The PROPERTY DOCTORS, Sydney Australia Novak Properties
NOVAK PROPERTIES CREW and PROPERTY LEGENDS in the industry share their experiences and knowledge. Hacks and tips to make you a smarter property GURU :) Learn with exclusive content, advice, insider info and HOT real estate industry PRO SECRETS. For sale, for lease, residential, commercial, buying off the plan, finance, mortgages, interest rates, first home buyer, investments - all topics covered. The untold real estate info you've been waiting for.
The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1390 STOCKS VS PROPERTY: THE GREAT DEBATE
What's the smarter investment - property or shares? Beyond the raw numbers lies a complex story about leveraging, risk, and long-term wealth creation that most advisors won't fully explain.
We tackle the investment question that burns in every first-time buyer's mind when they've saved that hard-earned deposit. The ASX might show impressive 71.4% five-year returns versus property's 46.7% growth, but these figures don't tell the whole story. The game-changer? Leverage.
For every $100,000 you invest in property, banks will typically lend you another $400,000. Unlike stocks, this residential property loan won't trigger margin calls if values temporarily dip. You'll enjoy both capital growth and rental income on the full $500,000 asset while only putting down a fraction of that value. This compounding effect accelerates wealth creation in ways stock market investments simply can't match.
Property also offers something shares never will - tangible value. There's profound psychological comfort in driving past your investment, seeing it, touching it. Plus, when you eventually sell your owner-occupied property, you won't pay a cent in capital gains tax - a unique advantage the Australian tax system grants to homeowners.
Ready to make smarter investment choices? Listen now to understand how banks view these investment classes differently and why timing matters less for property than having time in the market. Whether you're starting with $10,000 or $100,000, this episode will transform how you think about building lasting financial security.
Oh, stocks versus property, the great debate. Stay tuned. Billy Drury, the old man in the young man's body, how are you this morning?
Speaker 2:Very well. Thank you, Mr Novak, the property-centric, passionate real estate agent.
Speaker 1:Yes, most biased bait you're ever going to hear in real estate and the stock market versus the stock market. We're obviously going to be very pro real estate, but we're going to give you what we know and what we hear people on the street talking about, Because a lot of people are juggling this. You know, do I do the stocks? Do I do the property? They're talking about returns on investment that they're getting in stocks versus property. They're talking about maintenance and repairs. What do you know, Bill it?
Speaker 2:is, I reckon, the biggest debate. I see it a lot with first-time buyers getting their $40,000, $50,000, $60,000 deposit together and they get like this itch a bit of a um, it's like burning a hole in their pocket. They want to spend it and they want to invest it and they feel like it's not doing anything, just sitting in the bank as cash. So they're looking at these stocks, shares and getting ideas and I see a huge amount with quite seasoned investors as well at open homes and they're sort of calculating the yields and they're calculating what they can get out of the bank, calculating what they can put into stocks and shares. And it comes a big debate like what, what the best approach is?
Speaker 1:Well, I had a family member talk to me about a 14% return they were getting annually from their accountant and I was like they're like you know, property can't do that. There's no way property can do that. And I was like, tell me more about the 14 return and um and how that's wired. Because I think the main thing that I'd like to bring up today in the stock versus property chat is the bank's attitude, opinion, lending policies. With stocks versus property, I think it, you become a bit of a um and it's called compounding. So basically, for every dollar you have um well, let me put this way for every hundred thousand dollars you have with property, the bank is going to be prepared to give you 500 000, if my maths is right. So what does that mean? Sorry, 400 000.
Speaker 1:So what does that mean? What that means is that you're going to put in, you're going to put in a portion of money. The bank's going to put in a portion of money. That's called compounding. Now, sorry, that's not called compounding, that's called um, leveraging. But the difference there is the bank doesn't want the extra rent on what they're going to lend you and the bank doesn't want the capital growth on what they're going to lend you. So what that actually means is you get to enjoy the capital growth on what they're going to lend you. So what that actually means is you get to enjoy the capital growth on the money that they're lending. So you're putting in $100,000, but you're enjoying $500,000 worth of capital growth. And you're putting in $100,000, but you're enjoying $500,000 being rented, and you get that upshot. Now, with stocks, it's different.
Speaker 2:It is. Yeah, You've got dividends as a stream of income, but it is different. I was curious to actually know what the returns have been and then work backwards from there. So a little bit of research.
Speaker 1:It's not fair to look at the returns only, billy, because when you're looking at property your actual returns you're actually putting in a fraction of the money. So for stocks to give you an example, residential properties don't get a margin call. So when you have a, if you've lent money on a stock, you can get a tap on the shoulder from the bank saying, hey, the stock level, the stock value has changed and we need you to top up. Now, if you can't top up to the level that the stock value has changed, they can call in their margin. That's called a margin call. So with property, if the value of the property which it generally doesn't but if the value of the property changes so if the property value goes from $500 to $400, you don't get a tap on the shoulder. With residential property, you don't get a tap on the shoulder. So once you've got your 25-year loan, you generally set and forget. You can get margin call with stocks if you're borrowing money on stocks.
Speaker 2:Interesting, curious to know what the five-year growth rate looks like. Here it is. It is ASX 200 performance 2020 till now. So I had a quick look. I'm no, I'm no mathematician or big follower of the ASX, but here's what the research says. The ASX 200 dropped 30% in March 2020 due to COVID-19, but rebounded 88.2% to a record high in February 2025 this year. Even after the recent market corrections, the ASX 200 is still up 71.4% over five years. However, timing matters. Buying before the crash would result in just an 8.6% returns over the same period. What I'm seeing there is maybe timing matters for the ASX more than time in the property market, as in, not timing the market, but time in time wise. That's the. That's the australian property market. Five years pretty cool numbers, um for the property market. Since march 2022, national property prices have risen 46.7 percent. Top performing cities adelaide, perth and brisbane, sydney and melbourne slightly further behind, but syd 38.6% five years. There you go.
Speaker 2:So that was a five-year graph you were showing with the stocks ASX 200 performance Five years.
Speaker 1:Yeah, it's killed it.
Speaker 2:It's killed property.
Speaker 1:It's interesting, isn't it? Property it's interesting, isn't it? It's interesting now, bear in mind it goes back to that the uh. The conversation I had with the relative about the, the 14 return on their money, um, what they were getting, I was. I just want you guys to keep in mind, leveraging your money in property is widely accepted by the banks. It's, and basically, when it comes to so, for every dollar you can borrow four or five dollars, um, you know it's a loan value ratio stocks. You're not going to get that leverage. And if you do get any leverage um say, uh, if you're at a 50 lvr or 30 lvr or something with stocks, um, they are, um you obviously there's a risk of you know margin calling on stuff like that as well. So I think you've got to be a little bit more careful. Um, why do people um traditionally like buying a property over a stock bill? In your opinion?
Speaker 2:My opinion. I'm glad you asked because I've got a great answer. In my opinion, it's tangible value. You hold it, you see it, you drive past it, you can move into it. It's tangible value. It's not numbers going up and down on a screen and I think there's an element of familiarity with that and that makes people feel good okay, look one I like there is is if it's, if you're living in there, there's no tax.
Speaker 1:So it's one of the only assets, I think the only asset asset in the country where you don't have to pay tax on, um so is the cap or so if you move into your half a million dollar apartment and that apartment turns to seven hundred thousand dollars and you sell it, you could put all of that money in your pocket, whereas with stocks you're gonna have to pay, pay the pipe up, pay the tax man. So the nice thing with australian property, if it's owner occupied stock, is no tax, no capital gains tax on the profits.
Speaker 2:Yeah, I can see the draw cards for both. I really can. I think it's great. You know that stocks maybe has an entry level price point much more achievable. I think that's why a lot of people would go down that route. Um, yeah, at the at the end of the day, from what the research says, australians are doing a bit of both.
Speaker 1:They're doing a bit of both. Yeah, I like that seed capital. You can actually get in at a much lower rate and enjoy the same amount of growth whether you're putting in $10,000 or $100,000. When it comes to stocks, that's exciting. The barrier of entry from property is much harder and probably the transactional costs, um with property are probably greater. Um, it's easy to dip in and dip out of a stock, but it's much harder to dip in and dip out of a property cost wise yeah, and, and the numbers, the numbers here today, that that's not a particular stock, that's just the market itself.
Speaker 2:So, um, there you go. Hope that helps property versus stock.
Speaker 1:There's someone's air billy. Thank you very much. Have a great day, yeah you too. All right, cheese butt. Thanks everyone. Have a great day.