Shane Oliver

Key points

• National average home prices were flat in May according to Cotality, the weakest since January last year. Prices fell further in Sydney and Melbourne, and the boom time cities of Brisbane, Adelaide and Perth are seeing growth slow.
• The housing shortage and expanded 5% deposit scheme are being offset by rate hikes, low confidence & the Budget tax hikes on investors with a further fall in prices likely.
• We now expect national average property prices to fall around 1% this year (revised from around 3% growth) and to fall around 5% over 2026-27.
• Units and lower end property are likely to hold up better due to the expanded FHB 5% low deposit scheme. The tax changes also favour properties with higher rental yields.
• The combination of a rising long-term trend in rates, poor affordability, the tightening of property tax concessions and a political shift towards lower immigration may mean the 30-year super cycle upswing in prices may be close to over. The housing shortage remains the key sticking point though.
• Asking rents rose 0.6% in May, with annual growth rising to 5.9%yoy as vacancy rates remain low. This is not good for inflation.

Home price cycle turning down

Cotality data shows national average home prices were flat in May, with capital city prices down 0.1%, their second monthly fall in a row. Prices have now fallen 2.1% in Sydney and 2.9% in Melbourne from their November highs. The boom time cities of Brisbane, Adelaide and Perth are also seeing slower growth.

The broad picture remains one of a continuing slowdown since late last year reflecting a combination of rate hikes, poor affordability, depressed buyer confidence partly reflecting the oil supply shock and the Budget changes to exclude new purchases of existing properties from negative gearing and shift to the taxation of real capital gains from the 50% discount approach. Interestingly, up until Budget day the five capital city average prices were up slightly in May with all the monthly fall occurring since then suggesting the tax changes are having a significant impact. Working the other way, the boost from the expansion of the 5% low deposit scheme for first home buyers is showing up in relatively stronger conditions in lower quartile property prices and in units. They are also benefitting from poor affordability pushing buyers into lower price points.

The slowdown is also evident in weak auction clearance rates.

Expect home prices to fall further over the next year

There are two key supports for the property market. First there remains an accumulated housing shortfall – of 200,000 to 300,000 dwellings – that has built up after years of very strong population growth. This is evident in low rental vacancy rates. Second, the expanded first home buyer 5% deposit scheme will help provide support lower priced entry level houses and units. But the bring forward of FHB demand due to the 5% deposit scheme will hit an air pocket at some point, probably next year.

However, despite these sources of upwards pressure on property prices, the Australian housing market is likely to cool further as rate hikes, already poor affordability, the impact of the War and a wind back in property tax concessions impact.

• Rate hikes – the RBA has raised rates three times back to their prior 2023 cycle high. While it’s likely to leave rates on hold this month we expect another hike in August. Rate hikes have usually been associated with some softening in property prices or slower growth. This is because they cut how much buyers can borrow, hit confidence and can boost distressed sales. Of course, this is not always the case as other factors can intervene like the population surge in 2023 which pushed prices up despite high rates but that seems unlikely this time.
• Poor housing affordability – the ratio of home prices to wages and incomes is at record levels. This, combined with rising mortgage rates, is leading to a widening gap between home prices and what an average buyer can afford to pay for a property.

• Poor buyer confidence – confidence has plunged as have perceptions of whether it’s a good time to buy a dwelling. The longer the Strait of Hormuz takes to return to normal the greater the risk of recession & higher unemployment, which could be a big drag on property prices.

• Tax hikes on investors – the move to remove negative gearing from new purchases of existing homes and return to the taxation of real capital gains with a minimum tax rate of 30% is likely to drive a decline in investor demand for housing in the near term. This is because the tax changes mean lower after-tax returns for investors going forward which will mean new investors will demand either lower prices or higher rents or some combination resulting in a higher starting point rental yield to make up for the less favourable tax treatment. This will be reinforced by banks reducing how much they can lend to investors due to their reduced cash flow from the tax changes. Various studies suggest this will reduce home prices by 1 to 5%. Given the risk investor sentiment weakens by more than justified by the tax changes we are assuming a 5% negative impact on property prices with the impact occurring over the next 12 months.

As a result, it’s a bit of a perfect storm for the property market. After 8.9% growth in 2025 we now anticipate a fall in national average home prices of around 1% this year and 5% over 2026-27.

However, this will likely mask a wide divergence between cities and property types. In terms of price to rent ratios adjusted for inflation as a rough guide to whether the market is over or under valued – a bit like the PE for shares – houses are 36% overvalued compared to units at just 9% and so are far more vulnerable to a fall in prices. See the next table. And units are likely to be supported by FHBs using the 5% deposit scheme. Using the same approach – in terms of houses Brisbane, Sydney and Adelaide are the most overvalued and vulnerable and in terms of units Brisbane, Adelaide and Canberra units are the most vulnerable.

Is the super cycle upswing in property prices over?

Since the mid-1990s Australian property prices have been in a long term, or super cycle, upswing. The next chart shows real home prices (average property prices after removing increases in inflation) indexed to start in 1926 at 100 (red line) against their long-term trend (blue line).

Over the last 100 years real property price growth has averaged around 3% per annum which is in line with long term average real GDP growth (which is a rough proxy for real income growth). We can see that real Australian property prices have gone through three major long-term (or super cycle) booms (highlighted with green arrows) and two major long-term busts or weak periods over the last century.

• The first long term boom was in the 1920s and was associated with an economic boom and very strong population growth from the end of WW1 until the early 1930s. See the first circled area in the next chart showing population growth.
• This was followed by a collapse in property prices associated with the Depression, a plunge in population growth and the early years of WW2, with real prices not bottoming until 1943 – maybe after many in Sydney’s Eastern suburbs sold up after the 1942 midget sub attack!
• The second long-term boom got underway after WW2 and ran into the early 1970s supported by very strong economic and population growth (the second circled area in the population chart). This saw real property prices rise from 50% below their long-term trend to be 50% above trend by 1973.

• This long boom ended in the mid-1970s with the economic malaise of the time, a step down in population growth and the high interest rates of the 1980s. Unlike the collapse of the first long-term boom, it saw real house prices churn sideways in a wide range with some strong periods along the way (such as in 1988-89). But because of a 20 year plus churn in real house prices, by the mid-1990s real prices were more than 20% below their long-term trend and little different to where they were in the mid-1970s. This was a great time to get into Australian property!
• This set the scene for the start of the current long-term boom in property prices in the second half of the 1990s, that has taken real property prices from well below trend to around 20% above trend.

The super cycle upswing in real property prices over the last thirty years has been propelled by a combination of:

• the shift from high mortgage rates – they were 17% in the late 1980s/very early 1990s – to low rates of 2-3% a few years ago, which enabled buyers to borrow more and hence pay more for homes;
• the easier availability of home loans with financial deregulation;
• the growth of two income households adding to how much buyers could borrow and pay each other for homes;
• a surge in underlying demand for housing as a result of a surge in population growth on the back of high immigration levels starting around 20 years ago which has continued albeit with a brief pause in the pandemic (see the third circled area in the last chart); and
• some would say the shift to taxing 50% of capital gains from taxing real capital gains in 1999 which combined with negative gearing and high marginal tax rates to boost investor demand for property.

This combined all goes a long way to explain how Australian housing went from cheap in the mid-1990s to expensive in the early 2000s and has stayed there ever since, in fact becoming more so. This can be seen in the surge in house price to wage and income ratios since the 1990s.

The main drivers have been the combination of low rates and an undersupply of property where people wanted to live (big cities). Other countries have had low rates and tax breaks too, but they have kept housing more affordable because of a better supply/demand balance.

The last two long booms or super cycle upswings were bought to an end by Depression and severe stagflation which hopefully won’t be the case this time. However, there are some reasons to believe that the long-term boom in Australian property prices may be close to an end as some of its drivers are starting to fade or have run their course:

• First, the long-term decline in mortgage rates that started in the 1990s and continued to 2020 when mortgage rates hit 2-3% looks to have bottomed. Rates rose in 2022-23, there was a brief and modest fall last year but now they are on the way back up again. For various reasons we now appear to have entered a more inflation prone world which means higher rates. So, the trend to ever lower mortgage rates driving ever higher amounts of money people can borrow enabling ever higher home prices may be over.
• Second, two income families are now the norm and so the boost from the move to this likely doesn’t have much further to go.
• Third, immigration is trending down with the Government forecasting a fall to 225,000 pa, the Coalition talking of 165,000 or so & One Nation talking of 130,000 with an aspiration of net-zero.
• Finally, the tax concessions for investors have been curtailed.

Calls for an imminent end to the property super cycle need to be treated with some caution though. I thought it might be close to over five years ago, but it was extended by a surge in immigration coming out of the pandemic and constrained home building resulting in a chronic undersupply of housing. Another surge in immigration is unlikely, but a 200,000 to 300,000 housing shortage remains. And with home building running around 180,000 a year and likely to slow in response to rate hikes it’s likely to remain well below the Housing Accord target of 240,000 a year which is necessary to meet annual housing demand and eat into the accumulated undersupply. So, at this stage while many of the conditions are falling into place it may be premature to call an end to the home price super cycle boom of the last 30 years until the supply shortfall comes under better control.

What to watch?

The key things to watch with respect to the next 12 months will be interest rates, the Strait of Hormuz, unemployment and investor demand in response to the tax hikes. Several more rate hikes, a sharply rising trend in unemployment and a big drying up in investor demand could result in much bigger price falls than 5%. On the flip side a quick resumption of rate cuts, a quick resolution of the oil supply shock and a subdued investor response could drive stronger property prices next year. Overall, the risks for home prices over the next 6-12 months seem skewed on the downside but note that in the absence of much higher unemployment, forecasts for a property price crash (say a 15-20% fall or more) are likely to be wide of the mark. A crash would require wide scale forced selling by homeowners – but without much higher unemployment forcing homeowners to sell this is unlikely as Australians will do whatever they can to keep servicing their mortgage.

In terms of the 30-year super cycle upswing – many of its key drivers are now fading but the supply shortfall is key. If it closes quickly thanks to stronger supply or a faster fall in immigration, then the super cycle upswing may well be over.

By Dr Shane Oliver Head of Investment Strategy and Chief Economist, AMP

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Important note: While every care has been taken in the preparation of this document, neither National Mutual Funds Management Ltd (ABN 32 006 787 720, AFSL 234652) (NMFM), AMP Limited ABN 49 079 354 519 nor any other member of the AMP Group (AMP) makes any representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. This document is not intended for distribution or use in any jurisdiction where it would be contrary to applicable laws, regulations or directives and does not constitute a recommendation, offer, solicitation or invitation to invest.

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Shane Oliver

Key points

• The War with Iran has led to a surge in oil prices & worries of stagflation which has pushed share markets sharply lower.
• Predicting how this will all unfold is hard. The key is to stay focussed on the basic principles of successful investing.
• These five charts focus on principles of investing critical in times like now: the power of compound interest; don’t get blown off by the cycle; the roller coaster of investor emotion; the wall of worry; and market timing is hard.

Introduction

Most of the time share markets are relatively calm, but periodically they tumble and generate headlines like “billions wiped off share market.” Sometimes it ends quickly and the market heads back up again. But every so often share markets keep falling for a while. Sometimes the falls are foreseeable (usually after a run of strong gains), but rarely are they forecastable (which requires a call as to timing and magnitude). And now with the US and Israel waging War on Iran its happening again with falls gathering pace as the War drags on. From their record highs earlier this year 7%, Japanese shares have fallen 12%, Eurozone shares are down 11% and Australian shares are down 9%. While the details regarding the current plunge differ from past falls, from the point of view of basic investment principles, it’s hard to say anything new. Which is why this note may sound familiar with “5 key charts for investors to keep in mind”.

The current state of the War and flow on to markets

We are now into the fourth week of the War with no clear sign of an end – despite President Trump’s frequent reassurances that the end is near.

• A problem is Trump indicated regime change was a goal – along with a group of military objectives – and killing of Iran’s leaders and musing about replicating the Venezuelan model appear to confirm this.
• So, Iran took the long-predicted response of attacking regional oil and gas infrastructure and effectively closing the Strait of Hormuz.
• Which in turn has potentially created the biggest oil & energy shock in history given 20% of world oil and gas flows through the Strait.
• This in turn has led to a surge in oil and gas prices which in turn has seen bond yields rise on inflation fears, the expected profile for official central bank interest rates rise sharply and shares fall on fears of higher inflation and rates and weaker growth and profits.
• By declaring that the War would be over “very soon” on 9 March and that he was considering “winding down” the War on 20 March, both after sharp oil price rises, Trump has signalled he can’t bear the full economic and political costs of the War. So just like his tariff TACO back down, many assume he will do the same this time which is why the rise in oil prices and fall in shares has so far been relatively mild.
• But the Iranian leadership shows no sign of waving a white flag and in fighting for survival wants to inflict maximum economic and political pain on Trump – which they know they can do by restricting oil supplies. So this makes it harder to him to do a TACO.
• There are various workarounds to the Strait blockage – Saudia Arabia’s pipeline to the Red Sea, stockpile releases, US naval escorts, Iran letting non-enemy ships through, etc – but its unclear they are enough or will work. Eg the US doesn’t have the capacity to defend every tanker. If Iran lets too many ships pass it weakens its leverage. And the US may not like the idea of Iran deciding who goes through.
• Right now, despite lots of confusing comments from Trump the risk is more escalation – with a consideration of using troops and now threatening to obliterate Iran’s power plants. Iran is threatening more retaliation against energy infrastructure in response.
• Past oil price shocks unfolded over months as the impact became clearer – 4 months in 1973 when oil prices rose four-fold & more than a year in 1979-80 when oil prices rose three-fold. It’s still early days.
• So, the threat of stagflation remains and it’s at a time of various other threats to shares around AI, private credit & stretched valuations.
• Current average capital city petrol prices in Australia of around $2.45 will if sustained add 1.5% to inflation taking it above 5% and add $114 a month to the household petrol bill which along with increasing risks of fuel shortages will lead to a big hit to economic activity.

Our base case is that the War and oil shock will be relatively short as Iran will not be able to keep the Strait closed indefinitely and Trump will look for an off ramp as political pressure builds ahead of the midterms. But it could still go on for weeks yet and so could still see oil prices rise more in the interim say to $US150. We continue to see the risk of a 15% or so correction in shares this year but the size of the threat means there is a high risk it may be deeper. Trying to work out how all this plays out is not easy. But looking at shares around major geopolitical events, the typical playout is for a sharp fall of around 8% but then a recovery over the next 12 months of around 14%. Of course, there are wide ranges around this. Given the uncertainty now is a critical time to stick to basic principles of investing. So, this note revisits 5 key charts investors should keep in mind.

Chart #1 The power of compound interest

This chart shows the value of $1 invested in various Australian assets in 1900 allowing for the reinvestment of dividends & interest along the way.

That $1 would have grown to $278 if invested in cash, to $998 if invested in bonds and to $1,000,977 if invested in shares up till now. While the average return since 1900 is only double that on shares versus bond, the huge difference between shares and bonds owes to the impact of compounding – or earning returns on top of returns over time. So, any return earned in one period is added to the original investment so that it all earns a return in the next period. And so on. Which means higher average returns over time compound into much higher end point values.

Key message: to grow wealth, we must have exposure to growth assets like shares and property that provide higher long term average returns.

Chart #2 Don’t get blown off by cyclical swings

The trouble is that shares can have lots of setbacks, eg, see the arrows on the previous chart. Even annual returns are highly volatile, but longer-term returns tend to be solid and relatively smooth. Since 1900, for Australian shares roughly two years out of ten have had negative returns but there are no negative returns over rolling 20-year periods.

Understanding that these periodic setbacks are just an inevitable part of investing is important in being able to stay the course.

Key message: big short-term swings in shares are normal but the longer the horizon, the greater the chance your investments meet their goals.

Chart #3 The rollercoaster of investor emotion

Investment markets move more than can be justified by moves in their fundamentals, because investor emotion plays a huge part. The next chart shows the roller coaster that investor emotion traces through the course of an investment cycle. Once a cyclical bull market turns into a bear market, euphoria gives way to ultimately depression at which point the asset class is under loved and undervalued and everyone who is going to sell has – and it becomes vulnerable to good (or less bad) news. This is the point of maximum opportunity for investors to buy into an asset at depressed prices. Once the cycle turns up again, depression gives way to hope and eventually euphoria. This is the point of maximum risk.

The roller coaster of investor emotion

Key message: investor emotion plays a huge role in driving swings in markets. The key for investors is not to get sucked into this emotional roller coaster. Of course, this is easier said than done, so many investors end up getting wrong footed – by buying at the top when everyone is bullish and selling at the bottom when everyone is bearish (like in April last year on US tariffs, or maybe soon on worries about the oil supplies).

Chart #4 The wall of worry

There is always something for investors to worry about. And this has certainly been the case since Trump returned with his contradictory and confusing utterances. But the global economy has had plenty of worries, but it got over them with Australian shares returning 11.6% per annum since 1900, in a broad rising trend, and US shares returning 10% pa.

Key message: worries are normal around the economy and investments and sometimes they become intense – like now. But they eventually pass.

Chart #5 Timing markets is hard

With the benefit of hindsight many swings in markets around things like the GFC and the 2022 inflation surge look inevitable and so it’s natural to think about switching between say cash and shares within your super fund to anticipate market moves. But trying to time the market is difficult. A good way to demonstrate this is with a comparison of returns if an investor is fully invested in shares versus missing out on the best (or worst) days. The next chart shows that if you were fully invested in Australian shares from January 1995, you would have returned 9.4% pa.

If by trying to time the market you avoided the 10 worst days (yellow bars), you would have boosted your return to 12% pa. And if you avoided the 40 worst days, it would have been 16.5% pa! But many investors only get out after bad days & miss some of the best days. If by trying to time things you miss the 40 best days (blue bars), the return falls to 3.7% pa.

Key message: trying to time the share market is not easy. For most – whether as a super fund member or as an investor outside super – its best to stick to an appropriate well thought out long term investment strategy.

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

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Global markets had a volatile week as the War with Iran continued with no sign of any reopening of the Strait of Hormuz which is key to restoring global oil and gas supplies to their pre-War levels. Consequently, oil and gas prices rose further, despite comments from President Trump that the war would soon be over. This in turn pushed bond yields up sharply on expectations for higher inflation and kept share markets under downwards pressure. Reflecting the worries about a boost to inflation and a hit to growth, ie stagflation, along with increased expectations for another RBA rate hike in the week ahead, the Australian share market fell another 2.6% or so with energy shares up but all other sectors down led by IT, health, property and materials. From this year’s highs US shares are down 4%, Eurozone shares are down 7%, Japanese shares are down 8% and Australian shares are down 6%.

Gold fell slightly further over the last week – which is odd given the surge in geopolitical and inflation risk, but could be a case of buy on the rumour and sell on the fact as a lot had already been factored into its price as it roughly doubled over the 12 months to its January high. By contrast Bitcoin continued to rise. And metal and iron ore prices rose – maybe in anticipation of increased defence spending. This along with ongoing expectations for the RBA to hike rates this year and the Fed to cut has seen the $A remain very resilient through the War so far against the $US, despite a rise in the $US generally on the back of safe haven demand. As a result, the $A has also increased on a trade weighted basis.

The past week highlighted the limits to TACO as the war with Iran continues and the Strait of Hormuz remains effectively closed. When markets started to panic on Monday with oil surging to $US119 a barrel and shares plunging Trump panicked (surely, he must have expected the oil surge!) and declared that the War could be over “very soon” and that oil prices would plunge when it was. So, oil prices plunged and shares rebounded thinking a TACO (ie Trump chickening out) was here or near and that the crisis would soon be over. Unfortunately, oil has headed back up again and shares remain under pressure as its clear that the War has a way to go yet with Iran remaining defiant, attacking more energy infrastructure and ships in the Persian Gulf and Strait of Hormuz and warning of oil going to $US200 a barrel. So, Trump has no easy off ramp.

The bottom line is TACO can work well when Trump has full control – like he did in relation to the tariffs last year. But despite Trump’s claim that “any time I want [the war] to end it will end” that’s not the case right now with Iran refusing to play ball. In fact, it wants to see Trump pay a big economic and political cost and the best way to do this is to keep the Strait of Hormuz effectively closed to shipping. That is taking out at least around 15 million barrels a day of global oil supplies (which is around 15% and its similar or more for gas). And the longer the Strait stays closed the more oil prices will trend up as inventories run down. Don’t forget the second oil crisis in 1979 on the back of the Iranian revolution saw a threefold rise in world oil prices but that only involved a hit to 5% of global oil supplies.

In the absence of securing the Strait of Hormuz most policy options to stop oil prices rising are band aid solutions. The release 400 million barrels of oil by IEA member countries, of which 172 million will come from the US, is to be welcomed. But it will only be released gradually and if its anything like the US release over 120 days it will at best only amount to 3.3 million barrels a day which will only cover 20% or so of the 15 million barrels a day of lost supply from the Persian Gulf. Easing sanctions on Russia would help but that might provide only another 1.5 million barrels a day, and that comes with all sorts of issues given its war with Ukraine. Trump has indicated the US can provide insurance and naval escorts for ships through the Strait but that was over a week ago and both ideas have huge challenges. The US Energy Secretary said the US Navy could start escorting tankers by the end of March..but that is still a few weeks away and sounds very iffy (like his claim that it had already escorted a ship). So the bottom line is that regardless of what Trump says the War likely has a way to go yet.

That said Trump is under big political pressure to keep the conflict short and avoid troops on the ground and Iran’s military capability is being rapidly degraded. Our base case remains that the War is limited, but it is looking more shaky. Our two scenarios are:

• Limited war (55% probability, lowered from 60%) – our base case is that the War is still ultimately limited with Trump likely finding a way to declare victory sometime in the weeks ahead. This may still take a few more weeks so oil prices could still go a lot higher to say $US150 (seeing further falls in shares, possibly taking us to the 15% correction we have been expecting this year), before they go lower (shares higher). Along with providing a “wag the dog” distraction from the Epstein files, its probable that Trump’s intervention in Venezuela and War on Iran is partly motivated by a desire to get the upper hand over China and so the US is probably aiming to have the War nearer to being wrapped up by the Trump-Xi meeting at the end of the month. However, with Iran digging in and it looking increasingly like Trump has miscalculated we have cut the probability of a limited war to 55%.
• Long war (45% probability, up from 40%) – however, while Trump may want to declare victory soon, Iran has an incentive to prolong the surge in oil prices and hence the cost to Trump and US consumers. Iran could also descend into chaos with various military groups continuing to threaten ships in the Strait of Hormuz even if Iran officially waves the white flag. This could necessitate a longer-term US involvement and mean a much longer disruption to oil supplies, conceivably resulting in oil prices going to $US200 & beyond driving a sharp sustained fall in global and Australian shares into a bear market. It would be a political disaster for Trump though and lead to a significant loss of confidence in the US – much as occurred in the 1970s!

The key things to watch for will be a sustained fall in missiles & drones coming from Iran, successful shipping through the Strait of Hormuz, indications Iran wants to negotiate and a 10% or more top to bottom fall in US shares which will up pressure on Trump to find a way out.

Longer term implications of the Iran war – more renewables and onshoring of supply chains. Like the pandemic, the Iran War and the impact on oil supplies will have longer term consequences including more pipelines to bypass the Strait of Hormuz, an accelerated push towards EVs, renewables and nuclear power, and even more pressure on countries to bring supply chains of strategic products back onshore. All of which is positive for metal demand. But the further hit to globalisation will potentially make the world even more inflation prone. No doubt many have seen the chart below before (in 2022 it was all the rage.) Could the US and global economy face another inflation wave as the chart implies – reflecting deglobalisation, weakening Fed independence and higher energy prices? It’s a bit odd that Iran figured back then in the third inflation wave and is figuring again now.

Australia is in a relatively good position but is very vulnerable if oil supplies are threatened for a lengthy period. While Australia is a net oil importer it’s a net energy exporter and so will benefit from higher prices for gas and maybe coal as we saw in 2022. This in turn will boost national income (and may provide some small boost to the Federal Government’s budget. By contrast most countries in Asia and Europe and net energy importers.

But Australia will be really vulnerable if the hit to oil supply continues beyond a month or two. In the 1980s, 90 to 100% of our oil consumption was sourced in Australia and it was mostly refined here. However, that has now fallen to around 20% for crude oil (as the Bass Strait field matured) and to 10 to 20% for refined products (as refineries closed). Of the 80-90% of refined product that is imported most of that comes from Asia (see the next chart) and most of the crude for that comes from the Middle East. The risk is that several of those Asian countries ban exports as their own oil supplies run down – and China has recently announced that. Then the focus will shift from the War being an inflation shock to an output shock for net oil importers like Australia. Of course, there is a way to go before we get to that and Australia does have reserves it can dip into – for about a month! (The IEA recommendation is to have 90 days of reserves, and we are way below that.) In the 1980s this would not have been an issue! So it turns out Australia didn’t have so much to worry about in the time of the original Mad Max films after all!

Given all the uncertainty we think the RBA should leave rates on hold at its meeting on Tuesday. We continue to see trimmed mean inflation falling a bit faster than the RBA is forecasting, recent data on consumer spending has been softer than expected with the CBA’s household spending indicator even falling in February, surging petrol prices will act as a dampener on consumer spending and it makes sense to wait for at least some of the dust to settle from the Iran war because it could end in a month making any boost to inflation from higher petrol prices a short term blip. So we think it makes more sense to wait till May before deciding what to do on rates, but to continue to sound hawkish in the interim.

However, we now think the RBA will hike on Tuesday. Since the last meeting stronger than expected growth and jobs data appear to have reinforced RBA concerns about capacity constraints and the Bank appears very concerned the boost to inflation from the war’s impact on oil prices (which at current petrol prices will add 1% to inflation taking it to around 5%) will add to inflation expectations – which were already on the rise again – making it even harder to get inflation back down. This has been reinforced by hawkish comments since the war started by both the Governor and Deputy Governor suggesting that they are inclined to act quickly to be more confident of getting inflation back down. As such, and while it’s a close call, we are now expecting another 0.25% hike in the cash rate to 4.1% on Tuesday. And we expect the post meeting statement and commentary to remain hawkish.  

The money market has around a 66% chance of a rate hike priced in for Tuesday and nearly three hikes priced in by year end. This looks a bit overdone, and we reckon its closer to 52% chance of a hike on Tuesday.

A potential double whammy hit for households. For mortgage holders another 0.25% rate hike would mean roughly an extra $110 a month in mortgage interest payments. If petrol prices stay at current levels, it will cost the average household around an extra $78 a month versus their February average. So nearly a $190 a month extra impost for those with an average mortgage and a car that’s not electric, which is quite a hit!

Major global economic events and implications

US data was again pretty uneventful. Small business optimism fell slightly and remains around long term average levels. Housing starts rose strongly, but this was driven by volatile unit approvals and building permits and existing home sales fell and remain soft suggesting that the housing sector remains weak. Jobless claims remain low though suggesting that the labour market remains okay.

On the inflation front the news was benign…for now. The February CPI showed core inflation unchanged at 2.5%yoy. The only complication is that because of different weights, the components imply another solid increase in the core private final consumption deflator for February of 0.4%mom or 3.1%yoy. And of course, March headline inflation data will show a spike due to higher gasoline prices. All of which will keep the Fed on hold next week.

US tariffs are out of the headlines – but Trump’s Plan B looks to be progressing, albeit with some threats. The processing of refunds of the illegal emergency power tariffs of around $US166bn is now underway. The 10%, possibly 15%, general tariff under Section 122 is now in place – but is being challenged in court. These tariffs will expire in July though and Section 301 investigations are now underway against China, Europe, Japan and 13 other countries with the likely outcome that the end result will be similar to the tariffs that prevailed prior to the Supreme Court striking down the reciprocal tariffs. That said with no review of Australia it looks like we will avoid additional tariffs and just face the various sectoral tariffs.

Chinese export and import growth boomed in January/February but it’s hard to see it being sustained at 20%yoy. Exports to the US were down 11%yoy, but they are up to other regions.

Chinese inflation also perked up in February, but this appears to be due to the late Lunar New Year boosting prices this February versus a year ago. It does appear that deflationary pressures are starting to ease though.

Australian economic events and implications

The Iran War has hit consumer confidence. While the Westpac/Melbourne Institute’s consumer confidence index rose 1.2% in March, survey responses in the latter part of last week as the Iran war intensified showed a sharp 7% fall and the alternative ANZ/Roy Morgan index fell another 4% taking it back to around its 2023 lows. This does not augur well for growth in consumer spending.

Australian business conditions remained around okay levels in the latest NAB business survey but confidence fell and this survey was in February, before the Iran war started.

Source: NAB, AMP

The NAB survey showed mixed price pressures with labour and purchase costs up but the price of final products remaining subdued at 0.5%qoq or 2% annualised. This maintains confidence that the spike in inflation seen in the last half of last year could prove to be an aberration, but the NAB survey may be understating services inflation.

What to watch over the next week?

Apart from the War with Iran, 8 major developed country central banks will meet in the week ahead. All are expected to indicate uncertainty regarding the implications of the war with Iran and its flow on to oil prices.

In the US the Fed (Wednesday) is expected to leave rates on hold at 3.5-3.75% after cutting rates three times last year as growth remains solid and core private final consumption inflation is still around 3%yoy. It’s dot plot of Fed officials’ interest rate expectations is expected to continue to allow for one cut this year and one next year. Powell is likely to express comfort with the current level of interest rates and indicate that it can afford to wait to see what happens to inflation. On the data front expect a small rise in industrial production for February (Monday) and March regional manufacturing indexes to show reasonable conditions.

The Bank of Canada (Wednesday) is expected to leave rates on hold at 2.25% with inflation (Monday) for February expected to show core inflation around 2.4%yoy.

The European Central Bank, Bank of England and the Swiss and Swedish central banks are also expected to leave interest rates on hold at 2%, 3.75%, zero and 1.75% respectively. The BoE is likely to lean dovish, and the ECB is likely to indicate a slight bias to raising rates in response to the inflationary impact of the Iran war.

The Bank of Japan (Thursday) is also expected to leave rates on hold at 0.75% and maintain a tightening bias.

Chinese economic activity data for January and February (Monday) is expected to show continued soft growth with retail sales slowing to 2.1%yoy and industrial production slowing to 5%yoy.

In Australia, the RBA (Tuesday) is expected to raise rates by 0.25% taking the cash rate to 4.1% reflecting concerns about the impact of a boost to headline inflation and inflation expectations from higher petrol prices on the back of the War with Iran at a time when inflation is already above target. It’s also expected to remain relatively hawkish. February jobs data (Thursday) is expected to show a 25,000 rise in employment but a slight rise in unemployment to 4.2%. The RBA’s Financial Stability Review (Thursday) will be watched for any assessment the RBA provides regarding the threat posed by the Iran war oil shock and the vulnerability of the household sector to rising rates.

Outlook for investment markets

Global and Australian share markets are at high risk of further falls in the near term in response to the War with Iran against the backdrop of stretched valuations, political uncertainty associated with Trump & the midterm elections and AI bubble & tech valuation worries. We continue to see a 15% or so top to bottom fall in share markets along the way this year. However, returns should still be positive for the year as a whole thanks to Fed rate cuts, Trump’s consumer friendly pivot ahead of the midterms and solid profit growth.

Bonds are likely to provide returns around running yield.

Unlisted commercial property returns are likely to be solid helped by strong demand for industrial property associated with data centres.

Australian home price growth is likely to slow to 5% or less due to poor affordability and the RBA raising rates with talk of more to come.

Cash and bank deposits are expected to provide returns around 4%.

The $A is likely to rise as the interest rate differential in favour of Australia widens as the Fed cuts and the RBA holds or hikes. Fair value for the $A is around $US0.72.

By Shane Oliver

The post Weekly economic and market update – week ending 13 February, 2026 appeared first on AdviserVoice.

Shane Oliver

Key points

• Uncertainty around the duration of the US/Israel war with Iran has intensified with oil prices spiking to $US119/barrel only to then plunge as President Trump hinted that the war may be close to over. This is in turn driving big gyrations in investment markets.
• While a limited war remains more likely than a long war, it could still push oil prices higher & shares lower in the near term. Trump may be getting close to an off ramp though.
• For the RBA, there is a strong case to wait till May on rates as the boost to inflation could prove temporary.

Introduction

Oil and investment markets initially reacted relatively calmly to the US/Israel war with Iran, despite the Strait of Hormuz through which 20-25% of global oil and gas supplies flow through on a daily basis being closed from the get go. However, as the war has continued with the Strait remaining effectively closed uncertainty has intensified. Coming into the second week of the war oil prices surged to $US119 as the pace of Iranian drone and missile attacks on its neighbour stepped up again, Iran’s decision to replace Ayatollah Ali Khamenei with his son suggested it’s not in a rush to surrender, as various Gulf countries shut oil and gas production and Trump downplayed the surge in oil prices as “a very small price to pay.” They then plunged back to around $US83 as Trump hinted the war could be over “very soon” noting that it was “very complete, pretty much”. But uncertainty remains high as he also said he did not believe it would be over this week and that he would “not relent until the enemy is totally and decisively defeated.” So oil prices then bounced back to around $US89 at the time of writing. Gas prices in Europe are also up around 80% since the war started. Bond yields have increased on worries about a boast to inflation. And from this year’s highs to recent lows US shares have had a fall of around -2.5%, Eurozone shares -8%, Japanese shares -10% and Australian shares -6.5% on the back of worries about a hit to growth. This note provides a Q&A around the key issues.

How high will oil prices go?

With their spike yesterday oil prices roughly doubled from their lows early this year taking them back to their highs around the start of the Ukraine War. The 1973 OPEC oil embargo saw a fourfold increase in prices (albeit from a much lower base even in today’s dollars) and the second oil shock in 1979 saw a threefold increase. Both reflected supply cuts with the second shock seeing a 5% hit to supply on the back of the Iranian revolution. While Trump has made assurances about reopening the Strait of Hormuz at present its still effectively shut, meaning a 20-25% hit to global oil and gas supplies. An optimistic take is that this may be reduced to a 15-20% supply hit if various pipelines can be used. But with global oil demand being relatively inelastic in the short term such a supply setback risks pushing the oil price to say $US150-200/barrel the longer the supply disruption persists as inventories run down. Reports of a release from the G7 oil reserves if realised may provide relief but it will only be temporary if the war and oil disruption continues.

What is the flow on to petrol prices?

In Australia, each $US1 a barrel rise in oil prices roughly adds around a cent a litre to petrol prices. So, if the oil price settles around $US100 for a while  it would mean a rise of $US40-50 from January lows and roughly a 40-50 cents per litre rise in petrol prices. This would normally take 7-10 days to fully show up but petrol prices have already moved up partly due to the normal discounting cycle in some cities and a catch up to the rise that occurred prior to the war starting.

What is the threat to growth?

Higher oil and gas prices will depress economic activity because they act like a tax on businesses and consumers leaving less money to spend elsewhere in the economy. Past oil price surges have played a role in US & global downturns. As can be seen in the next chart, the threat becomes significant once oil prices double – which they have come close to doing since the start of the year with yesterdays spike, although not if measured from a year ago.

A 60 to 70% decline in the oil intensity of GDP since the 1970s thanks to energy efficiencies and the bigger services sector across the US, global and Australian economies mean their impact will be less than it used to be. Rough estimates by Goldman Sachs indicate that a spike in oil prices spike to around $US100/barrel will knock around 0.4% off global growth over the year ahead. With Europe and Asia (which are net energy importers) more affected than the US (as the US is a net energy exporter).

While Australia is also a net energy exporter it is likely to see a similar sized hit to growth as a result of weaker consumer and business confidence and as higher petrol prices lower household disposable income. Our rough estimate is that oil prices around $US100 and the flow on to petrol prices will cost the average Australian household an extra $14 a week or $730 a year, which will lower their ability to spend. At the same time consumer confidence readings taken late last week as the war intensified show a sharp 7% plunge which will likely depress spending.

What is the impact on inflation?

Our rough estimate is that oil around $US100/barrel will directly add around 0.8% to inflation in Australia, pushing it up to around 4.6%yoy. There may be another 0.1-0.2% added due to higher transport costs and a flow on to goods like fertiliser and plastics that use oil but this may be offset in terms of underlying inflation by the impact of weaker spending in the economy reducing underlying pricing power.

What does it mean for interest rates in Australia?

For the RBA, the implications are ambiguous but with a bias to higher rates. The case for higher rates is that inflation is already above target and a further big boost to headline inflation to above 4% will threaten higher inflation expectations making it even harder for the RBA to get inflation back down. These concerns likely explain RBA Governor Bullock’s more hawkish tone last week. The case to hold is that the boost to inflation may be brief if the War ends in the next few weeks and the negative impact on demand in the economy could lead to lower underlying inflation.

On balance we expect the RBA to wait till May before deciding what to do on rates, but to sound hawkish in the interim.

Why have share markets fallen?

Shares have fallen because the surge in oil prices is threatening a negative combination of higher inflation, bond yields and potentially central bank rate hikes on the one hand and lower economic growth and profits on the other. This has also come at a time of increased uncertainty around the disruptive impact of AI and stretched valuations. So, shares were vulnerable to a pullback, and the war may have provided the trigger. We have been of the view that while global & Australian shares will have okay returns this year they are likely to have a 15% or so correction on the way.

Why is the $US up and the $A down?

Consistent with the risk off tone the $US is up (because it’s a net oil and energy exporter) particularly against the Euro (which is a net energy importer). The $A is down because of fears about global growth but it has held above $US0.70 because while it’s a net oil importer it’s a net energy exporter and will benefit from higher gas prices and because the RBA is still expected to raise rates whereas the Fed is still expected to cut rates.

How long will the war last and oil remain disrupted?

This is the key issue. Trump is under big pressure to keep it short and avoid troops on the ground – polls show little support in the US for this War (around 27%), compared to 70% or more for Iraq I and II and Afghanistan, most of his MAGA base was motivated by a desire to stay out of wars and surging gasoline prices will go down badly into the midterm elections. And it could be argued that the US is at or close to success on several of its four stated goals which are:

• Dismantling Iran’s missile forces – close.
• Destroying its navy – done.
• Stopping its nuclear weapons development – largely done.
• Cutting of its regional terrorist groups – to be seen.

This suggests that Trump may be getting close to finding an off ramp. Hence his comments that the war may be close to over. So our probabilities on the two key scenarios remain:

Limited war (60% probability) – given these considerations our base case is that the war is limited with Trump likely finding a way to declare victory sometime in the weeks ahead. This may still take a few more weeks so oil prices could still go higher (seeing further falls in shares) before they go lower (shares higher). This would ultimately be a selling opportunity in oil and a buying opportunity in shares. Trying to time it will be hard though.

Long war (40% probability) – however, while Trump may want to declare victory soon, Iran may not play ball and has an incentive to prolong the surge in oil prices and hence the cost to Trump and US consumers. So far it’s not playing ball, with a defiant new leader. Iran could also descend into chaos with various military groups continuing to threaten ships in the Strait of Hormuz. This could necessitate a longer-term US involvement and mean a much longer disruption to oil, conceivably resulting in oil prices going to $US150 & beyond driving a sharp sustained fall in shares.

Key to watch for will be a sustained fall in missiles & drones coming from Iran, indications Iran wants to negotiate and a 10% or more top to bottom fall in US shares which may up pressure on Trump to find a way out.

What should super members do?

While no one likes to see their wealth go backwards, periodic setbacks are an inevitable aspect of investing. Given the difficulties in trying to time markets, the key for investors is to stick to an appropriate long-term investment strategy.

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

The post The impact of the US/Iran war on economies and markets – Q and A appeared first on AdviserVoice.

Shane Oliver

Key points

• The start of a war between the US and Israel and Iran poses the risk of a significant disruption to global economic growth given the likelihood of significant disruption to the supply of oil, particularly through the Strait of Hormuz.
• This in turn could contribute to a correction in share prices.
• A $US40 a barrel spike in oil prices could add 40 cents a litre to petrol prices with a threat to growth & inflation. As a “tax on spending” the RBA should look through it.
• For investors: share market falls are normal, timing markets is hard and the key is to stick to a long-term strategy.

Introduction

Geopolitical shocks have been a rising feature this year with US “interventions” in various countries – Nigeria, Venezuela, Greenland and now Iran. It now looks like Venezuela was a planned precursor to Iran with the US and Israel launching broad based attacks on Iran on the weekend following its failure to give up its nuclear program. To be sure conflict regularly flares up in the Middle East leading to concerns of a blow to the global economy via a surge in oil prices like in the 1970s and early 1980s, but most of time oil supply is not affected as key producers are not involved. The risks escalated last year with Israel and the US getting involved in conflict with Iran (which supplies around 4.5% of global oil and gas production and exports 1.5 percentage points of that). But last year’s fears settled down after US strikes in June failed to lead to an escalation and oil supplies were unaffected. This time might be different though resulting in a sharper and longer spike in oil prices. So, what are the implications for the global economy and investment markets.

Oil prices on the rise

But first some context regarding oil prices as that is likely where the main shock will come from. The next chart shows world oil prices since 1970 in nominal terms (blue line) and after adjusting for inflation (red line).

From their highs over $US120 a barrel back in 2022 on the invasion of Ukraine oil prices had fallen sharply and were around a low of $US56 in January after the US intervention in Venezuela. Up till Thursday they had risen to around $US67 as the risk of a strike on Iran increased and have spiked to $US72 today after the start of the war with Iran. This leaves them well below the Ukraine War high and in real terms they remain well below the highs seen on the back of the second oil crisis in 1979 and the commodity boom in 2008. But its early days yet.

The risks point to a further spike in oil prices

What we know so far from the conflict that started Saturday is that:

• US & Israeli targets in Iran are broad based (surgical strikes last year).
• President Trump is calling for regime change in Iran urging Iranians to “take over your government”. The shift from surgical strikes in June last year to broad based strikes and regime change implies a potential longer involvement and hence disruption to oil production.
• The Iranian government sensing a threat to its survival is retaliating with a broad range of targets in neighbouring oil producing countries and effectively shutting the Strait of Hormuz through which 20% of global oil production and 25% of LNG flows daily.
• While OPEC countries have about 3.5 million barrels per day of spare capacity able to offset a disruption to Iranian exports of 1.5 million barrels per day, this is academic if the Strait of Hormuz is blocked.
• At the same time Iranian backed Houthis are moving to disrupt shipping again through the Red Sea which will add to transport costs.

This poses the risk of a more significant spike in oil prices, possibly to above $US100/barrel, as oil supplies are severely disrupted, potentially taking them above the highs seen at the start of the Ukraine War. At this stage its not clear what the death of Iran’s Supreme leader Ayatollah Ali Khamenei means – it could accelerate the demise of the regime, or it could further motivate his followers.

Constraints on the US

However, the constraints on the US cannot be ignored. Trump is likely to want to minimise the impact on oil prices given the US midterm elections this year and his desire to retain control of Congress. And in particular, most of his MAGA base was motivated by a desire to avoid more “forever wars” so a lengthy entanglement would weaken support from his base.

There are essentially two scenarios

Base case – limited war (60% probability) – given these considerations our base case is that the war is limited with Trump likely finding a way to declare victory in the next week or so, presumably on the basis that he has (again) obliterated the threat from Iran and that he will leave it to the Iranian people to sort out. It may take a few days/weeks before this is clearly apparent so oil prices could still go higher (threatening shares) before they go lower (shares higher) but this would be a selling opportunity in oil and a buying opportunity in shares.

High risk case – oil supplies significantly disrupted (40% probability) – however, Trump may lose the gamble with Iran fighting on for longer forcing the US to say involved longer. Iran could descend into chaos as occurred in Iraq and Afghanistan necessitating US troops on the ground. There are few examples of successful regime change from US interventions in recent decades. This could mean a bigger and much longer disruption to oil supplies, conceivably resulting in a doubling in oil prices to around $US150/barrel, which could drive a sharp fall in shares.

Impact of higher oil prices

Higher oil prices will add to inflation resulting in higher than otherwise interest rates.  But it’s not that simple. Central banks will focus on underlying inflation and higher oil prices threaten economic growth. Past oil price surges have played a role in US & global downturns – in the mid-1970s, the early 1980s, the early 1990s, early 2000s and even the GFC. See the next chart. They weren’t necessarily the driver of these recessions, but a rise in energy prices is a tax on consumer spending.

Trouble often ensues if the oil price doubles over 12 months. However, while it will ultimately depend on how high oil prices go there are some positives suggesting it may not be quite as negative as feared:

• First, the oil intensity of economic activity has been falling with energy efficiencies and the growth of the services sector. So, the impact of an oil price surge today is less than it used to be.

• Secondly, we have not yet seen a doubling over 12 months in oil prices suggesting they are not yet up enough for a big hit to global growth.

Impact on Australia

The main way Australians will feel the impact of the war is via higher petrol prices. Australian petrol prices track the Asian Tapis oil price closely & Tapis tracks US oil prices. This is because our prices are set globally – to which is then added tax, transport costs & margins. Roughly speaking each $US1 a barrel rise in oil prices adds around a cent a litre to petrol prices. So, a $US40 a barrel rise in world oil prices taking them above $US100 a barrel would add around 40 cents a litre with a 7-10 day lag if sustained.

A 40 cents a litre rise in petrol prices would add about 0.8% to CPI inflation, but it would also impart a dampening impact on growth. This is because it would add around $14 a week to the household petrol bill leading to a cut back in spending elsewhere in the economy. In other words, it will act as a tax on households.

So, for the RBA the implications are ambiguous – a boost to inflation but a hit to growth. We are not changing our view which sees rates on hold with a high risk of another hike. While higher oil prices flowing from the war could drag on Australian growth via weaker global growth, Australia is relatively well placed as we are a net energy exporter & may benefit from higher prices for gas and coal. And our economy is less dependent on oil.

Implications for investment markets

Overall, we see the outbreak of war with Iran as negative for shares (with the risk to growth at a time when the key direction setting US share market was looking a bit vulnerable), but positive for oil and energy prices, gold (as a safe haven) and government bonds (as a safe haven).

Key things for investors to bear in mind

In times of uncertainty like these with a threat to share markets, it’s important to focus on basic investment principles. In particular:

1. Share market pullbacks are healthy and normal – their volatility is the price we pay for the higher returns they provide over the long term.
2. It’s very hard to time market moves so the key is to stick to an appropriate long-term investment strategy.
3. Selling shares after a fall just locks in a loss.
4. Share falls provide opportunities for investors to buy them cheaply.
5. Shares invariably bottom with maximum bearishness.
6. Australian shares offer an attractive income relative to bank deposits.
7. To avoid getting thrown off a long-term strategy – it’s best to turn down the noise around all the negative news flow.

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

The post Gulf War 3 – the threat to economies and markets from the US/Iran war appeared first on AdviserVoice.

Shane Oliver

Key points

• Over the long-term Australian shares have been a relatively strong performer, but it does go through relatively long periods of out and underperformance versus global shares.
• We see more upside in Australian shares supported by the return of profit growth. And its underperformance over the last 16 years is getting long in the tooth.
• But rich valuations, a more hawkish RBA and global risks suggest it will be a bumpy ride.

Introduction

Australian shares have had a strong start to 2026 with the ASX 200 up 3.3% and flirting with a new record high. The local market has also outperformed US shares which are down 0.1% and global shares which are up 1.6%.  However, this could just be noise and follows a significant underperformance against US and global shares since 2009.  So, can the gains continue and is the 16 year structural underperformance finally over?

Australian shares in a long-term context

To get a handle on the future, it’s first useful to understand the past and here some key points on the performance of Australian shares:

• Over the very long-term Australian shares have been a strong performer. Since 1900 Australian shares have returned 11.6% per annum once dividends are allowed for versus 10.1% pa for US shares.
• However, Australian shares go through periods of relative out & underperformance or “mean reversion”. This can be seen in the next chart. Australian shares outperformed in the 1940s (indicated by a +), unperformed in the 1950s (indicated by a –), outperformed in the 1960s resources boom years, underperformed in the high inflation 1970s and 80s, outperformed in the 1990s (although Australia underperformed in the second half of the 1990s when the tech boom raged), outperformed dramatically in the resources boom of the 2000s and underperformed in the 2010s and this decade so far.

• The more recent swings in relative performance can be seen more starkly in the next chart. It compares the relative performance of Australian to global shares since 1970 in terms of: relative share prices in local currency terms (green line); relative total returns ie with dividends added in (blue line); and relative total returns with global shares in Australian dollars (red line). A rising ratio means Australian outperformance and vice versa.

• As Australian shares pay high dividend yields (3.3% currently) versus global shares (1.5%), dividends should be included in comparisons of Australian & global share returns. So, the focus should be on the blue line (comparing total returns) or the red line which compares total returns in $As, and not the green line which only looks at share prices.

Several things stand out.

• First, as noted earlier, over long periods of time and when dividends are allowed for Australian shares have performed well versus global shares. Since 1970 Australian shares have returned (capital growth plus dividends) 10.2% per annum versus 8.9% pa for global shares in local currency terms. However, the falling $A over this period has enhanced the return from global shares to 10.4% pa but its not that different to the return from Australian shares.
• Second, the swings in the relative performance of Australian shares are apparent if dividends and currency moves are allowed for or not.
• Finally, since October 2009, Australian shares have seen a long run of underperformance. Over that period, they have returned 8.5% pa compared to 11.8% pa from global shares in local currencies or 12.9% pa from global shares in Australian dollar terms (as the $A fell).

Why has Australia underperformed since 2009?

The underperformance of Australian shares since 2009 reflects a combination of: payback for the huge mining boom related outperformance of the 2000s; the slump in commodity prices from 2011; the lagged impact of the surge in the $A above parity against the $US into 2011; relatively tighter monetary policy in Australia for much of the post GFC period; fears that higher post pandemic interest rates will hit Australia harder due to more indebted households and Australia’s expensive property market; worries about the slowing Chinese economy; and a low exposure to tech stocks – with tech stocks propelling US shares in the pandemic and more recently with AI excitement.

5 reasons Australia’s underperformance may be over

There have been several occasions over the last few years where it looked like the relative underperformance of Australian shares may be ending  – such as around 2018-19 and 2022 – only to see it resume taking the ratios in the previous chart to new lows for this cycle. But there are now several positives for the Australian share market suggesting at least more upside on a 12 month view and possibly some relative outperformance.

1. Mean reversion – the historical experience tells us that after a lengthy period of underperformance the local share market eventually bottoms and outperforms for a few years. This may now be due after more than 16 years of underperformance.
2. Rotation from tech to non-tech shares – global investors appear to be rotating away from tech shares on the back of concerns about stretched valuations, excessive capex related to AI and worries that AI will decimate software businesses (ie “tech eating itself”). This will work against the tech heavy US share market (and was evident in the global relative underperformance of US shares last year) and may benefit the Australian share market. As we saw in the tech wreck of 2000-03 Australia’s low tech exposure turned out to positive for Australian shares and helped kick of a long period of outperformance.
3. A new super cycle in commodities – the commodity price slump from their 2008-2011 highs looks to be over with commodities embarking on a new super cycle bull market driven by constrained supply after low levels of investment and electrification and rising defence spending driving increased demand for metals. This will benefit Australia’s resource stocks. Iron ore is likely to feature less this time around partly reflecting slowing urbanisation in China and its property slump. But it’s worth noting that copper is now a bigger contributor to BHP’s earnings than iron ore.
4. Artificial Intelligence could add to demand for commodities – North American research provider the Bank Credit Analyst has posited that if AI driven robotics effectively boosts the supply of labour and drives a surge in global GDP, then the value of other factors of production like land and natural resources will soar. So, Australia might turn out to be a big long-term beneficiary of the AI revolution.
5. Company profits are rising again in Australia – this is the key driver in the near term. After three years of falls listed company profits are turning up with the latest profits reporting season confirming this: upside surprises have been surpassing downside surprises by almost two to one which is the strongest since 2021 and more companies are reporting profits and dividends up on a year ago compared to what was occurring in 2023 and 2024.

Consensus earnings expectations for this year have risen to 13%.

But it’s unlikely to be smooth sailing

There are three key threats or constraints for Australian shares:

1. Valuations are rich with the forward PE of 20 times well above its norm of 15 times and the absence of a risk premium over bonds.

2. The RBA’s hawkish bias with the high risk of more rate hikes could threaten the Australian economic and profit growth outlook.
3. Global uncertainty around tech shares, US policies and geopolitics. As we have seen in the past, big ructions in US tech shares can have a flow on to Australian shares even if we have a low exposure to tech stocks. While the US Supreme Court has provided confidence that legal constraints remain on President Trump and Trump is now more politically constrained with the midterms this year, his replacement tariff strategy has ramped up the uncertainty around US trade policy. Finally, the high probability of another US strike on Iran risks a spike in oil prices should Iran decide to be uncooperative.

Concluding comment

A range of considerations suggest the outlook for Australian shares remains positive – particularly with profits on the rise. And there is a good chance its relative underperformance of the last 16 years is at or close to over. But given the various threats around valuations, the RBA and global conditions, there remains a case to be a bit cautious until confirmation is received.  And the ride is likely to be bumpy. So, stay well diversified.

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

The post The outlook for Australian shares – is the long underperformance over? appeared first on AdviserVoice.

Shane Oliver

Key points

• 2025 was another strong year for investors with shares up strongly on the back of better than feared growth and profits and global central banks cutting rates. Balanced super funds returned around 9%. Volatility rose though mainly on the back of worries about Trump’s tariffs.
• 2026 is likely to see good returns but after the strong gains of the last three years, its likely to be more constrained. And another 15% plus correction is likely along the way again.
• We expect the RBA to leave rates on hold, the ASX to return around 8% and balanced growth super funds to return around 7%. Australian home price gains are likely to slow to around 5-7%.
• The key things to watch are: interest rates; the AI boom; US midterms; China; geopolitics; and the Australian consumer.

Introduction

Despite uncertainty around US President Trump’s policies, geopolitics and interest rates, 2025 saw strong investment returns on the back of falling interest rates, solid economic and profit growth globally and expectations for stronger profit growth in Australia. AI enthusiasm boosted US shares although they were relative underperformers globally. This saw average superannuation funds return around 9%. This is the third year in a row of returns around 10% and over the last five years, they returned 7.7% pa.

Here is a simple dot point summary of key insights & views on the outlook.

Five key themes from 2025

• US tariff turmoil – Trump’s Liberation Day tariffs caused volatility, but fortunately he backed down, retaliation was limited, deals were cut, and a trade war was averted.
• AI enthusiasm – It surged along with related investment.
• Global resilience – Despite Trump’s shock and awe global growth remained just above 3% and Australian growth picked up.
• Lower interest rates – Despite sticky inflation around 3%, central banks continued to cut rates. In Australia rates were cut three times.
• Gold a “safe haven” – There was lots of geopolitical noise, but it failed to dent investment markets significantly, but it did help gold prices!

Five lessons for investors from 2025

1. Government intervention in markets is still rising. It was evident under Biden with increasing subsidies, and it’s ramped up dramatically under Trump with tariffs a key example along with the US Government buying shares in companies like Intel and charging Nvidia a fee for selling chips to China. “Socialism with American characteristics” is becoming more apt. In Australia it’s also evident in government moves to prop up failing steel works and aluminium smelters. Ultimately, it will mean a high cost to taxpayers and consumers.
2. Trump’s bite is often worse than his bark. Variations are “take Trump seriously but not literally” or “Trump always chickens out” (TACO). Trump often puts something out there (like Liberation Day tariffs around 30%) then backs down as markets rebel or deals are cut.
3. Timing markets is hard. It was tempting to switch out of shares in response to the plunge around Trump’s silly Liberation Day tariffs and on the back of concerns around stretched valuations or an AI bubble. But the trend remained up. As Keynes once said, “markets can remain irrational for longer than you can remain solvent.”
4. Geopolitical risk remains high in an age of populists and nationalism, and this can create periodic setbacks in markets.
5. By the same token, geopolitical events are hard to predict & then can be less impactful than feared. There was much fear that a US strike on Iran would lead to a flare up and surge in oil prices, but it was all a bit of a non-event from a market perspective and quickly forgotten about.

Some of these are covered in detail by my colleague Diana Mousina here.

Seven big worries for 2026

• Share valuations – these remain stretched relative to history with US shares offering little risk premium over bonds and Australian shares not much better. Fortunately, Eurozone and Asian shares are cheaper.
• The surge in AI shares shows some signs of being a bubble – including surging data centre capex increasingly being funded by debt.
• Some central banks are at or close to the bottom on rates – this includes the ECB, Bank of Canada and the RBA. In Australia, higher inflation since 2025 could see the RBA hike prematurely.
• Trump’s policies – there is much uncertainty about the impact of his policies in relation to tariffs, immigration, university research, the rule of law and his attacks on Fed independence which are hotting up ahead of Chair Powell’s term expiring in May. And now his crazy grab for Greenland to get its minerals and threat of tariffs on Europe if they don’t let him have it. All of which threaten “US exceptionalism.”
• Risks for China’s economy remain – as its property slump continues.
• High public debt in the US, France the UK and Japan is a problem – it runs the risk that governments will try and inflate their way out of it.
• Geopolitical risk remains high – the Ukraine war is yet to be resolved, problems with Iran could flare up again with a possible US military strike, US tensions with China could escalate again, political uncertainty will likely be high in Europe with the rise of the far right, the US intervention in Venezuela could turn bad for the US (and may be interpreted as a “green light” for China and Russia to act in their own spheres of influence). Trump’s grab for Greenland threatens the NATO appliance. And the midterm elections in the US are often associated with share market volatility with an average 17% drawdown in US shares in midterm election years since 1950. This is arguably evident in Trump’s increasingly erratic and populist policies.

These considerations point to another year of high volatility.

Five reasons for optimism

1. First, while AI may be in the process of becoming a bubble it could still be early days. Compared to the late 1990s tech bubble: valuations are cheaper; Nasdaq is up less; tech sector profits are very strong; bond yields are lower; and its early days in the associated capex build up around data centres.
2. Second, while central banks are likely close to the bottom on interest rates, rate hikes are likely a way off (probably a 2027 story). For the Fed, another rate cut is likely in 2026, and a Trump appointee will likely be given some leeway before Fed independence worries really kick in. In Australia we expect some fall back in underlying inflation to allow the RBA to avoid rate hikes, but it’s a close call.
3. Third, despite lots of noise Trump is pivoting to more consumer-friendly policies ahead of the midterms which will boost demand, and ultimately, he wants shares to rise ahead of the midterms and not fall. There is a chance he could now pivot further towards the populist left. But mostly his shift will likely be more market friendly and given the elections he has an interest in keeping geopolitical flareups low. Pressure to reduce the cost of living suggest the threatened tariffs on Europe over Greenland are a bluff & won’t stick.
4. Fourth, global growth is likely to stay just above 3% as the lagged impact of rate cuts feed through along with some policy stimulus in the US and China. Australian growth is likely to edge up to 2.2%.
5. Finally, okay economic growth likely means solid profit growth globally & about 10% profit growth in Australia (after 3 years of falls).

Key views on markets for 2026

• After three years of strong returns, global and Australian share returns are expected to slow in the year ahead to around 8%. Stretched valuations in the key direction setting US share market, political uncertainty associated with the midterm elections and AI bubble worries are the main drags, but returns should still be positive thanks to Fed rate cuts, Trump’s consumer friendly pivot and solid profit growth. A return to profit growth should also support gains in Australian shares. Another 15% or so correction in share markets is likely along the way though.
• Bonds are likely to provide returns around running yield.
• Unlisted commercial property returns are likely to stay solid helped by strong demand for industrial property for data centres.
• Australian home price growth is likely to slow to around 5-7% in 2026 after 8.5% in 2025 due to poor affordability, rates on hold with talk of rate hikes & APRA’s ramping up of macro prudential controls.
• Cash & bank deposits are expected to provide returns around 3.6%.
• The $A is likely to rise as the rate gap in favour of Australia widens as the Fed cuts & the RBA holds or hikes. Fair value is about $US0.73.
• Precious metals like gold are likely to remain strong as a hedge against Trump related inflation risks and geopolitics.
• Balanced super fund returns are likely to be around 7%.

Six things to watch

1. Interest rates – if underlying inflation fails to fall, central banks including the RBA could start hiking rates.
2. The US midterms – historically these drive more volatility in markets & uncertainty is high this time around given Trump’s erratic approach.
3. The AI boom – watch for signs that it may be becoming more bubble like with investor euphoria and excessive debt driven capex.
4. The Chinese economy – China’s property sector is continuing to struggle, and more measures are needed to support consumers.
5. Geopolitics – risks remain high on several fronts including the US/China détente, Iran, Ukraine and now Greenland.
6. The Australian consumer – consumer spending has seen a decent pick up but may be vulnerable if rates start to rise.

Nine things investors should always remember (yeah, I know I say this every year, but they are important!)

1. Make the most of compound interest to grow wealth. Saving in growth assets can grow wealth significantly over long periods. Using the “rule of 72”, it will take 16 years to double an asset’s value if it returns 4.5% pa (ie, 72/4.5) but only 9 yrs if the asset returns 8% pa.
2. Don’t get thrown off by the cycle. Falls in asset markets can throw investors off a well-considered strategy, destroying potential wealth.
3. Invest for the long-term. Given the difficulty in timing market moves, for most it’s best to get a long-term plan that suits your wealth, age and risk tolerance and stick to it.
4. Diversify. Don’t put all your eggs in one basket.
5. Turn down the noise. We are increasingly hit by irrelevant, low quality & conflicting information which boosts uncertainty. The key is to avoid the click bait, turn down the noise and stick to a long-term strategy.
6. Buy low, sell high. The cheaper you buy an asset, the higher its prospective return will likely be and vice versa.
7. Avoid the crowd at extremes. Don’t get sucked into euphoria or doom and gloom around an asset.
8. There is no free lunch! If an investment looks dodgy, hard to understand or has to be justified by odd valuations, then stay away.
9. Seek advice. Investing can get complicated.

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

The post The investment outlook for 2026 – expect a rough but, ultimately, ok ride appeared first on AdviserVoice.

David Hutchison

Key points

• Newly-launched biannual report by North explores why 2025 is a tipping point for managed account adoption
• 24.6% annual increase in AUM for managed accounts in Australia, rising to $256.24 billion in AUM according to the latest figures.^[1]
• Two in three advisers now use managed portfolios^[2], yet only about one-third of advised assets are in managed portfolios^[3], highlighting significant opportunity for growth

AMP’s inaugural North Managed Portfolios Insights Report finds 2025 is the tipping point: managed portfolios have moved from an efficiency play to the default operating system for advice – driven by advisers seeking stronger governance, less implementation risk and more client time.

The numbers tell a compelling story. According to the latest IMAP and Milliman Census, total Australian managed portfolio assets under management (AUM) reached $256.24 billion as of 30 June 2025 – representing close to 25% growth year-on-year.

At the same time North has just achieved its fastest half year of growth, with managed portfolio AUM surging by more than $2.7 billion during the period to reach $21.8 billion as of 30 June 2025 thanks to flows and market movement – a 37% increase over the past year.

The biannual report draws on expert insights from independent advisers, asset consultants and some of the foremost thinkers in investment management.

By examining the investment trends and themes shaping managed portfolios today, North’s Managed Portfolios Insights Report provides advice practices across Australia—and those exploring managed accounts for the first time—with a clear view of the structural transformation underway in wealth management.

Key Findings

• Record Growth: Managed portfolio assets under management in Australia reached $256.24 billion at June 2025, a 24.6% year-on-year increase.
• Boutiques break through: While the top managers still command the bulk of industry assets, the report shows rapid growth from challengers, with challenger managers fast gaining traction as advisers diversify their manager line-ups to access global capability, alternatives and ESG-focused strategies at scale.
• Adviser Adoption: Managed portfolios have shifted from niche solutions to the centre of advice delivery, offering advisers better governance, streamlined compliance, and more time for client conversations. Two thirds of advisers now use managed accounts^[2], yet only about one-third of advised assets^[3] are in managed portfolios, highlighting significant room for growth.
• Innovation and Customisation: The next wave of growth will be driven by customisation, technology integration and the inclusion of alternative assets, as well as private markets and sustainable investments.
  As an example, North’s “Blend” style solutions are gaining popularity, merging off-the-shelf efficiency with adviser control.
  Launched in June, North innovative ‘Blend’ offer enables advisers who are seeking the efficiencies of managed portfolios (but may not have the scale just yet) to partially customise according to their clients’ needs at a holistic ‘Portfolio Series’ level supports advice practices who want to tailor model portfolios realise the practice efficiency and client improvements from managing a model portfolio solution.
• Global Perspective: Australia’s transformation reflects global trends, with managed portfolios becoming the default architecture of advice in the US and UK. Regulatory changes are accelerating adoption and innovation worldwide.

Notes:
[1] Source: IMAP FUM Census report for 2025. Data as at 30 June 2025
[2] Source: 16th SPDR ETFs / Investment Trends Managed Accounts Report
[3] Source: NMG Consulting

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Shane Oliver

Key points

• Five mega trends still point to risks of a more inflation prone/lower growth environment than pre-pandemic.
• These are: a move away from economic rationalist policies; the reversal of globalisation; rising geopolitical tensions; climate change and decarbonisation; as well as slowing and aging populations. A productivity boost from artificial intelligence should provide some offset though.
• But taken together and along with rich share market valuations this will likely constrain medium term superannuation returns, potentially to around 5% pa.

Introduction

From the early 1980s investment returns were spectacularly strong. Despite some bumps, like the 1987 crash, this was reflected in Australian balanced growth superannuation funds returning an average 14.1% pa in nominal terms and 9.4% pa after inflation between 1982 and 1999. And that was after taxes and fees.

Since 2000 nominal super returns have been more constrained averaging 6.5% pa with real returns averaging 3.8% pa. This is still pretty good. Returns are likely to be similarly constrained over the next 5-10 years.

Why were returns from the early 1980s so strong?

There was an element of mean reversion (or payback) after the poor returns of the high inflation 1970s which left shares on low price to earnings ratios and bond yields very high. But fundamental drivers were:

• Supply side, economic rationalist policies – deregulation, privatisation, competition reforms, tax reform and free trade.
• Globalisation which boosted trade & competition and lowered costs.
• Easing geopolitical tensions with the ending of the Cold War in 1989.
• A corporate focus on return on capital.
• Positive demographics as baby boomers entered peak consumption and peak productivity.
• Inflation targeting by independent central banks with a focus on keeping inflation and inflation expectations at low levels.
• And, of course, the tech boom of the 1990s.

This drove strong productivity growth and low inflation which underpinned a secular bull market in shares through the 1980s and 1990s. It paused in the US in 2000-2013 but took off in Australia with the 2000s resources boom only to take off in the US again from 2013. Despite a brief inflation scare in 2022 its continued helped by AI optimism.

Since 1900 there have been four major secular bull markets in US shares: the 1920s (with electricity; chemicals & mass production); the 1950s & 60s (with petro chemicals, electronics & aviation); the 1980s and 90s (see the text); and since 2013.

Mega trends – five key constraints on returns

Unfortunately, shares are no longer cheap, now trading on high PEs in the US and Australia, and the drivers of the strong returns from the early 1980s are reversing. On this front there are five key constraints.

1. Bigger government, less economic rationalist policies

Thanks to rising inequality, stagnant real wages, aging populations, climate change, the rise of populism partly fuelled by grievance driven social media and a collective memory loss regarding the lessons of the past there is a backlash against economic rationalist policies and more support for big government. It’s evident in the US with Trump’s tariffs and intervention in companies. It’s evident in Australia, with the rising public spending, support for higher taxes and labour market reregulation.

2. The reversal of globalisation

The post-WW2 surge in global trade saw production allocated globally according to comparative advantage. This helped cut inflation. But it stalled in the 2000s and trade barriers are rising. The pandemic, rising geopolitical tensions and nationalism are adding to this. Free trade is giving way to old-fashioned protectionism. This means higher costs.

3. Rising geopolitical tensions with a multipolar world

Declining military spending into the 2000s was disinflationary. This was facilitated by the move to a “unipolar” world dominated by the US and believe in free market liberalism. This started to fracture after the GFC, and we are now in a “multipolar” less stable world with arguably a new Cold War between China and its allies and Western countries. This is also driving increased military spending. This means more demand for metals and more government spending which will add to inflationary pressure.

4. Climate change and decarbonisation

Ultimately the shift to sustainable energy could result in lower costs. But we are a long way from that and climate change and the move to net zero will add to costs and inflation via: extreme weather events; associated rebuilding and higher insurance premiums; costs of mitigation; increased metals demand as economies retool; and increased pollution regulation.

5. More consumers but less workers

Global population growth is slowing, while in advanced countries and China the working age population is declining. And populations are aging, resulting in rising ratio of retirees to workers (i.e. a rising dependency ratio). Thanks to its high immigration program Australia is in a somewhat better position. But globally, the upshot is less workers (supply) and more consumers (demand) which will add to inflationary pressures.

Implications for growth and inflation

Taken together these key mega trends risk further lowering productivity growth making economies more inflation prone. There is some offset with technological innovation – with artificial intelligence offering significant potential to boost services sector productivity, although this will take time to materialise. And the Australian Government following last month’s “Productivity summit” appears to recognise the need to reduce red tape. But the more inflation prone environment means central banks will have to work harder to keep inflation down, which will mean higher and possibly more variable interest rates than we saw pre-pandemic.

The collapse in inflation from the 1980s provided a tailwind for returns because the fall in interest rates and in related uncertainty allowed growth assets to trade on lower investment yields and higher price to earnings multiples (which boosted capital growth). A more inflation prone world will remove this tailwind with cash and fixed interest becoming relatively more attractive, price to earnings ratios on shares settling at lower levels and income yields on real assets at higher levels at some point (which will constrain capital growth). So far there is little sign of lower PEs although bond yields seem to be settling at higher levels.

What does all this mean for medium term returns?

Our approach to get a handle on medium term (i.e. 5-10 year) return potential of major asset classes is as follows:

• For cash, we use our forecast cash rate over the medium term.
• For bonds, the best predictor of future medium-term returns is current yields. The rise in yields has increased their return potential.
• For equities, the current dividend yields plus trend nominal GDP growth provides a rough guide to future medium-term returns.

• For property, we use current rental yields and likely trend inflation as a proxy for income and capital growth.

Our latest return projections are shown in the next table. The second column shows each asset’s current income yield, the third shows their 5–10-year growth potential, and the final column shows their total return potential. Note that: we assume inflation averages around 2.5% pa; and we have cautious real economic growth assumptions reflecting the five mega trends noted above.  This will likely constrain capital growth.

Key observations

• After falling for many years (see next chart), the medium-term return potential using this approach improved after the 2022 inflation scare but the share market surge of the last few years has seen it fall back to around 6% pa for a balanced growth superannuation fund.
• After allowing for taxes and fees this implies nominal medium-term returns around 4.9% pa, a bit below the average since 2000. This is still better than bank term deposit rates which average 3.6% pre-tax.

• The main medium term downside risk is that inflation rises again driving a rise in interest rates, bond yields and yields on shares, property and infrastructure resulting in a drag on capital growth.

Implications for investors

• First, have reasonable return expectations. In the past super returns were boosted by very favourable conditions which have faded.
• Second, remember there is no free lunch – investment opportunities offering higher returns likely entail much higher risk.
• Third, medium term returns from super are still likely to be well above bank term deposit rates on an after tax and fees basis.
• Finally, while bear markets when they occur are painful, they push up the medium-term return potential of shares and so can provide opportunities.

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist

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Alexis George

AMP has launched the Retirement Confidence Pulse, a new national barometer tracking how financially confident Australians feel about life after work.

The inaugural Pulse score is 50/100 – a wake-up call that too many of us still lack financial peace of mind about retirement. The full report is available here.

The rising cost of living and surging household expenses have seen the annual cost of a comfortable retirement climb by more than $13,000 in just five years, with new ASFA data showing Australian couples aged 65 and over now need more than $75,000 a year to maintain that lifestyle^[1].

Alexis George, AMP Chief Executive, said: “Australians over the age of 65 will make up nearly a quarter of our population within four decades – a demographic shift set to reshape the nation’s economic and social landscape.

“Yet, as this Pulse shows, despite growing super balances and national wealth, too many feel financially insecure about life after work – an issue that needs to be front and centre for policymakers and the superannuation industry.”

• Gender gap: Only 2 in 5 women feel confident about retirement, versus nearly 3 in 5 men.
• The “Sandwich Generation”: Australians in their 40s are among the least confident (under 2 in 5) as they juggle mortgages, kids and caring for ageing parents.
• Single mums under pressure: Single mothers recorded particularly low confidence levels with less than 1 in 5 in their 40s confident about retirement, the second lowest of all tested.
• Confidence doesn’t arrive at 65: More than 1 in 3 Australians 65+ still feel financially insecure, worried their savings won’t last.
• The “confidence dividend” of coupledom: Partnered Australians (close to 3 in 5) are more confident than singles (2 in 5).
• Divorce dents security – especially for women: Only 1 in 3 separated/divorced women feel confident, versus over half of separated/divorced men.
• Work matters: Jobseekers in their 40s show deepest concerns, with just over 1 in 10 confident.
• The income divide: Confidence rises with income – 3 in 4 on $190K–$250K feel confident, versus 2 in 5 under $45K.
• The squeezed middle: Just half of middle-income Australians ($45K–$135K) are confident.

From insights to action: The Retirement Confidence Hub

To help turn these insights into practical solutions, AMP has created the Retirement Confidence Hub.

Through its Advisory Committee, the Hub brings together some of the most respected experts in the industry – including AMP’s Chief Economist Dr Shane Oliver and AMP’s Director of Retirement Ben Hillier. Nicola Stokes, CEO of the AMP Foundation, joins the Committee, ensuring the cross section of social and community needs are also addressed.

The Retirement Confidence Hub – Mission Statement: Harness AMP’s expertise to bridge insight with practical industry applications, raise awareness of key social issues and opportunities, and inform policy reform, to help more Australians be financially confident about their retirement.

Chair of The Retirement Confidence Hub, Ben Hillier, said: “The Pulse is our scoreboard; the Retirement Confidence Hub is our game plan – a standing effort to turn evidence into action so more Australians can feel confident about their retirement, and unlock a better quality of life.
“This requires a system that is easier to understand, improved financial literacy, easier access to guidance and advice at critical life moments, and more solutions that provide lifetime income and which unlock the considerable wealth tied up in property.”

About the AMP Retirement Confidence Pulse

The Pulse is based on AMP commissioned research of 2,000 Australians by independent research company, Dynata in July 2025.

 ———–

Notes:
[1] Annual cost is $75,319 per year for a couple and $53,289 for singles, according to the latest ASFA Retirement Standard. Compared to $61,909 and $43,687 respectively for the June quarter of 2020. (Source: ASFA, 2025)

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