How Australian asset classes have moved over the last 20 years
When clients ask us "what is a normal return?" we usually push back on the question. There is no single normal —the answer depends on which 20-year window you pick, which asset mix, and whether you adjust for inflation. What we can do is describe the range.
Australian equities
Over rolling 20-year windows, the All Ordinaries has delivered long-run nominal returns in the high single digits to low double digits, with real returns after inflation materially lower. Along the way, there have been drawdowns of 40 to 50 per cent —the early 2000s, the GFC, the 2020 COVID shock. Anyone building a plan that assumes no drawdown is planning against history, not with it.
Cash and fixed interest
Cash returns have tracked the cash rate, which over the last 30 years has moved from double digits in the early 1990s to near zero in the 2010s, back to 4 per cent plus in 2023-24. The 2010s were an anomaly; the longer average is higher. Income-focused clients who remember 1990s deposit rates are planning off a different world.
Residential property
Australian residential property has had very long upswings and shorter corrections. The 2010s saw substantial price growth in Sydney and Melbourne, followed by a 2017-19 correction and the 2020-21 upcycle. The data shows clearly that property is not a one-way bet, even in Australia.
What this means for a planning conversation
The historical range is useful for one thing: it sets realistic expectations. A client who expects 15 percent annual property growth every year is planning against a small slice of history, not the average. A client who expects equities to double in five years is similarly planning against a specific window. The planning conversation is not about picking the best past window; it is about building a mix that survives the worst window without forcing a sale.
Inflation and real returns
Nominal returns overstate what an investor actually keeps. Australian inflation over the last 30 years has averaged around 2-3 percent annually. A 7 percent nominal equity return is closer to 4-5 percent real. Property returns that look strong in nominal terms after 10-15 years are materially lower after inflation. Most planning numbers should be run in real terms, not nominal.
The point
Every asset class has had a period where it looked unstoppable, and a period where it looked broken. The planning conversation is not about picking the next unstoppable one. It is about building a mix that survives the broken periods without forcing a sale.
Sources: RBA, ABS, ASX historical data. This note is descriptive and does not constitute investment advice.