We’re diving into part four of our series on the six reasons why people invest in property through an SMSF. Today, we’re tackling a significant challenge that many aspiring homeowners face: access to a deposit.

The Deposit Dilemma

For most first-time homebuyers, the biggest hurdle to entering the property market is scraping together a deposit. The numbers can be daunting, especially in cities like Sydney. To give you a clearer picture, let’s break down the figures:

  • Sydney: The median house price in Sydney is around $1.6 million. To purchase a property at this price, you’d typically need a 20% deposit, which equates to $320,000. Add stamp duty of approximately $70,000, and you’re looking at a total of $390,000 just to get your foot in the door. These numbers can be overwhelming and heartbreaking for many individuals and families.
  • Brisbane: If you’re considering Brisbane, the median house price is around $900,000. Here, a 20% deposit would be $180,000. Including stamp duty, which is roughly $29,000, the total deposit required comes to $209,000. Again, these figures represent the cost of an average, middle-of-the-road property, not a luxury home.

For many people, these numbers are simply out of reach, making the dream of homeownership feel unattainable.

How an SMSF Can Help

This is where the power of an SMSF comes into play. In Australia, your employer contributes to your superannuation, which gradually accumulates over time. As these contributions are invested, they grow, potentially creating a sizeable sum. Once you establish a self-managed super fund, you can leverage these accumulated funds to purchase an investment property.

No Deposit? No Worries!

With an SMSF, the barrier of needing a large deposit can be significantly reduced or even eliminated. You can use the funds in your SMSF to secure the property, bypassing the deposit hurdle that stops so many from entering the market. This strategy opens the door to property investment for families and individuals who might otherwise struggle to save the necessary deposit.

Next Step

Investing in property through your superannuation fund isn’t just about buying a home—it’s about creating opportunities. It allows you to overcome one of the most significant barriers to property ownership and makes the dream of owning property more accessible.

We hope this gives you a fresh perspective on how an SMSF can be a game-changer in securing a deposit for your property investment. Next, we’ll discuss how employer contributions can be used to pay off loans. If you’ve heard enough and are ready to chat, contact us today.

Information from Teach Me About Property is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).