Property or Shares?

When Australians think about building wealth, the conversation almost always comes back to two things: shares and property.

In fact, the question is often "Am I better investing in Property or Shares" or "Which returns better?". Recently Betashares did a study into the returns over the last 10 years. You can read it here.

We believe that the challenge isn’t choosing one over the other in isolation - it’s understanding which approach actually fits based on factors like liquidity, leverage, costs and overall flexibility. Put simply, it's about you, the investor.

For Australians, the property market has historically been the go-to. But over the past decade, the accessibility of the share market has changed the landscape significantly. At the same time, rising property prices have pushed many investors out of the market altogether.

More recently we can add to that the discussion the potential changes to the capital gains tax discount being proposed by Treasurer Chalmers.

What the data suggests

Let's look at the numbers Betashares used to explore this.

They modelled a simple comparison over the 10 years to September 2025 - looking at what happens if an investor chooses property versus deploying the same cash flow into equities.

The Property Scenario

They assumed a “rentvesting” approach - renting where you want to live while purchasing an investment property in a more affordable area. The model used the median Sydney house price in 2015, funded with a 25% deposit and standard lending terms.

They factored in everything you’d expect: rental income, loan repayments, interest costs, ongoing expenses and tax outcomes over the full 10-year period.

The Equity Scenario

They then took the exact same cash flows - both upfront and ongoing, and redirected them into the share market. No gearing was used in share investments, distributions were reinvested, and tax was accounted for including franking credits.

They ran this with two separate share investment options:

• Using the ASX 200 (as a proxy for a low-cost Australian ETF)

• Using the MSCI World Index (as a proxy for global equities)

They also calculated final after-tax outcomes assuming everything was sold at the end of the period.

The outcome

On this basis, the Australian equity strategy finished around $74,000 ahead of the property investment - without the debt, illiquidity or concentration risk.

The global equity strategy extended that gap to approximately $310,000.

This doesn’t mean property is a poor investment. But it does challenge the assumption that it’s automatically the superior option.

The outcome over 10 years

Where property struggled

The key issue wasn’t growth, it was cost. Something we go to lengths to discuss with all clients when considering direct property investments. What Betashares didn't make clear was what the ongoing costs included, for example, does it include repairs and maintenance? Any property investor can attest these can be surprisingly high and what about strata-fees on units?

Sydney property has traditionally relied on leverage to drive returns, but the inputs have shifted materially:

• Rental yields have fallen to ~3% (down from ~5% in the early 2000s)

• Median prices have climbed to ~$1.75 million - around 13–14x household income

Over the 10-year period in our model:

• Interest costs totalled roughly $410,000

• Principal repayments were only around $104,000

• Additional property costs (management, maintenance, insurance) added another ~$125,000

Rental income (~$360,000) helped, but not enough - the property remained negatively geared throughout.

Leverage can amplify gains, but when yields are low, it also amplifies the drag from holding costs.

Why equities have structural advantages

Beyond the raw numbers, equities can offer a number of practical advantages - particularly for younger investors.

Accessibility

• You can start investing in shares and other listed assets with relatively small amounts. Compare that to needing $350,000+ just for a deposit on a median Sydney property, before costs.

Liquidity

• Shares can be sold quickly and in part or full. Property is slow, expensive to transact, and all-or-nothing. If you're looking at this asset as a security/emergency tool, property can be difficult.

Diversification

• A single property ties up capital in one asset, in one location. Shares and other listed assets can be structured to spread risk across many companies, economic sectors and even countries.

These factors don’t always get enough attention in the shares vs property debate, but they materially change the risk profile.

Final thoughts

Property still has a role and as you can see, the returns are still good. It’s a legitimate long-term asset and can be effective in the right circumstances. (disclaimer: your scribe owns investment property so we certainly aren't against it as an investment vehicle)

But the idea that it’s the default or “best” way to build wealth is not accurate.

Lower yields, higher entry costs and potential tax changes have compressed returns in a way that headline price growth doesn’t fully reflect. And lets not talk about the current interest rate environment but the 20% uplift in Brisbane unit prices over the last year would certainly make for a good return but lets be honest, that doesn't happen every year.

What the Betashares analysis showed is that consistently investing the same cash flow into a diversified equity portfolio can produce competitive, often superior outcomes, with far more flexibility along the way and this matches our own research.

What you choose to do however must suit your own investment philosophy and risk tolerance.