Property versus Shares: which is a better investment in 2025?
With the real estate market gaining traction once again, which is your best option this year?
4 min
For those on the hunt to find the perfect investment opportunity in 2024, two of the main sources of potential investment income to consider are shares, and the property market. The latter, currently, is gaining momentum again in Australia, coupled with stabilising interest rates, and inflation on a downward trend compared to this time last year.
On the other hand, if entering the property market is out of the question right now and you’d rather start small, investing in shares is a great alternative to consider. Naturally, there are always going to be dangers and risks associated with any type of investment, be it property or shares, but with some research and guidance, you’ll be better suited to make a decision.
“One thing all investors should do in the beginning is understand the asset class they want to invest in. If your personal interest is in building a property portfolio, then researching property investing and understanding the ins and outs is key,” David Pelligra, director & mortgage broker at Wealth Point Lending, says.
“The same goes for shares. If you are someone who enjoys the nuances of the share market and the inner workings of a publicly listed company, then again, researching that particular part of the market is important. My biggest piece of advice when investing is to speak with professionals that understand the market you are wanting to invest into.”
So, in 2024, which is your best option for starting your investing journey? What are the pros and cons of each? These are the questions you must ask before investing your money in either sector.
What are the pros of investing in shares?
The idea of investing in shares as a means for potentially earning high returns has long enticed those looking to increase their capital growth over a long period of time. Shares also present the opportunity for ownership in companies with shareholders enjoying particular voting rights and dividend potential. Those who invest in shares often have a degree of flexibility and control, which is a comfort when investing large sums of money. For example, should you wish to access your funds at any point in time, often you can do so instantaneously. This cannot be done with property.
“Shares are a liquid asset, meaning you can sell parts or all of your portfolio, allowing for quick access to cash,” Pelligra says.
When investing in shares, individuals — novice or otherwise — should consider adding blue chip shares to their portfolio. These are shares issued by a large corporation, often one of notoriety, with an excellent reputation and experience in market capitalisation. Blue chip shares are often safe and risk-adverse, however any financial gain is usually in the long-term.
What are the cons of investing in shares?
As Warren Buffett once said, “the first rule of an investment is don’t lose (money). And the second rule of an investment is don’t forget the first rule. And that’s all the rules there are.”
Despite their advantages, it’s essential to remember that investing in shares also carries with it risks, including the potential for the loss of capital. Price volatility is also another important factor to consider — where shares prices rise and fall rapidly over the space of days or months. Those who invest in high risk shares — although seeking higher returns in a short amount of time — have to be prepared that they could lose a large sum of money depending on which way the market swings.
Naturally, when endeavouring to invest in shares, it’s important to conduct thorough research. This includes seeking advice from financial professionals before making large investment decisions.
What are the pros of investing in property?
Somewhat a no-brainer, investing in property offers a number of benefits, from capital growth (should the property rise in value over time), through to reduced volatility (historically, property prices only go up). If you’re planning on owning a property as an investment—and plan on leasing it—you can generate continual cash flow to cover your property expenses. Unlike shares, investing in property is a physical endeavour, in that it’s something people can see and touch, which is always favourable.
For those that are looking long-term and don’t necessarily need the instant cash flow (yield) renting a property can provide, investing in property for capital gain is also a great way to increase your finances considerably. Depending on where you buy, residential properties have the potential to rise in value in a relatively short period of time, and as a result, can offer owners a significant gain should they look to divest at the right time.
“Investing comes with an inherent risk, but the key is to look at past performance. Property, for example, has consistently performed in Australia for the last 30 years, so you could feel quite safe if you were investing,” says Pelligra.
“Property is also a physical asset that you can either live in, or earn an income from if you are to rent it out.”
What are the cons of investing in property?
There are a number of potential pitfalls that come with investing in property. No one can predict where the property market is going to go, whether interest rates will rise or fall, and if you plan on renting your property, whether your tenants do the right thing in the way of upkeep, making regular payments, and so forth. Properties can also have additional costs attached, such as maintenance, repairs and upgrades, as well as insurance. For those looking to gain capital on an investment property they don’t live in, you also need to consider the capital gains tax, which naturally reduces savings and investment incentives.
Of course, there are ways of mitigating the risks of investing in property by doing thorough research, and speaking to the professionals who can assist you on your journey.
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All commentary made is considered general advice. It is recommended to seek financial advice from a professional before making decisions associated with investing.
A record-breaking $11 million sale at The Centennial Collection has set a new benchmark for luxury apartment living in Bondi Junction.
As interest rates, inflation and market sentiment fluctuate, investors are being urged to focus on data, not panic.
Australia’s housing affordability crisis is being fuelled by chronic undersupply, planning delays and rising development costs, as politicians continue to focus on the wrong solutions.
3 min
Australia’s housing crisis will not be solved by first-home buyer incentives or tax changes alone, with leading property figures warning governments must tackle supply constraints if affordability is to improve.
Speaking at the Kanebridge Quarterly Property Leadership Summit in Sydney last week, expert project marketing specialist Sam Elbanna, property investor and fund manager Paul Miron and property consultant Karla McNeice said that a lack of housing supply remained the central issue facing the market.
Elbanna, Director of CPM Realty with more than 30 years’ experience in project sales, argued that successive governments had focused too heavily on stimulating demand rather than addressing the barriers preventing new housing from being delivered.
“The misconception is that politicians think the way to solve the housing crisis is to drive demand,” he said.
“The reality is that’s not the way. This is a supply-side problem, and it needs to be solved on the supply side.”
Drawing on his experience in project sales, Elbanna said policies designed to help first-home buyers often had unintended consequences, pointing to previous grants that ultimately flowed through to higher property prices.
Instead, he said developers were facing increasing red tape, approval delays and rising costs, which were discouraging new housing supply.
“In the absence of stock, demand exceeds supply,” he said.
Miron, a Co-Founder and Fund Manager of Msquared Capital, said the housing debate had become overly focused on tax policy while overlooking broader structural issues.
He argued that affordability challenges stemmed from a combination of factors, including planning constraints, supply shortages, migration levels and interest rates.
“No-one can be 100 per cent certain on the real reason for property prices is going up,” he said.
“The reason why property prices are higher is a combination of interest rates, lack of supply, migration, vacancy rates and maybe taxes play a role.”
Miron was critical of recent federal housing policy changes, warning they could reduce the number of new homes being built and further constrain supply that was even highlighted in the budget.
He also highlighted the importance of the property sector to the broader economy, noting that residential real estate and related industries employed more than one million Australians.
McNeice, who advises developers on sales strategy and market intelligence, said understanding buyers had become increasingly important as affordability pressures intensified.
While affordability remained a major consideration, she said today’s buyers were focused on value rather than simply price.
“People are looking for value for money,” she said.
She said buyers were increasingly evaluating factors such as transport connections, walkability, nearby amenities and flexible living spaces that could accommodate changing family needs.
“What infrastructure is going on? Can I walk to the shops? Can I meet people at the local cafe?” she said.
The panel also discussed the mounting pressures facing developers, with Elbanna arguing that many projects become financially unviable from the moment a site is purchased.
“The viability of a development happens at the moment the site is bought,” he said.
He said rising construction costs, higher interest rates and overly optimistic feasibility assumptions had left some developers exposed as market conditions changed.
While acknowledging the growing number of smaller and first-time developers entering the market, Elbanna said property development required expertise across finance, construction, marketing and legal disciplines.
“It is actually a business that requires a level of expertise,” he said.
Looking ahead, the panel agreed opportunities remained in the market despite current challenges.
Miron said property should continue to be viewed as a long-term investment and cautioned against trying to time short-term market movements.
McNeice said success would increasingly depend on identifying projects that genuinely met changing buyer expectations.
Elbanna said affordable housing remained achievable, but developers needed to deliver more than just homes.
“We can provide affordable housing in this country,” he said.
“But we’ve got to wrap that affordable housing with the things that people want.”
As Australia’s housing affordability debate intensifies, the panellists agreed on one point: without a meaningful increase in housing supply, demand-side measures alone are unlikely to solve the nation’s property challenges.
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