The Changing Landscape of Property Investing

Wealth Management Read time 5mins
20 May 2024
Now Reading: The Changing Landscape of Property Investing
Historically, real estate has been an effective investment option that has delivered stable returns and long-term price appreciation. However, like any asset, it’s important to reassess costs and benefits as circumstances change. Recent rises in interest rates, legislative changes and general increases in costs, should be viewed as an opportunity to reassess the attractiveness of property relative to other investment vehicles.

What’s changed?

  1. Interest Rates: Since May 2022, official interest rates have risen steeply from 0.10% to 4.35%. Data from the Australian Bureau of Statistics estimates that the average Australian mortgage is approximately $600,000, which means the rate rise has added as much as $25,000 in annual interest costs to a mortgage of that size. For investors, this increased interest expense directly reduces the returns generated by property investments. At the same time, returns offered by high interest savings accounts and term deposits have increased markedly which has increased their relative attractiveness (particularly given they’re government guaranteed).
  2. Legislative changes: For Victorian investors, the State Government has introduced a COVID Debt Repayment Plan which will see a new surcharge apply for individuals. This equates to $975 plus 0.1 per cent of the land value for all investment properties with a land value above $300,000. In other jurisdictions like the ACT, stamp duty is being progressively replaced with higher land taxes. It’s important to consider how your state’s local legislation applies to your circumstances.

How does property stack up?

Property has performed strongly across Australia. The latest data from the Australian Bureau of Statistics shows that in the 10 years ending December 2021, Australian property values increased at a rate of 6.35% per annum. Further, CoreLogic estimates the current yield on Australian properties in capital cities to be 3.60% per annum.

As a comparison, the Australian share market (measured by the ASX200) has provided capital growth of 4.61% per annum over the same period, plus a current yield of 3.90%. This does not include franking credits. For many investors, including retirees, franking credits can add to their return.

Looking at the numbers collectively, the gross return on property (9.95%) appears slightly ahead of Australian Shares (8.51%). However, for investors a net (after-cost) return is crucial. Property investors are often subject to costs that are unique to property and/or subject to annual increases. So, when assessing the performance of an existing property or before investing in a property, it’s important to factor in the following costs:

Upfront costs
Ongoing costs
  • Stamp duty
  • Council and water rates
  • Conveyancing fees
  • Building insurance
  • Legal costs
  • Landlord insurance
  • Body corporate fees (if applicable)
  • Land tax
  • Property management fees (if applicable)
  • Repairs and maintenance costs

How else does investing in property and shares differ?  

For investors looking to prudently grow their capital, shares and property are often considered as possible investment vehicles due to the similar return profiles offered (strong levels of capital growth complemented by income generation).

Beyond returns, the characteristics of property and shares should also be factored before investment. Some key differences include:

Tax deductions Yes Costs such as interest on loans and maintenance expenses may be offset against income. Yes Costs such as advice fees or professional subscriptions may be offset against income.
Income Yes Property can be rented but there may be periods of low or no income if the property is untenanted. Yes Although not guaranteed, companies often pay dividends and some investments promise fixed payments (e.g., bonds).
Liquidity Low Property can be difficult to liquidate at short notice as buyer/sellers need to be identified and settlement times can vary.


High Shares can often be sold, and proceeds received within two business days.
Diversification Low Property assets typically require larger deposits and represent ownership of a single asset. High Shares offer lower entry points which provides opportunities to diversify across companies, sectors and geographies.
Volatility Variable – Low Individual property prices are only reflected periodically (i.e., when a valuation is completed), and thus may be less volatile on a day-to-day basis. Variable – High Shares are priced continuously and thus may have higher levels of day-to-day volatility.
Flexibility Low Property assets typically need to be bought and sold in entirety (i.e., it’s difficult to sell a portion of a property). High Individual shares can be sold which provides a high level of flexibility.



Ultimately, the decision between property and shares depends on individual circumstances and preferences. It is also important to assess your financial situation more broadly before making a decision. For those who already own property via their homes, investing in other asset classes such as shares can help to diversify your overall wealth. For individuals who are employed within or exposed to the property industry (such as builders, suppliers, mortgage brokers, real estate agents), it may also be appropriate to diversify using other asset classes.

Whether you already own or are considering an investment property, an Evans and Partners financial adviser can help assess your financial situation and determine how best to achieve your objectives with the right investment mix.

Saurav Patel
Investment & Strategy Adviser

Important information

This document was prepared by Evans and Partners Pty Ltd (ABN 85 125 338 785, AFSL 318075) (“Evans and Partners”). Evans and Partners is a wholly owned subsidiary of E&P Financial Group Limited (ABN 54 609 913 457) (E&P Financial Group) and related bodies corporate.

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