Brisbane property outperformed shares in 2015, but only just: Place Advisory

Which is the better asset class to invest: shares or property?

Off-the-plan marketer Place Advisory pit the share market against Brisbane’s property market, an annual exercise, using the benchmark All Ords Index and sales data for apartments in Inner Brisbane.

Traditionally, shares and property have been strongly correlated and several overall trends have been established: Both asset classes seem to move in cycles together with property responding slightly slower than the All Ords Index to any changes in the wider market. This is likely due to information reporting and the illiquidity of apartments in comparison to shares.

The share market is generally more volatile than the property market – experiencing higher highs and lower lows. The 30-year period has seen the property market outperform the share market – just.

Inner Brisbane apartments have recognised annual median price growth of 6.3% per annum, compared to the All Ords annual return of 5.6%.

Place Advisory used All Ords for the report as it is the best indicator of the health of the share market in the longer term. This is primarily due to the fact that it is the oldest index, and tracks the performance of the 500 largest companies by market capitalisation.

The ASX 500 registered its first annual decrease in 2015 since 2011. As of December 31, the index stood at 5,345 points – down 0.8% on the recorded value 12 months earlier.

The Brisbane property market did not fare much better in terms of price growth. The median apartment price for the six months to December 2015 was $440,000, just $1,000 higher than the corresponding period of 2014.

The share market is generally more volatile than the property market, reacting with a greater level of severity to market fluctuations. In 2008 for example, the values of both asset classes took a hit. However, Brisbane’s median apartment price contracted by 1.5% over that year, whereas the index value of the ASX 500 tumbled by 44%. The trend reversed the following year. Median apartment values in Brisbane rose by 6%, but the ASX 500 value increase by 36%.

"If you’re looking for stability and long term growth, you should consider property as an investment vehicle. There is less volatility in the property market, which means that your hard earned money will generally be more secure in property," says Lachlan Walker, director of Place Advisory and Place Projects in Brisbane. 

"As an investor seeking capital growth, timing is critical- neither shares nor property are completely fool proof."

And as for any investment, research is imperative.