Alarm bells ring as self managed super funds spruiked as vehicle for leveraged property

The Australian Securities and Investments Commission (ASIC) has been forced to set up a taskforce to conduct surveillance on spruikers pushing the use of self-managed super funds (SMSF) to leverage up heavily into residential properties located typically in depressed markets such as Queensland.

ASIC commissioner Peter Kell is concerned SMSFs are being set up by members who don’t have the resources, experience or the understanding to manage the fund. While the Government changed laws a couple of years ago to allow super funds to borrow and leverage themselves into property, doing so may breach obligations to maintain liquidity and fails to diversify the portfolio.

Mr Kell told the Australian, “We know enough from history to be certain that spruikers will push property in the good times: we want to make sure this does not create problems in the SMSF sector when the cycle invariably turns,”

“And in particular we don’t want SMSFs to be the preferred vehicle for dodgy property spruikers,”

» Setting up an SMSF to buy property a risky strategy – The Australian, 13th November 2012.


  1. Since the entire politico housing complex of spruikers seems to have mesmerised most of the nation, WHY should the nanny state seek to protect a small minority of SMFS???????????

    If it was good enought ideafor the govt to suck in 100,000 FHB 2009 and 100,000 or Denise Brailey ‘nanna ninjas” why not a a few SMSF’s!

  2. they found one more way to blow the bubble, great, the more the merrier. its so good to see my USDs safely sitting in the bank.

  3. @FHB dreamer

    remember 2008, when AUD was 65c? thanks to Chinese Government’s ¥4000000000000 (divided by 4.3 will be AUD. by the time, the currency was 1:4.3) investment. yeah, count the zeros, its rite. then in 2009 the prices of coal, iron ore, gold, wool and everything went up again. and AUD went up again with it. it definitely saved China’s and Australia’s ass.

    most of the debt from 4000000000000 investment will due around next February, and most of them cant be paid (banks in China literally run out money, have nothing to be loaned). so there will be no more money for further investment. i dont think China will print more money, that will cos way too much inflation, no economy can survive from that.

    plus China has the biggest housing bubble in the entire human history. every Chinese urban families has at least 2-3 apartments, plus tons of rich people speculating over a dozen properties each, and China has the population of what? Beijing only has around 4m apartments are empty right now, not even been rent, just sit there being empty. and they are still building them. just imagine what will happen when it burst. it already started bursting in some parts of China. in the worst city, the price of square metres went from ¥20,000 to ¥3000. and China’s housing bubble is the reason that iron ore price went from $70 to $200, and its going down again.

    China takes 30% of Australian export, and Japan takes 20%, thats half of the Australian export. since China and Japan are going down together start from the beginning of next year. Australian economy is going down with them. actually its already happening. just look around, how many business are closing down, how many people are losing their jobs. AUD will go down with the economy. i think it will go down to 80c, even lower if i was right.

    of course its just my personal opinion. make your own decisions, take your own chances.

  4. DX:
    Isn’t RBA printing money? If you think no, please refer to details about covered bonds and similar products. For sure OZ banks are excessively exposed to property bubble, 2/3 of total loans in this single sector, draining the blood from all other sectors. In case of bubble burst, which is taking place eventually now, RBA is speeding up the money printing. Inflated living costs across daily life have been felt. Question is when two bad currencies compete against each other to print more. The worse one drives out the bad one. Which is the worse one, US$ or AU$?

  5. @DX, the Australain economy has been going down for a while, since 2008 when the rest of the world began its decent.

    If the U.S dollar comes out smelling better then the rest, wouldn’t that make China very rich, very quickly? And make their debt payments a little easier?

  6. “surveillance on spruikers pushing the use of self-managed super funds (SMSF)”

    That should include everyone who buys into one. One guy at my work was trying to convince me to go into one to buy “property”. They’re mostly clueless, giving all the analysis and propaganda being sold them as if they are experts in the matter.

    Let them go under “when the cycle invariably turns.”

    People only learn the hard way!

  7. @ Fooey

    Do you pay a lot of tax? Do you feel you pay too much tax?

    The problem is, if these suckers blow their super on poor investments, social security will be there to catch them.

    As an employer, I hate super. A fantastic idea, that has been poorly executed.

    Super steals from the worker, and funnels that money straight into finance types pockets.

    A completely failed concept. But no political party will touch it. Hell, the current government have increased it. With each rise in mandatory super, the workers take home pay will reduce. They have guaranteed you are poorer in the present, by lying to you about your secure future, which the sleezy finance industry is consuming, leaving you poorer in old age.

    It’s so disgusting. If you view it from a completely objective angle, you would belive that it is from communist/socialist third world, eastern european nation.

    Corruption and legalized theft are rift in this country. Super, property, Telsta sell off, QN sell off, etc. etc. the list is huge.

  8. This is a big deal — property selling machines have now latched onto opening up SMSFs as a new source of capital to encourage people to purchase under-performing assets in the hope of capital gains outstripping rental losses in 20 years time, due to a ‘convenient’ relaxation of super laws. Typically they’re being sold literally in the middle of nowhere in SE Qld – a ‘spec builder’ will erect a whole new suburb and pass the properties to SMSF marketeers in the hope they can hoodwink people around the country to invest in a suburb that would presumably be full of nothing but happy renters, miles from any industry or jobs, and call these ‘carefully hand picked for performance’ properties that are ‘guaranteed to outperform the market’. Balderdash. They take anything from $15K to $50K above market rates in a two-tier pricing scheme now, and SMSF bunnies will make the loss later.

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