, shares and ETFs were the most common response overall, with almost half of SMSF investors (46%) planning to increase their allocation, while 23 per cent plan to keep more of their retirement savings in term deposits within their SMSF.
Additionally, it was revealed that 82 per cent of Australians who don’t already have an SMSF say they no longer see the point in setting one up if they can’t borrow to buy residential property through their fund.
Just 18 per cent say they would still consider setting up an SMSF without the ability to borrow for residential property.
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