Allocations to property within superannuation portfolios, and in particular SMSF portfolios, will decrease in the medium to long term, according to the head of a large financial services institution.
“I think over time property will be the loser with the weight of money exchanged over the next 30-plus years. Again, property [values] down the east coast can’t be sustained. It simply moves in cycles,” Perpetual chief executive Geoff Lloyd told delegates at last week’s 2013 Citi Investment Conference in Sydney.
“Also, education will come a lot further, which means our love for Aussie equities and franking credits and property will be balanced away from those asset classes.”
Lloyd said evidence was already surfacing indicating the growth in SMSFs was slowing and a growing compunction to regulate the sector more vigorously was apparent – two factors that would make property allocations less prevalent and attractive.
“I do think they are slowing. The data that is coming out from the ATO (Australian Taxation Office) is two years old every quarter that it comes out,” he said.
“The ATO will be forced to be regulated over the coming course of whichever government so there will be a lot of compliance and governance over the assets, including property.”
When asked about whether the current coalition government would have the appetite to further regulate the SMSF sector when traditionally its philosophy suggested the opposite might happen, Lloyd confirmed his view on the subject.
“They’ve already said they think the need for greater supervision by the ATO needs to be there, particularly on collectables and meeting the SIS (Superannuation Industry (Supervision) Act) sole purpose test,” he said.
