Despite the recent tremors in the share market, when viewed over a five-year period, stocks have generally provided greater returns compared to property, according to Daniel Butkovich (pictured), property analyst at PropTrack.
The share market, although volatile in recent months, has shown resilience with significant long-term gains.
The Australian share market has narrowly avoided a major correction, defined as a decrease of more than 10%, amidst global economic uncertainties including US tariff impacts and recession fears.
This market instability has heightened awareness among Australians, many of whom have investments tied up in shares through their superannuation accounts. Despite these short-term setbacks, the share market has experienced substantial growth since a significant drop in March 2020.
The Australian share market in 2025 is expected to experience moderate growth, though there are a few nuances to consider based on recent analyses and forecasts. The growth in earnings per share (EPS) for the broader market is projected to be tepid, with estimates suggesting only a slight increase around 0.5% to 0.7%.
On the other hand, the property market has seen a notable increase since the pandemic began, with national prices rising by 46.7%. Adelaide leads in capital growth with an 81.7% increase, slightly outpacing Perth and Brisbane.
Factors such as interstate migration and changing lifestyle preferences have fueled these price surges, particularly in areas where affordability and supply constraints are less severe.
The demand for residential property in major cities remains robust, driven by ongoing population growth and housing shortages.
Commercial real estate is also seeing increased interest, particularly in industrial spaces and green buildings, which are benefiting from the growth of e-commerce and a shift towards sustainability.
At face value, stocks have outpaced property nationally and in major cities over the past five years. However, this comparison is nuanced.
Stocks would have required impeccable timing—buying at the market’s lowest point in 2020—to achieve a 71.4% return.
Meanwhile, property investors often use leverage, magnifying both gains and risks, unlike the less common and riskier margin lending in stocks.
Investing in stocks offers dividends, with the ASX 200 currently yielding about 3.5%, while property can generate rental income, with a national average yield of 4.4%. However, property involves higher transaction costs and is less liquid than stocks, which can be traded instantly online, Butkovich said.
Both stocks and property are subject to capital gains tax, though primary residences are exempt for homeowners. Beyond financial returns, property provides tangible utility as a place to live and can be modified to suit personal needs, offering both emotional and financial value, Butkovich said.
While stocks have shown superior financial performance over the past five years, property offers stability and utility, making it more than just an investment.
The PropTrack analysis highlights the complexity of choosing between stocks and property, suggesting that the best choice depends on individual financial situations, risk tolerance, and investment goals.
