I think it is lower perceived risk and stability returns. However, your take prompted me to do some investigation of the relative performance of (median indexes of) property prices in notably expensive western cities over 10 years. And I was surprised by just how much Gold Bullion and an S&P500 index fund out performed median house prices—so, thank you, this made me change my mind. Those two are probably more volatile than housing prices, but it’s only short-term, so really that seems noise over the overall performance?
I’d need to do a more thorough investigation. I’m only looking at median prices of residential a handful of cities, and that can obscure a lot of trends localized to certain suburbs, and I’m not sure how other types of investment properties look in comparison. But the preliminary research has radically differed from my assumptions.
The only advantages I see are that there’s far more cheap leverage available to retail investors in real estate than other sectors,
In Australia this is certainly a reason, but indirectly. See the “Negative Gearing” controversy. High income individuals buy leveraged investment properties, then claim a loss which reduces their taxes.
Did you look only at changes in median prices (capital gain), or did you include a rental income stream as well? You would need to make allowance for maintenance and various fees and taxes out of that income stream, but it usually still exceeds the capital gain.
I only looked at the median prices of residential properties from 2015 to 2025. Particularly because of the whole “flipping houses” meme. It would be interesting to see how the cost/reward ratio of flipping houses compares to other asset classes, including long-term rental investment properties.
I think it is lower perceived risk and stability returns. However, your take prompted me to do some investigation of the relative performance of (median indexes of) property prices in notably expensive western cities over 10 years. And I was surprised by just how much Gold Bullion and an S&P500 index fund out performed median house prices—so, thank you, this made me change my mind. Those two are probably more volatile than housing prices, but it’s only short-term, so really that seems noise over the overall performance?
I’d need to do a more thorough investigation. I’m only looking at median prices of residential a handful of cities, and that can obscure a lot of trends localized to certain suburbs, and I’m not sure how other types of investment properties look in comparison. But the preliminary research has radically differed from my assumptions.
In Australia this is certainly a reason, but indirectly. See the “Negative Gearing” controversy. High income individuals buy leveraged investment properties, then claim a loss which reduces their taxes.
Did you look only at changes in median prices (capital gain), or did you include a rental income stream as well? You would need to make allowance for maintenance and various fees and taxes out of that income stream, but it usually still exceeds the capital gain.
I only looked at the median prices of residential properties from 2015 to 2025. Particularly because of the whole “flipping houses” meme. It would be interesting to see how the cost/reward ratio of flipping houses compares to other asset classes, including long-term rental investment properties.