Watching the property and tax reforms has been a rollercoaster for us at It’s Simple. The real surprise was the change to Self-Managed Super Fund borrowing, a last-minute addition as part of a deal for Labor to win support from the Greens in the Senate. It kicks in on 10 August. This has sent a ripple through the market that may result in fewer homes built.
How do we get from banning SMSFs buying residential property to fewer homes being built? Basically, the Housing Industry Association surveyed the country’s biggest detached home builders and found 3,613 signed building contracts involving an SMSF that have yet to start construction. Builders expect 2,415 of those to be cancelled once the new restrictions take effect. The HIA goes further, claiming that when combined with weaker investor demand, construction of freestanding houses could fall by 3.5 to 5 per cent. It also puts the cost to state governments at more than $450 million in lost GST and stamp duty.
The SMSF Changes
The new rules still allow super funds to invest in housing and property, but SMSFs can no longer borrow against retirement savings to finance residential purchases. Existing arrangements are untouched, and borrowing for commercial property is unaffected. Treasurer Jim Chalmers stated that SMSF borrowing makes up less than one per cent of total residential property borrowing and less than half a per cent of new borrowing every year.
The Industry Isn’t Happy
The industry isn’t happy, arguing that SMSFs don’t add to the number of people buying homes. Instead, they argue these investors are sources of funding for the construction of new homes.
The HIA survey covered builders responsible for more than 40 per cent of Australia’s detached housing. More than 70 per cent of them said investor enquiries had fallen since the budget, while almost 90 per cent expect construction commencements to decline across 2026 and 2027.
The National Housing Accord has a target of 1.2 million new homes to be delivered by 2029. That requires 240,000 new homes per year. Twenty-one months in, the country has completed 307,635 against the 420,000 needed to stay on pace. That’s well short of the mark.
The HIA warns that the impact of the SMSF borrowing ban hasn’t been taken into account properly, and wants the Treasury to publish a housing supply assessment.
Apartment Construction to be Hit Hardest?
Ray White chief economist, Nerida Conisbee, argues the ban will hamper apartment construction, because SMSF buyers help projects hit the pre-sale numbers that unlock construction finance in the first place. Her other point is a timing one. An SMSF buyer can sign a contract and get a project over the line months before that loan ever shows up in ATO data, which is the data Treasury is working off.
A typical new development needs a good chunk of its debt covered by pre-sales before the developer can draw down and start building. Banks commonly want somewhere between 60 and 100 per cent debt cover. SMSF buyers are commonly in that pool. Colliers reckons they make up about 30 per cent of off-the-plan pre-sales, while developer Hamton puts it nearer 20 per cent on its own projects.
The government considers the impact minimal, with around 4,000 SMSF loans written per year on average. Developers are looking at a completely different point in the process, and that gap is the whole argument.
So What Does This Mean for You?
If you already hold a residential property in your SMSF under an existing borrowing arrangement, nothing changes. If you were planning one, the window closes on 10 August 2026, and contracts and holding trust structures need to be correctly in place before then.
Commercial is still on the table, even after 10 August. Our team can walk you through what’s available across our panel of more than 40 lenders. No pressure, no jargon, just simple guidance. Have a chat with us.
For questions about your fund’s strategy, speak with your accountant or a licensed financial adviser.
This article is general information only and doesn’t take into account your objectives, financial situation or needs. It is current as at 28 July 2026. Legislation and lender policy can change. It’s Simple is a mortgage broker and sub-aggregator, not a lender, and does not provide financial product, taxation or superannuation advice. SMSFs and limited recourse borrowing arrangements are complex and carry strict compliance obligations, so please seek advice from a licensed financial adviser or registered tax agent before acting. All lending is subject to lender approval, terms, conditions and eligibility criteria.