Yes Miles I am glad we didn't waste a lot of time arguing a subject without clearly defining what we were arguing about.
The thing I find (personally) with property vs shares is a matter of scale.
I can invest in shares and put about $250K in. It has worked out well and I am well up but I don't see how my bank will lend me more for shares. Maybe I am wrong maybe they will.
Anyway I have this ceiling of $250K whether it is self-imposed or not.
With property, I have way more invested and I don't wish to sound like a tosser but the figure therein is necessarily much much higher, thus is the nature of property investment.
My point is that we can look at raw percentage rises and it may be a few points either way. If you look at Melbourne/Sydney historical average rises I think you will be surprised but suffice to say it is not absurdly far from share market average rises.
But raw percentage rises is not what it is about. It's about how much money you are holding when the dust settles.
This is where the percentage rises in property create very large dollars. Even if the percentage rise is modest, the actual rise in wealth is not modest.
The reason why a property investor can have such a large loan and still be able to service it is two fold.
One is the renter. The renter goes a long way in helping the investor afford the holding costs.
Two is depreciation. The physical building value can be depreciated 2.5% pa for 40 years and the chattels can be depreciated using the diminishing value method.
Together these two allow the property investor to afford very large figures and watch his asset wealth grow even in the face of modest percentage rises in asset value.
I know you know this stuff, so please don't get agitated, I am just wanting to emphasise there is more to the comparison than simple growth figures of one sector vs another.
