Speaking to SMSF Adviser, Nyko Property director of corporate partnerships, Bill Nikolouzakis agreed with the AMP Capital analysis, but believes there is still a role for property in a trustee’s portfolio.

“I think any knee-jerk reactions now are not required — property markets and the fundamentals behind it such as strong population growth, supply levels not keeping up with that growth — I think over the medium term property will continue to grow,” said Mr Nikolouzakis.

“At the top of every cycle, we see property prices reduce somewhat, sometimes they are reduced 3 per cent, sometimes they are reduced 5 or 6 per cent, I think a reduction at the top of every cycle should be expected.

“In Sydney's case it went up 75 per cent in a short period of time, so unless you bought right at the top, a 5 per cent reduction certainly shouldn't scare you as a property investor and the same goes for Melbourne.”

While Mr Nikolouzakis has seen SMSF investing in residential property come off the boil due in part to stricter lending conditions, he has also noted a shift in buying trends.

“What we're seeing is that property investors are very much attracted to landed property so townhouses and houses and they are moving away from the apartment dwellings,” said Mr Nikolouzakis.

“As you get to the top of any marketplace, people start to get a bit more conservative and conservative investors generally speaking move towards land because the land is part of the asset that grows and buildings depreciate so people tend to move that way.

“It is not necessarily the correct decision all the time but certainly in this marketplace it's much harder to get it wrong when you're buying landed property.”