In Australia, people talk about property prices as often as they talk about the weather. It slips into convos at work and around the family barbeque

Owning property feels like the most pressing concern for everyone around you as soon as you hit 30 (or even earlier)! So it’s no surprise that owning property is known as the ‘Great Australian Dream’... but should it be?

Today, we want to look at the cold hard data to see if our property obsession stacks up from a financial perspective.

How has the Australian residential property market performed over the past 20 years compared to other forms of investing like shares? And what are the important factors to consider on both sides of the equation?

A 20 year snapshot

A lot has happened in the last 20 years including a global financial crisis (2008), the rise of FAANG stocks, a global pandemic and months in social lockdown! 😱

These events have no doubt impacted the property and share markets in unique ways.

But the residential property market in Australia as stayed resilient throughout all these changes. In fact, the residential property market has delivered approximately 154% return between 2005 and 2024 - averaging out to around 7.7% of annual growth.

Meanwhile, the ASX200 returned a compound annual growth rate (CAGR) of 7.96% between 2005 and 2025 (if you reinvested all your dividends) and the S&P500 returned 10.30% over the same period.

Adjusting for inflation

Over the last 20 years, Australia has struggled with sky high inflation - cumulatively, equating to about 67% rise in prices. So when inflation is taken into account, it erodes a lot of the growth we see because our money has less purchasing power.

Below are the REAL return rates, after adjusting for inflation.

Now, you might be thinking shares are the better investment after this simple comparison, but hold your judgement until the end because there’s more to consider.

Tax treatment

Tax is where property starts to shine. When Australians sell their assets at a profit on an investment (like an investment property or investments in the share market), they need to pay ‘capital gains tax’ (CGT).

Shares sold at a profit are subject to CGT. If the shares have been held for longer than 12 months, a 50% CGT discount may apply to reduce tax payable.

On the other hand, residential property that is considered your main residence is exempt from CGT. This means any capital growth you benefit from at the time of sale won’t be taxed at all for capital gains.

Ongoing costs

High expenses are the silent killer of growth… And anyone who owns a home can tell you - maintaining property ain’t cheap!

Below are common ongoing expenses that come with owning property:

• Council and water rates: The council and water rate is set by your local council and can range anywhere between $500 to $4,000 per annum
• Body corp / strata fees: Covers the cost of shared amenities and can range between $500 to $5,000 per annum for small unit blocks, town houses and sky-rise apartments. Whereas luxury apartments can sometimes cost as high as $10,000 per annum.
• Home & contents insurance: Insurance cost varies depending on the value of your home and contents, however for a property worth $500,000 and content up to $100,000, is on average $137 per month
• Maintenance and repair costs: When you own the home, you’re also responsible for fixing it if anything goes wrong! It’s estimated that homeowners spend around 1% to 4% of the value of their home value on maintenance and repairs each year.

Although an investment portfolio usually has less ongoing costs, it's still important to be mindful of the fees that come from trading shares and maintaining the portfolio.  

• Brokerage: This is a fee that usually gets charged when you make a trade and it can be a fixed cost or percentage of your trade value depending on the broking platform you use. For a $5,000 trade, the average brokerage is $15.27 in Australia, however, some platforms waive or reduce brokerage fees to attract new investors.
• Management fees: If you trade in ETFs and managed funds, this is a fee charged for the upkeep of an investment portfolio and it can range from 0.03% to over 1%. Nowadays, there are popular ETFs that passively track indexes like the ASX200 and S&P500 for minimal fees.

Stay tuned for part 2 where we’ll look at an example scenario that incorporates all these factors … And finally figure out whether the Aussie property obsession is justified!

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