As the financial year ended, plenty of considerations emerged for Australians, ranging from the performance of their superannuation funds to clear indications of a gradual cooling within the housing sector.
Many drivers experienced brief relief with lower fuel prices, though the trend might not last long. Meanwhile, investors analyzed a year of moderate returns from local Australian shares, which were overshadowed by the more robust gains seen in international markets.
Interestingly, these higher returns abroad are likely to have positively influenced the performance of your superannuation.
Your super may have performed better than you think
This past financial year, the Australian sharemarket achieved a modest increase of just 2.77 percent. This figure pales in comparison to the remarkable approx 20 percent surge witnessed by the S&P 500 in the United States.
Yet, for superannuation fund members, these numbers only tell part of the story.
Research from Chant West suggests the median growth super fund is likely to have returned around 9.2 per cent over the past 12 months.
That’s because most super funds invest across a broad range of assets, including international shares, infrastructure, property and fixed interest, rather than relying solely on Australian equities.
Global markets were major contributors to returns. Investment managers also pointed to emerging markets, including South Korea, where technology companies have benefited from growing investment in artificial intelligence.
In fact, South Korea’s sharemarket surged by an incredible 150 per cent in the year to the end of June. Its market is dominated by Samsung and SK Hynix.
The week also highlighted the increasing importance of Australia’s superannuation sector to the broader financial system.
Regulators continue to monitor the industry’s rapid growth, while ASIC warned that some super platforms must do more to protect members from excessive fees and higher-risk investments.
Property market is cooling
Australia’s housing market showed further signs of losing momentum this week.
New figures from Cotality revealed national home values fell 0.4 per cent during June, the largest monthly decline since December 2022. Annual price growth also eased to 7.3 per cent.
Sydney recorded the biggest monthly decline, with home values falling 1.2 per cent, while Melbourne dropped 1 per cent. Canberra also slipped, although several smaller capital cities continued to record gains.
Perth continues to lead the nation, with home values almost 24 per cent higher than a year ago, while Melbourne remains the weakest-performing capital over the same period.
The data suggests higher interest rates and affordability pressures are continuing to weigh more heavily on Australia’s largest housing markets as investors also navigate new negative gearing and capital tax gains changes.
For buyers, slower price growth may create more opportunities after several years of rapid increases. Sellers, meanwhile, may need to adjust expectations as the balance between supply and demand becomes more even.
Fuel prices fall, but relief may not last
Motorists received some welcome news this week as petrol prices dropped to levels not seen since early 2022.
National average unleaded prices fell below $1.60 a litre according to the Australian Institute of Petroleum, with some service stations in Sydney and Perth briefly selling fuel for less than $1.42 a litre according to the ACCC.
The fall reflects lower global oil prices following the easing of tensions in the Middle East and has provided some relief for household budgets during the school holiday period.
However, drivers are being warned that cheaper prices may be temporary.
From Wednesday, the government’s temporary reduction in fuel excise was halved, with the discount falling from 32 cents to 16 cents a litre. While global oil prices and exchange rates will continue influencing pump prices, the reduced tax relief is expected to place upward pressure on fuel costs.
Car buyers flock to EVs
It does, however, come as a growing number of new car buyers are drawn to battery-electric vehicles, with those cars accounting for nearly a quarter of all new car sales in June.
Combined data from the Federal Chamber of Automotive Industries and the Electric Vehicle Council show that the Tesla Model Y was the most popular new car sold last month, with two of the top four being battery-electric vehicles.
Despite rising cost of living pressures, the overall new car market is holding up better than expected with a record 140,058 new vehicles sold. That’s the highest monthly sales figure ever recorded in Australia.
The FCAI’s Tony Weber says greater competition is helping to pull down prices, as China becomes Australia’s leading source of cars.
Exchange traded funds continue their rapid rise
Exchange traded funds, better known as ETFs, continued their remarkable growth this financial year.
A record 72 new ETFs were listed on the Australian Securities Exchange, taking the total number available to investors to around 460. Together, they’re now worth more than $350 billion.
ETF trading activity also increased by 26 per cent year on year, outpacing the 22 per cent growth in overall equity market trading activity over the same period.
ETFs have become increasingly popular because they allow investors to buy exposure to a broad range of companies, industries or markets through a single investment.
The rapid expansion reflects growing demand from investors seeking lower-cost and more diversified investment options although like managed funds, they do attract management fees and because they’re listed on the sharemarket, their value can rise and fall.
That’s this week’s On the Money wrap. Prefer to listen? The On the Money podcast breaks down the latest every weekday. You can tune in here or wherever you get your podcasts.