Despite fears that the federal budget crackdown on superannuation tax concessions could spur on the housing market, experts say that the rich are unlikely to suddenly rush into the property investments. The changes include a $1.6 million cap on the funds retirees could transfer from a super accumulation account into a tax-free retirement account.
According to Domain Group chief economist Andrew Wilson, changes in superannuation concessions would only affect four per cent of the market. And even then, they are unlikely to direct their money into property, with its high transaction costs, lower rental yields, and lower levels of capital growth predicted for most capitals.
“It will have a benign effect... There will be no noticeable rush to the property market,” Wilson said. “Those wanting a salubrious lifestyle are looking for income, and property won’t give them the returns.”
But BIS Shrapnel senior manager residential Angie Zigomanis begs to differ. He said that as negative gearing offers an attractive tax offset, the superannuation policy changes might “possibly” have an impact on the property market. Still, he pointed out that there are other options for tax minimisation.
“Negative gearing applies to all investments, so property isn’t the only alternative,” Zigomanis said.
Like Zigomanis, Real Estate Institute of Queensland chairman Rob Honeycombe believes that wealthy Australians might be motivated to minimise their tax in any asset, not necessarily property.
“The truth is, that people will choose the investment strategy that best fits their needs, their goals, and their current situation,” he said. “It’s virtually impossible to predict how the market will choose to go at this early stage.”