SMSF residential lending ends in 4 days. What’s next for investors?
From 10 August, investors will no longer be able to borrow through their self-managed super funds (SMSF) to buy residential property, forcing many to rethink how they build their portfolios.
According to House Finder founder Simon Loo, the biggest mistake investors could make was assuming the policy marked the end of property investing.
You’re out of free articles for this month
Instead, he said the SMSF ban will simply change the vehicle through which many investors will enter the market, bringing them back to the fundamentals of investing.
“I don’t think the appetite for investing will stop,” Loo told SPI.
“I think the money or the people that were thinking of doing SMSF will find ways to maybe buy in their own names again or buy in their own companies or buy in their own trusts.”
Data from the Australian Finance Industry Association showed more than 16,000 new residential SMSF loans worth $10.3 billion were written in FY2026 – four times the Australian Taxation Office’s annual estimate of 4,000 loans.
Despite the popularity of the strategy, Loo argued SMSFs were never the ideal starting point for building wealth through property.
“I’ve been very vocal… I’m actually quite against SMSF,” he said.
“For me, I never like to rely on my future or my family’s generational wealth… on any plan Bs or plan Cs. I’d rather give plan A a proper shot.”
Rather than relying on superannuation from the outset, Loo said investors should first focus on building a portfolio outside their SMSF, using capital growth and equity to continue expanding over time.
He said the key advantage of buying outside super was flexibility, with investors being able to access equity as their properties grow in value, fund future purchases and build larger portfolios.
“If I go off and buy a house in my own name today and it goes up $100,000, I can go back to the bank and pull that $100,000 out and use that as equity for the next house.
“But in SMSF, you can’t. You just buy it, and you just wait and hope and pray that it goes up in value.”
Loading form…
Rather than stopping to invest or buy into market fear, he said that smart investors will remain attentive to the fundamentals and buy in line with their goals and capacity.
Research from Money.com.au found 27 per cent of SMSF investors plan to continue buying residential property outside their super once the ban takes effect.
26 per cent said they would redirect their attention to commercial property through their SMSF, where borrowing remains permitted.
Only 12 per cent plan to purchase residential property outright using existing SMSF balances.
The research also showed that perceptions of SMSFs have changed, with 82 per cent of Australians saying they no longer see the benefit of establishing a fund if it cannot be used to borrow for residential property.
While commercial property continues to emerge as an alternative for some investors, Loo cautioned against assuming it will deliver better outcomes.
He said an influx of investors chasing commercial assets could place pressure on returns while broader economic conditions continue to challenge businesses.
“If there’s more people piling into commercial assets, will it dilute the returns? Will demand start to drop? Will vacancy rates start to rise?” he said.
Instead, he said the current market environment would reward investors who ignore the noise and concentrate on the basics.
Rather than chasing the next hotspot or changing strategies with every policy announcement, Loo said investors should continue to look for quality assets in affordable suburbs where people need to live because of employment, affordability, and population growth.
“Our whole thing has always been to buy bargains, always buy below market value,” he said.
“Stick to major capital cities, stick to the bread and butter, stick to the affordable housing areas, and I think you’ll do fine.”
“Bottom line, just go where people are choosing to move to permanently to live.”
Loo also warned investors to be selective about whose advice they follow, arguing the changing market is likely to expose buyer’s agents who have relied on marketing rather than sound investment principles.
“My opinion is… be very, very careful about what buyer’s agents are selling you,” he said.
“There’s just a lot of people… trying to make a quick buck. They’re selling the dream of a brand new infrastructure or brand new roads, brand new hospital, or how this little town is going to be the next big thing.”
According to Loo, the same caution should be applied to property data, warning investors against making decisions based solely on statistics that can be selectively presented.
“Data is very, very, very dangerous. I think it can be manipulated to form an agenda,” Loo said.
“If I choose bits of data, I can make Alice Springs look like the next hotspot.”
Despite the policy changes, Loo remains confident the drivers supporting residential property remain firmly in place.
Migration continues to add demand, housing supply remains constrained, and affordability will continue pushing buyers towards well-located, entry-level housing in major cities.
“The demand for housing doesn’t stop. The demand for rentals doesn’t stop. In fact, these only increase with these changes,” he said.
“The bottom line is in the next two years, there’s going to be tonnes of opportunities.”
