Invest
SMSF property investment ‘pot luck’: CBA
CommSec has labelled physical residential property as a “hit and miss” investment and has discouraged SMSFs with less than $4 million from investing in the asset class.
SMSF property investment ‘pot luck’: CBA
CommSec has labelled physical residential property as a “hit and miss” investment and has discouraged SMSFs with less than $4 million from investing in the asset class.
Speaking to nestegg.com.au’s sister publication SMSF Adviser , CommSec general manager of adviser services Eric Blewitt said that by investing in physical residential property, the average SMSF worth around $1 million is defying the rules or theories of proper portfolio diversification and exposing the fund to unnecessary risk.
Mr Blewitt said limiting the exposure of an SMSF to a property to 10 to 15 per cent would ensure the fund has sensible diversification.
“If you’re looking at an average SMSF, which has just over $1 million, and you’re looking at a 10 or 20 per cent allocation, you’re only looking at $100,000 to $200,000 worth of property,” he said.
“It’s not until you get to that $4-5 million balance that you can go buy something at $500,000 or maybe up to a $1 million and still have an allocation at a reasonable proportion.”
The performance of residential property markets in different capital cities has also been very diverse, he warned.
“Looking over the past year, Sydney was around 14.5 per cent, whereas Brisbane was 2.5 per cent and Perth was pretty much flat, so for an SMSF purchasing a property as a single asset, it is pretty much pot luck depending on where you purchased it,” he said.
Darwin’s residential property market, for example, has actually declined by 2 per cent.
“Property as far as SMSFs are concerned, specifically residential, is pretty hit and miss depending on where you happen to have purchased and therein lies the problem with [investing] in an illiquid asset, so unless it’s only a small portion of a balanced portfolio, it’s pretty challenging,” Mr Blewitt said.
The yields from residential property are only expected to reach around 3.5 per cent while capital growth is only expected to be around 5 per cent, he added.
“Your risk premium over and above cash isn’t too much – okay, you might have some capital growth, but looking at the last year, looking at the diametrically-opposed growths and reductions in the country – it’s pretty hard to pick,” he said.
“It’s a challenge because you’ve not only got to pick the right area, you’ve got to pick the right apartment or the right house. We’re coming into spring carnival season – you might as well see what horse you’re going to back.”
RELATED ARTICLES
Property
2026 property expansion? Why disciplined investors will wait — and where to play offence
A growing chorus of market practitioners is urging investors to pause portfolio expansion in 2026 as returns compress and policy settings tighten. The headline risk is less about price crashes and ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
Property
2026 property expansion? Why disciplined investors will wait — and where to play offence
A growing chorus of market practitioners is urging investors to pause portfolio expansion in 2026 as returns compress and policy settings tighten. The headline risk is less about price crashes and ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
