Proof superannuation has gone up by more than houses during the past 30 years


How superannuation balances have gone up by MORE than houses during the past 30 years

  • SuperRatings calculated $1 invested in super in 1992 would be worth $7.67 now
  • Sydney’s median house prices rose 7.54 times to $1.382million in three decades
  • SuperRatings however forecasts a 3.3 per cent drop in superannuation balances
  • Still much less severe than the 11 per cent decline predicted for Sydney houses 

Australian superannuation balances have typically gone up by even more than most big city house prices during the past three decades but are tipped to fall as rates rise.

A dollar invested when compulsory super debuted in July 1992 would be worth $7.67 now, SuperRatings calculated.

By comparison, Sydney‘s median house has multiplied 7.54 times during the same period as it rose from $183,300 three decades ago to $1,382,631 as of last month, data from Macquarie University and CoreLogic showed.

Melbourne‘s equivalent value has increased by 7.8 times from $125,000 to $975,850 as Brisbane‘s mid-point multiplied 6.92 times from $129,000 to $892,133.

Perth’s median house has grown by a lesser 5.7 times, from $102,500 to $585,114, as Adelaide’s mid-point multiplied by 6.46 times from $108,300 to $699,251. 

Australian superannuation balances have typically gone up by even more than most big city house prices during the past three decades. Since compulsory super debuted in July 1992, a dollar invested then would be worth $7.67 now, SuperRatings calculated (pictured are young women at Sydney's Opera Bar)

Australian superannuation balances have typically gone up by even more than most big city house prices during the past three decades. Since compulsory super debuted in July 1992, a dollar invested then would be worth $7.67 now, SuperRatings calculated (pictured are young women at Sydney’s Opera Bar)

How much super you should have by age

25: $31,000

30: $68,000

35: $112,000

40: $164,000

45: $219,000

50: $285,000

55: $360,000

60: $449,000

65: $535,000

Source: Association of Superannuation Funds of Australia based on ages as of 2020

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Like the property market, superannuation balances are set to drop as the Reserve Bank of Australia keeps raising interest rates to tackle inflation running at 5.1 per cent – the worst pace in two decades.

SuperRatings is estimating median balanced funds will fall by 3.3 per cent in the year to June 30 but this follows a 17.8 per cent surge in 2020-21.

This would mark the fifth financial year of losses since compulsory super debuted in 1992.

The bad financial years included a 6.4 per cent drop in 2007-08 followed by a 12.7 per cent plunge in 2008-09 during the Global Financial Crisis. 

The predicted 3.3 per cent fall for the financial year just gone would be comparable to the 3.1 per cent fall in 2001-02 during the year that included the September 11 terrorist attacks in the U.S.

But during the past three decades, compulsory super balances have grown by an average pace of seven per cent a year. 

Property is in for an even bigger fall with the Commonwealth Bank predicting an 11 per cent fall in Sydney in 2022 and a 10 per cent drop in Melbourne. 

In 2021, Sydney’s median house price surged by 29.6 per cent as Australian home prices climbed by 22 per cent, the fastest pace since 1989, CoreLogic data showed.

By comparison, Sydney's median house has multiplied 7.54 times during the same period as it rose from $183,300 three decades ago to $1,382,631 as of last month, data from Macquarie University and CoreLogic showed (pictured is an auction at Paddington)

By comparison, Sydney’s median house has multiplied 7.54 times during the same period as it rose from $183,300 three decades ago to $1,382,631 as of last month, data from Macquarie University and CoreLogic showed (pictured is an auction at Paddington)

SuperRatings executive director Kirby Rappell said Russia’s Ukraine war was adding to inflationary pressures, and hurting superannuation balances.

‘Funds have had a challenging second half of the financial year, dragging on a solid first half,’ he said.

Median balanced funds, with 60 to 76 per cent of savings geared towards growth assets like shares, were tipped to fall by 3.3 per cent in 2021-22 but be up 7.9 per cent over 10 years.

Stable funds, with a 20 to 40 per cent mix of growth assets, were tipped to fall 2.7 per cent but be up 4.7 per cent over the decade.

Riskier funds, with a 77 to 90 per cent focus on growth assets, were forecast to have fallen by 4.3 per cent during the last financial year for a decade increase of 9.1 per cent.

The Association of Superannuation Funds of Australia calculates someone needs $535,000 saved up by age 65 for a comfortable retirement.

That means having $164,000 saved up by age 40 and $285,000 by age 50.

But as ASFA analysis released in June showed the average Australian had $147,425 in their superannuation.

Melbourne's equivalent value has increased by 7.8 times from $125,000 to $975,850 as Brisbane's mid-point multiplied 6.92 times from $129,000 to $892,133

Melbourne’s equivalent value has increased by 7.8 times from $125,000 to $975,850 as Brisbane’s mid-point multiplied 6.92 times from $129,000 to $892,133

SuperRatings is estimating median balanced funds will fall by 3.3 per cent in the year to June 30 but this follows a 17.8 per cent surge in 2020-21. This would mark the fifth financial year of losses since compulsory super debuted in 1992

SuperRatings is estimating median balanced funds will fall by 3.3 per cent in the year to June 30 but this follows a 17.8 per cent surge in 2020-21. This would mark the fifth financial year of losses since compulsory super debuted in 1992

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