Property vs Shares: What Actually Builds Wealth Over the Long Term?

It’s one of the most common questions we’re asked: should I invest in property or shares?

Australians have a natural affinity for bricks and mortar. Property feels tangible - you can see it, touch it, even live in it. For many, buying their first home or investment property remains the most significant financial decision they’ve ever made.

But when you take a step back and look at the numbers, the answer isn’t so clear-cut. That’s why we’ve stepped through the most important factors below - helping you make up your own mind on this age-old debate.

Consideration 1 - Risk, Volatility and Diversification

Shares are more visibly volatile. You can log in and watch your portfolio fluctuate daily. This can work against investors, as humans tend to feel losses more intensely than gains - often leading to poor decision-making and selling at the wrong time.

Property values move too, but more slowly. Because they aren’t marked to market every second, they allow investors to stay the course without reacting emotionally to every headline.

But volatility isn’t the same as risk.

Real risk is about permanent loss, concentration, and liquidity constraints. Owning a single property in one location is very different to holding a portfolio of companies across multiple industries and regions. Diversification and liquidity is far easier to manage in a share portfolio.

And it’s worth considering that if you already own your home, your exposure to the property market is already high. With Australia’s median residential property price now above $1 million, adding another investment property often significantly increases this concentration risk.

Source: Forbes 11/6/2025

Consideration 2 - Long-Term Returns

So, what about returns? Over the past 20 years, Australian shares have outperformed residential property when total returns are considered - that is, when dividends and reinvestment are included. But what about more recently? Property has been a dominant topic in the Australian economy since the pandemic, with prices and activity surging in many areas.

Australian Shares:

The ASX 200 has delivered strong, compounding returns over the last five years, averaging 11.68% p.a. (ChartIQ, as at 17 June 2025).

Residential Property:

According to CoreLogic (June 2025), median Australian house prices have risen 44.03% over the past five years. Coupled with average gross rental yields of 5.04% p.a. over the same period (OpenAgent 2025), this brings the total annualised return to approximately 13.6% p.a.

International Shares:

Where things really stand out is global equities. The S&P 500, home to some of the largest and most innovative companies in the world, returned 14.27% p.a. over the same five-year stretch (ChartIQ, as at 17 June 2025), outperforming both Australian shares and property.

But returns are only part of the story. What these figures don’t account for are the ongoing expenses - particularly for property investors.

Expense	Cost Estimation
Property Management Fees	9-15% of annual rental income
Repairs & Maintenance	0.5% - 1% of property value p.a.
Council & Water Rates	$2,000 to $3,000 p.a.
Insurance	$1,200 to $2,500 p.a.

The takeaway? Property has delivered strong recent returns, but once you factor in the cost of holding and managing an investment property, the net returns often fall short of their headline figures. Shares - particularly global equities - may not offer the same tangible feel, but their lower overheads and compounding power remain a compelling part of any long-term portfolio.

Consideration 3 - Income vs Growth

Property generates rental income, but the net yield - meaning what you are left with after covering maintenance, insurance, agent fees and land tax - is usually modest.

Shares, on the other hand, can provide dividends with fewer costs. You can also sell part of your share portfolio to generate income - something you can’t do with half a house. This flexibility is particularly valuable in retirement, where many clients aim to draw a steady, tax-effective income stream.

Consideration 4 - Liquidity and Access

One of the biggest differences - often underestimated - is liquidity.

Shares can be sold within a day or two, giving you access to funds quickly if your circumstances change. Whether it’s helping a family member, starting a business, or adjusting to a new phase of life - that flexibility matters.

Property is slower, more expensive to sell, and all-or-nothing. You can’t sell a bathroom to raise $50,000.

Consideration 5 - Costs and Effort

Property comes with its own set of costs: stamp duty, council rates, repairs, letting fees, agent fees, and more.

In Adelaide, property management fees alone typically range from 9% to 15% of weekly rent (WhichAgent). Add in maintenance, routine inspections, and advertising, and the net rental return often shrinks.

In contrast, shares are relatively low-cost and low-effort. Even a professionally managed portfolio will be far more cost effective over the life of your investments.

Consideration 6 - Tax Treatment

Tax can also tilt the scales.

Both property and shares benefit from the 50% Capital Gains Tax discount when assets are held for more than 12 months. However, property investors may gain an edge through negative gearing - allowing them to offset property losses against other income, potentially reducing their overall tax bill. Shareholders, on the other hand, generally have fewer tax levers available, with deductions largely limited to margin loan interest or deductible advice fees.

Consideration 7 - Debt & Leverage

Leverage amplifies outcomes - both gains and losses.

Property investors commonly use debt to fund their investments, which can significantly enhance returns in a rising market. However, this also introduces greater risk, particularly during periods of higher interest rates or prolonged rental vacancies.

In contrast, while margin lending is available for shares, it’s far less common. Both investors and lenders tend to adopt a more cautious approach to borrowing in equity markets, given the day-to-day volatility and the potential for margin calls.

Our View

It’s not about choosing one over the other.

At Bratton Wealth, we believe in building diversified, resilient portfolios that span multiple asset classes - tailored to each client’s goals, preferences, and circumstances. In many cases, the right mix includes elements of each: property for long-term stability, shares for liquidity and global growth, fixed interest for defensive positioning, and select alternatives to provide uncorrelated returns.

The key is understanding the trade-offs. It’s not about which asset class is “better” - it’s about what’s right for you.

Sources:

Adelaide Property Management Fees - Adelaide Property Management Fees [2025 Guide] + Cost Calculator

Landlord & Building Insurance Costs - Landlord Insurance Comparison Australia - Canstar

Investment Property Council Rates - Council rates | Local Councils

Investment Property Repairs & Depreciation - Tax Depreciation | BMT Tax Depreciation