Australia’s 14.8 million superannuation holders should start the year with optimism, with new data showing that Australian superannuation funds delivered greater average returns than the property market in 2017.
SuperRatings found that returns for balanced super funds were 10.5 per cent over the past year, and 0.6 per cent in December alone, compared with the 9.1 per cent return property investors gained from the Australian capital city property market last year.
The return of 10.5 per cent delivered in 2017 is nearly double the annual 10-year average of 5.6 per cent, which was dragged down due to the 19.7 per cent negative return experienced in 2008 when the global financial crisis (GFC) hit.
SuperRatings chief executive Kirby Rappell said that this marks sixth consecutive year of positive returns for super funds.
“Investors will certainly be starting out 2018 on the front foot, despite some of the challenges we have seen throughout the past 12 months,” he said.
Despite the Australian market largely missing out on the global rally through the middle of 2017, Kirby said that super funds were able to match the series of positive retunes experienced since 2011.
Investors also experienced challenges throughout 2017, according to Kirby.
“For Australian investors, it was a frustrating year in many respects, with the share market rallying in fits and starts. However, a falling Australian dollar in the latter part of the year did help boost returns for funds’ international share exposures,” he said.
“Of course, the US market has provided some crucial support, with the new US tax package providing some momentum in the market; however, we will have to wait and see exactly how that will flow through to returns in 2018.”
Meanwhile, the real estate boom appears to be over, with most experts predicting weakening property prices in 2018.
Cameron Kusher, head of research for property price monitoring firm Corelogic, told the ABC that “at a national level I think that values will be lower, and that will really be driven by Sydney, the areas surrounding Sydney and even, potentially, Melbourne later in 2018.”
“To the end of November they [Sydney prices] were already down 1.3 per cent and I think by the end of 2018 we could see them down as much, potentially, as 5 or 6 per cent in some regions.”
Kusher also said he expected that the Perth and Darwin markets were set for a flat 2018, while Adelaide and Brisbane could expect modest growth, and Canberra a moderate level of growth.