Property vs ASX 200 – Which Strategy Would Have Best Secured Your Family’s Future?
When planning to secure your family’s financial future, two popular long-term investment options in Australia are property and the ASX 200 index. To better understand which investment strategy would have been more effective over the last 10 years, let's reflect on the past decade to review how each has actually performed across the country.
How Did Property Perform in Australia Over the Last 10 Years?
Investing in property is often seen as a reliable long-term strategy due to the perceived stability and potential for growth. However, the property market’s performance has varied significantly between capital cities and regional areas.
National Property Market Trends (2013-2023)
1. Capital Growth:
Across Australia, property prices have grown at an average annual rate of around 4% to 6% over the past decade. For example:
Sydney: Experienced a boom, with average annual growth rates of around 6% to 8%. Median house prices increased from around $650,000 in 2013 to over $1.2 million in 2023.
Brisbane and Perth: More moderate growth, averaging 3% to 5% per year.
Regional Areas: Gained popularity, especially post-COVID, with growth rates of 4% to 6%.
2. Rental Yields:
Rental yields in Australia generally range from 3% to 4.5%, depending on location.
Sydney and Melbourne: Lower yields of around 2.5% to 3.5%.
Brisbane, Adelaide, and Regional Areas: Higher yields, around 4% to 4.5%.
3. Total Returns:
Combining capital growth and rental income, property investments across Australia delivered a total annual return of around 7% to 9%.
How Did the ASX 200 Perform in Australia Over the Last 10 Years?
The ASX 200 index, which represents the top 200 companies listed on the Australian Stock Exchange, offers a diversified investment option. Here’s how it performed over the past decade.
1. Capital Growth:
The ASX 200 index increased from around 5,200 points in 2013 to approximately 7,100 points in 2023, reflecting average capital growth of 3% to 4% per year.
2. Dividend Yields:
Dividends have been a significant part of the ASX 200’s returns, with yields averaging 4% to 4.5% annually. Franking credits further boosted returns by reducing the tax burden for Australian investors.
3. Total Returns:
Combining capital growth and dividends, the ASX 200 delivered average annual returns of 7% to 9% over the past decade.
Comparing the Actual Returns: Property vs ASX 200 (2013-2023)
Lessons from the Last Decade
Property:
Sydney and regional areas outperformed other markets due to high demand and lifestyle shifts post-pandemic.
Property investments require significant capital, ongoing management, and are less liquid than shares.
ASX 200:
The ASX 200 showed resilience, recovering quickly after downturns, with dividends providing stable returns.
Shares offered better liquidity and lower management costs, making them a flexible investment option.
Which Investment Would Have Been Better for Your Family’s Future?
Both property and ASX 200 investments delivered solid returns, averaging between 7% to 9% annually over the past decade. However, the right choice depends on your family's financial goals, risk tolerance, and investment horizon. For most families, a diversified portfolio that includes both property and shares is ideal for balancing stability and growth.
About the Author
John Cachia is a seasoned financial adviser and dedicated parent of three boys. With a passion for financial literacy and wealth management, John has been in the industry since the young age of 14. His early start in finance has provided him with a wealth of experience and insight, which he now uses to guide families towards achieving their financial goals. As Australia's leading wealth adviser for young families, John is committed to helping parents become positive financial role models for their children, ensuring a secure and prosperous future for the next generation.
Sources:
[CoreLogic](https://www.corelogic.com.au/)
[Canstar](https://www.canstar.com.au/investor-hub/australian-share-performance-30-years/)
[REIV](https://reiv.com.au/market-insights/victorian-insights)
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