Investing in property versus investing in shares
We know properties are less volatile than shares or other investments. Which means investing in properties is safer than investing in shares. We have done some analysis to understand the risk and returns of investing in property versus investing in shares.
Below graph shows the median price of residential properties in NSW from 1991 to 2014. Second graph shows the median rental income of NSW residential properties from 1990 to 2014.
New South Wales all dwelling median sale price
(Source: Housing NSW)
New South Wales All Dwellings – All Bedroom median rent
(Source: Housing NSW)
There has been a fivefold increase in the price during the period. Price went down several times but not by more than 10%. However, we can see bit more fluctuation in price after the Global Financial Crisis in 2008. With couple of exception, any reduction in price was recovered within a period of one year.
Rental income has increased by more than 2.5 times during this period. There has been very little fluctuation in rental income.
Below ASX 200 reflects changes in share price of companies listed in Australian Stock Exchange, from 1992 to 2014.
During the same period share price has increased by three times. It reached 6000 points in 2007 but has not reached that level since then.
Above is much generalized view of property and share investing. A right kind of property in right location will provide a substantial return in a long term. There are also people who are trapped with a troublesome properties. Same applies to investing in shares. However, getting rid of property is not as easy as selling off shares. Therefore, it is very important to do a proper homework and get professional advice before you invest in property.
The information provided on this website is for use of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific professional or investment advice. The team at OzHomeFinance.com.au are not financial planners or investment advisers. So, before taking any action or risking any money, you should always check with your own qualified professional advisers.