Towers Perrin report

The ASX Investment Performance Report by Towers Perrin found that, for the first time in more than decade, residential investment property outperformed listed investments over the previous 10 years.

The Report measures the pre and post tax returns on shares, listed property, residential investment property, fixed interest and cash over 10 years from 1 January 1994 to 31 December 2003.

Key highlights – Investment returns for 10 years to December 2003:

For the top marginal tax

  • Australian Shares – 6.1% pa
  • Listed Property – 7.3% pa
  • Residential Investment property – 9.3% pa 
  • Fixed interest 3.2% pa

For the lowest marginal tax rate:

  • Australian Shares – 8.0% pa
  • Listed Property – 10.2% pa
  • Residential Investment property – 12.7% pa
  • Fixed interest 6.6% pa

Dividends on Australian shares averaged 4.1% over 2003 and had an average franking credit 75%

Over 20 years, depending on marginal tax brackets, Australian shares returned between 11.9% and 10.1% per annum, listed property returned between 10.5% and 8.5% per annum, while residential investment property returned 13.4% and 11.5% per annum.

On the results Colin Scully, Deputy Chief Executive Officer said: “The performance of the housing market over this period has been well documented and these results were not unexpected.  All markets move in varying cycles and investors, after seeking appropriate advice, would do well to consider diversification across a broad range of investments.  Experience has shown that shares and property both perform well over the long term.  We also note that shares remain highly attractive in terms of the income they can generate through dividends, which can be further boosted by franking credits.”

The report for investment returns for the 10 years to December 2004 has been commissioned and will be available in May 2005.