New research from Money.com.au shows self-managed super fund (SMSF) investors have no intention of abandoning property once new borrowing rules take hold from 10 August, even as the ban changes how many will access the asset class.
From that date, SMSFs will no longer be able to enter new Limited Recourse Borrowing Arrangements (LRBAs) to buy residential property, though existing loans will be grandfathered, allowing current borrowers to continue under existing terms and refinance if needed. The ban stems from the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, which received Royal Assent on 26 June, with the measure forming part of a deal between the government and the Australian Greens to pass a broader tax reform package.
Money.com.au property expert Nick Burgess (pictured) said the changes are altering the mechanics of SMSF property investment rather than dampening enthusiasm 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," Burgess said.
The research found 27% of SMSF investors now plan to buy residential property outside their super, while 26% intend to shift toward commercial property within their SMSF, where LRBA borrowing remains permitted. Just 12% plan to buy residential property outright within their fund using existing cash, reflecting how few investors hold sufficient funds to purchase without borrowing.
"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," Burgess said.
Burgess expects commercial property to draw more attention as investors look for the nearest available substitute within the SMSF structure.
"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," he said.
The Treasurer has said the change will improve the Commonwealth's budget position by $50 million over the forward estimates, framing it as a modest measure aimed at closing a loophole rather than raising significant revenue.
Treasurer Jim Chalmers has also described SMSFs as a small share of the market, accounting for less than 1% of total residential property borrowing and under half a per cent of new residential lending each year. However, data from the Australian Finance Industry Association (AFIA) suggests new SMSF lending may be running well above Treasury's estimates, with AFIA members alone writing more than 16,000 new residential SMSF loans in FY26, against Treasury's estimate of around 4,000 arrangements a year.
Property wasn't the most popular response overall. Shares and ETFs topped the list, with almost half of SMSF investors (46%) planning to lift their allocation, while 23% intend to hold more retirement savings in term deposits.
The changes may also curb new SMSF establishment: 82% of Australians without an SMSF said they no longer see the point of setting one up if borrowing for residential property isn't an option, with only 18% saying they'd still consider it.
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