Property vs shares: what’s the better option?
When it comes to making your money work for you, there are plenty of options. Two of the most popular, and the most talked about in the media, are property and shares.
So which is better: investing in property or in the share market? This article compares the two.
Why property has been such a popular investment
Many Kiwis have built wealth through property. When property investment took off in the 1970s, house prices were low compared with incomes. People could borrow significant amounts, rent out properties in almost any condition and sell without tax on the gain.
Property is also a tangible asset. Investors can add value through their own work on maintenance and improvements.
In recent years, property investors have faced more regulation on property standards, more compliance for landlords, tighter lending and a competitive market. That has led many people to ask whether shares are now the better option.
What the property rule changes mean
Several law changes have affected property investors, with the aim of giving tenants safer and more secure housing.
Healthy Homes standards: rental properties must meet minimum standards for heating, insulation, ventilation, moisture and draughts.
Interest deductibility: mortgage interest deductions were phased out for residential rentals, then restored in full from 1 April 2025.
Bright line test: the period was extended to ten years, then reduced to two years for sales on or after 1 July 2024.
Investors have also had to adjust their expectations. It is harder to find properties where rent covers every cost: mortgage repayments, insurance, repairs and maintenance, property management, reserves for vacancies, rates and body corporate fees.
Being a landlord takes time. It means collecting rent, inspecting the property, finding tenants, managing maintenance, lodging bonds and dealing with disputes. A property manager can do this for a fee, often up to 9% of rental income. Investors also generally need a 30% deposit under the Reserve Bank’s lending limits.
Investing in shares is growing in popularity
The way Kiwis build wealth has shifted, helped by the introduction of KiwiSaver in 2007. More than three million New Zealanders are now KiwiSaver members. Despite the ups and downs of share markets, KiwiSaver has shown its potential for long term growth.
Younger New Zealanders in particular are investing in the companies they use and like. Online platforms have made investing more accessible than ever, and more people understand how share markets work.
Shares vs property compared
The table compares the two across the factors that matter most.
| Factor | Shares | Property |
|---|---|---|
| Long term returns | The S&P 500 has averaged around 10% a year over the past 30 years | New Zealand house prices have averaged around 5.8% a year since 1990 |
| Cost of entry | Start with any amount, from $100 upwards | An entry level rental in a major city can cost $600,000 to $800,000, usually with a 30% deposit |
| Leverage | Usually paid for upfront, unless you use a margin account, which carries its own risks | A mortgage lets you buy a larger asset, and existing equity can fund further purchases |
| Convenience and liquidity | Easy to buy and sell, with no maintenance | Selling can take months, transaction costs are high and properties need ongoing maintenance |
| Volatility | Prices move daily, so short term investing is riskier | Subject to booms and corrections, but usually less volatile in the short term |
Past returns are not a guide to future returns.
Property remains popular because it is familiar and tangible, and many people have seen others make strong gains selling property. Share markets are more volatile, with periodic corrections, but over the long term they have delivered strong returns.
What this means in practice: the right answer often includes both. The mix depends on your goals, timeframe, cash flow and how hands on you want to be.
How Finsol can help
We help you build wealth through property, shares or both, and check how each fits your wider financial position.
Call us on 0800 346 765 or book a free consultation.
Finsol is a financial advisory business founded in Hawke’s Bay in 2010, looking after more than 6,000 clients across New Zealand. This article is general information only and does not take your personal circumstances into account. Rules and lending limits checked against Inland Revenue and Reserve Bank sources in October 2026.
