Australian Asset Review —Enrichment Success PTY LTD

Market Review

How Australian asset classes have moved over the last 20 years

A descriptive look at historical ranges. No forecasts.

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.

Property and equities have different long-run patterns

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.

Asset Comparison

Property vs Australian equities: a 30-year look

Returns, volatility, liquidity and leverage: the structural differences.

"Property or shares?" is one of the most common questions we are asked. The data does not give a single answer; it gives a set of trade-offs. This note describes the structural differences without recommending one over the other.

Long-run returns

Over 20-30 year windows, Australian residential property and Australian equities have delivered broadly similar total nominal returns, with real returns after inflation materially lower for both. The path differs: equities have higher volatility and sharper drawdowns; property has smoother reported prices but lower liquidity and higher transaction costs.

Volatility and drawdowns

Listed equities can fall 40-50 percent in a matter of weeks or months during a crisis, and rebound equally quickly. Property prices adjust more slowly (transaction times, valuation smoothing), so a 15 percent correction unfolds over 18-24 months rather than a quarter. This slower adjustment can feel less volatile on a month-to-month basis but can lock owners into illiquid positions during downturns.

Leverage

Property is commonly purchased with 70-90 percent debt. Equities can be geared, but the practice is less common and margin calls can force sales. Leverage amplifies both gains and losses; a property with 80 percent debt that falls 15 percent has lost 75 percent of its equity. Equities with 30 percent gearing that fall 40 percent have lost proportionally less of the total position.

Liquidity and transaction costs

Australian equities can be sold in a day with brokerage of tens of dollars. A property sale takes weeks or months and incurs agent fees, stamp duty, legal costs and moving expenses that can total 5-10 percent of the value. This makes property a poor asset for short-term liquidity needs.

The planning point

The right mix depends on the investor's time horizon, income stability, debt tolerance and liquidity needs. A high-income professional with stable employment and a long horizon may hold both. A person nearing retirement with limited cash reserves should prioritise liquidity over high-growth assets. This is a personal planning conversation, not a generic "property vs shares" debate.

Sources: RBA, ASX, CoreLogic. This note is descriptive and does not constitute investment advice.

Australian Major Asset Market Review