Brett Warren , National Director – Metropole Group
Shares versus property – it’s the age-old debate that keeps some investors awake at night and especially at the moment with US President Donald Trump’s trade tariffs causing chaos on stock markets around the globe. Time will tell what the damage will ultimately be on stock prices here and overseas.
However, some recent research from PropTrack has delved into the performance of these two different investment vehicles over the five years to March this year.
Picture this: it’s March 2020, the world is in turmoil, and both the share market and property market are feeling the heat. On 23 March 2020, the ASX 200 hit rock bottom, plunging by 30% from its previous all-time high.
According to the research, the ASX was still up 71.4% over the past five years to March this year. However, President Trump’s global tariff announcement in early April triggered a sea of red across the Asia-Pacific, with investors in Australia erasing about $31 billion from the S&P/ASX 200 by lunchtime on the same day.
On the other hand, property has taken a very different path over the five-year period. While it didn’t face the dramatic crash that shares experienced – and it never does which is why it is such a safe and reliable investment – its growth has been steady and solid. Since the pandemic began, property prices in Australia have risen 46.7% nationally, according to PropTrack.
But here’s the kicker – some cities have absolutely soared. Adelaide led the charge with an eye-popping 81.7% increase, followed closely by Perth and Brisbane, both nearing 81%. Lifestyle changes, interstate migration, and affordability played a big role in driving this boom.
For shares over the period, to enjoy that 71.4% gain, you’d need to have bought in at the very bottom of the market crash – easier said than done when fear is running high like it is doing right now again. Buy a month earlier, and your gains might only be a modest 8.6%, according to PropTrack.
Meanwhile, property has a unique trick up its sleeve – leverage. Most people borrow to buy property, which amplifies gains, especially for investors. Imagine using $100,000 in equity on a $500,000 property, then watching its value grow by 46.7% in just five years?
Leverage in the share market is riskier and far less common, which makes this an advantage for property.
Dividends and rental income add another layer to this story. Shareholders earn around 3.5% annually through dividends, according to PropTrack, while investors earn about 4.4% in gross rental yield.
At the end of the day, the real winner depends on your goals, risk tolerance, and personal situation. However, while shares might sometimes temporarily offer higher returns – but also the potential for big stock price falls literally overnight – property’s stability, long-term performance, and leverage make it the standout contender in this age-old debate and the overall winner in my books every day of the week.
