Figures from the Australian Tax Office show that SMSF investors are putting more money back into the real estate market.

In 2020, real estate held by SMSFs increased by 7.5%, to a total of $39.1 billion in holdings.

In fact, SMSF investors seem undaunted by the falls experienced by the property markets earlier this year. Rather than dumping shares for cash, those funds were allocated to property assets instead.

Non-residential holdings jumped by 9.2%—perhaps investors sought to capitalise on distressed commercial real estate.

Investors turning to real estate during stock market crashes is a common occurrence. Australian real estate’s first boom occurred shortly after the Black Monday stock market crash in 1987.

However, direct ownership of real estate in an SMSF may not be the best strategy. Borrowing in an SMSF is not an effective tax strategy, and contribution limits may affect the SMSFs ability to pay its debts.

Gaining exposure to the property market through an alternative strategy, such as a real estate fund, may be a more effective way for SMSF investors to allocate capital to real estate assets.