The Australian share market rose (+1.4%) in December, outpacing world share market returns for the month, but finishing a long way behind most global markets for the year.
Only 8 out of the 11 market sectors delivered positive returns with Materials (+6.6%) and Financials (+3.4%) the best. The worst performers were IT (−8.7%) and Health Care which fell (−7.1%).
The world share index was up (+0.5%) on a hedged basis with the US market breaking a seven month positive streak, finishing down (-0.1%). The UK and China were both up (+2.3%), Europe (ex UK) climbed (+2.7%) and Japan (+0.3%) while the Emerging Market economies delivered (+2.6%).
House prices were up (+0.7%) in December but values in both Melbourne (-0.1%) and Sydney fell (-0.1%). Brisbane (+1.6%), Adelaide (+1.9%) and Perth (+1.9%) continue to lead the way. Rents increased (+0.3%) last month following the (+0.5%) rise in November.
The RBA held rates steady at 3.6%. The unemployment rate fell to 4.1% which has now pushed the chance of a rate hike next month to 50%. The Australian dollar jumped (+1.9%) against the US dollar closing the year at 67 US cents.
The price of Iron Ore was up (+1.6%), while Oil fell (-1.9%). Precious metals continued to boom with Gold (+2.0%) hitting a new high at the end of December and the price of Silver leaping (+23.5%). The price of Copper also jumped (+13.7%). Bitcoin ended the year with a whimper, falling (-4.9%).
2025
Much like 2023 and 2024 almost everything went up in value during 2025. The only major asset class that didn’t was Bitcoin which fell (-6.0%) for the year.
The Australian share market delivered a return of (+10.3%) for 2025, made up of a (+6.8%) capital gain and a 3.5% dividend yield. It wasn’t exactly a smooth ride as the index was down (-14%) in April, jumped up (+23%) over the next 8 months and then fell slightly at that end of the year. The 10 year return for the Australian share market is (+9.3%p.a) so the 2025 return was in line with the average.
The world share index delivered a return of (+18.6%) outperforming the US market which rose (+17.9%) in 2025. It was the third year of gains above 15% for the US market, that has only happened twice since 1928. The US share market has now delivered an average annual return of (+15.6%) over the past 17 years.
Globally the best returns were had from Emerging Markets (+33.4%), the UK (+25.8%) and Japan (+28.7%) while Spain (+49.3%) topped the charts as the place to invest in 2025.
National house prices grew by (+8.6%) for the year. Melbourne recorded the lowest figure of the capital cities at (+4.8%), while Darwin (+18.9%), Brisbane (+14.5%) and Perth (+15.9%) all experienced double-digit growth.
Gold jumped (+64.4%) and had its best year since 1979 while the price of Silver went ballistic, up a staggering (+147%). The Australian dollar appreciated (+7.8%) against the US dollar in 2025 and looks set for further gains in 2026.
Research house Chant West has released a summary showing the median Growth Super Fund returned (+9.3%) for the year, and the median Balanced Super Fund (+7.8%). Since compulsory super began the average Growth Super Fund has delivered a return of (+8.0%p.a) so last year was above average.
As for 2026, nobody knows. I note that the Australian share market has only produced 2 negative calendar year returns in the past 14 years while the US market has only had 1 negative year. That’s well outside the long-term averages, but it doesn’t necessarily mean this will be a bad year. At the start of 2021 the US market had gone 11 straight positive years in a row, if you sold out then you would have missed another positive return of (+36.6%).
