What’s best – property, gold or shares?

How has residential property performed over the last twenty years compared to that of other assets such as shares and gold?

There are many options available to investors these days, including crypto, savings, commodities and commercial property, but the most popular are residential property, shares and gold.

Shares require a small initial outlay and are easily traded

Shares are often chosen by first-time investors because they can be purchased for a small outlay and are easy to trade.

Share prices boom during periods of political stability and economic growth, but can fall quickly during economic slowdowns, political instability or international crises.

Gold is seen as a safe haven during uncertain times

Gold does the opposite to shares, offering a safe haven during uncertain or turbulent periods when gold prices rise quickly.

At other times, gold prices can stagnate and even fall as confidence returns and investors turn to other assets.

With over three million investor-owned dwellings, housing is the most popular

Housing easily remains the most popular choice for investors, with the total value of residential property owned by investors exceeding three trillion dollars, so how has housing performance compared to that of shares and gold over the last two decades?

This graph shows you the relative performance of residential property, gold and shares over the last twenty years.

The graph shows that share prices rose dramatically in the years leading up to the Global Financial Crisis in 2008, after which they crashed during the years of economic uncertainty that followed.

Shares have experienced several slumps and recoveries since then, including a major fall at the onset of the COVID-19 pandemic.

Gold prices rose during and after the Global Financial Crisis, but then fell during the property investment boom of 2013-14.

Gold prices quickly rose again at the onset of the COVID-19 pandemic, but its performance has been subdued since then until recent economic uncertainty and conflicts have sent gold prices soaring.

Housing is a reliable investment choice

Both gold and shares have experienced several periods of significant growth and decline since 2005, while housing has always increased in value (apart from a slight dip in 2012).

This shows you that compared to shares or gold, property is a less volatile and more reliable investment option.

Based on price growth alone, shares have been the worst performers, while gold has been the best.

Gold, however, has one significant and costly drawback - housing and shares offer dividends and rent providing returns of between 2% and 6% no matter which way prices move, but gold investors only benefit when prices rise.

About John Lindeman John Lindeman has well over a decade of experience researching the nature and dynamics of various types of assets at major data analysts and is a leading property market researcher, author and commentator. For more information visit Lindeman Reports.