Property vs Geared ETF: The Actual Numbers After the 2026 Budget
Starting from the same $100,000, how does a post-budget investment property compare to a geared ETF over 10 and 20 years? Here are the numbers — honestly modelled, with all costs included.
The argument about property versus shares has always been contested at the level of assumptions. Change the growth rate by 1% and the winner flips. Include stamp duty and the property case weakens. Leave out maintenance costs and it strengthens.
This article attempts to model the comparison honestly — using post-2026-budget rules, including the costs that are routinely left out of property comparisons, and applying realistic assumptions that are neither optimistic nor pessimistic for either asset.
The goal is not to declare a winner. It is to give you accurate numbers to make your own decision.
The starting point: what both investors have
Both investors start with $100,000 of their own capital in July 2026.
Neither has an existing investment. Both are deciding where to put their next dollar. This is the comparison that matters for new capital — not for investors reassessing existing positions.
Scenario A: Investment property (established, post-budget)
The property:
- Purchase price: $500,000
- Own funds: $100,000 (20% deposit)
- Stamp duty: ~$18,000 (Victoria — paid from own savings outside the $100k)
- Loan: $400,000 at 70% LVR (reduced from 80% — reflects reduced serviceability for established property post-budget)
- Interest rate: 6.6% p.a. interest-only (average investor rate, mid-2026)
- Annual interest: $26,400
- Gross rental yield: 3% = $15,000/year
- Gross annual cash shortfall: $11,400
- Net annual shortfall after expenses (management 8.5%, maintenance 0.75%, rates, insurance, vacancy): approximately $24,000/year
Post-budget tax treatment (properties purchased after 12 May 2026):
- Rental losses quarantined from 1 July 2027 — no annual salary deduction
- Investor must fund the ~$24,000 annual cash shortfall from personal income with no tax offset
- CGT on sale: CPI indexation replaces 50% discount for post-July 2027 gains
Growth assumption: 6% per annum (consistent with long-run Australian residential property historical averages)
Scenario B: Geared ETF (GHHF)
The investment:
- Own capital: $100,000
- Fund: GHHF (BetaShares Wealth Builder Diversified All Growth Geared ETF)
- Effective leverage: 1.55× (midpoint of 30–40% LVR range)
- Total effective exposure: ~$155,000
- Annual return on underlying (DHHF): 10% (long-run historical total return including dividends reinvested)
- Effective return after leverage (at 1.55× on 10% minus 0.39% fee): approximately 15.1% per year on invested capital at stable leverage
- Annual holding cost: 0.39% management fee
- No stamp duty. No ongoing cash shortfall. No maintenance. Full liquidity.
- Distributions reinvested (accumulation approach)
Note: The 10% underlying assumption uses the long-run average for diversified global equities (Australian and international). Past returns do not guarantee future returns. Leverage amplifies both gains and losses.
The 10-year outcomes
| Investment property | Geared ETF (GHHF) | |
|---|---|---|
| Starting own capital | $100,000 | $100,000 |
| Stamp duty (upfront, sunk) | ~$18,000 | $0 |
| Total cash shortfall funded (10 years) | ~$240,000 (cumulative) | $0 |
| Portfolio/equity value at year 10 | ~$495,000* | ~$405,000 |
| Net of sunk stamp duty | ~$477,000 | ~$405,000 |
| Net of cumulative cash shortfall | ~$237,000 | ~$405,000 |
*Property equity = $895k value (6% growth for 10 years on $500k) minus $400k loan = $495k. Does not include the cash shortfall funded from personal income.
Adjusting for total capital deployed:
The property investor spent $100,000 in deposit plus $18,000 in stamp duty plus $240,000 in cumulative cash shortfalls = $358,000 in total capital deployed over 10 years.
The ETF investor spent only $100,000 and contributed nothing additional (distributions reinvested within the fund).
Return on total capital deployed:
- Property: $495,000 equity on $358,000 deployed = 38% total return on capital deployed
- Geared ETF: $405,000 on $100,000 deployed = 305% total return on capital deployed
This is the honest comparison. Property reports equity growth without accounting for the ongoing capital injections required to hold it. When those injections are included, the ETF's return on total capital is substantially higher.
The 20-year outcomes
| Investment property | Geared ETF (GHHF) | |
|---|---|---|
| Property/portfolio value at year 20 | ~$1,604,000 | ~$1,636,000 |
| Loan outstanding | $400,000 (interest-only) | $0 |
| Net equity/portfolio | ~$1,204,000 | ~$1,636,000 |
| Total capital deployed | ~$100k + $18k + $480k shortfall = ~$598,000 | $100,000 |
| Net return on capital deployed | ~101% | ~1,536% |
Property value at 20 years: $500,000 × (1.06)²⁰ = ~$1,604,000. ETF at 15.1% effective return per annum: $100,000 × (1.151)²⁰ = ~$1,636,000.
The gap at 20 years:
- Pure equity comparison: ETF $1,636k vs property $1,204k — ETF ahead by $432,000
- Total capital deployed: ETF deployed $100k vs property deployed ~$598k — ETF dramatically more capital-efficient
What the property numbers miss
The above comparison is already more accurate than most published analyses. But there are additional property costs that further disadvantage the comparison:
Maintenance and capital works: The 0.75% of value assumption is conservative. On a 20-year hold, at least one significant capital works item is almost certain — kitchen renovation, bathroom, roof, hot water system replacement, or a structural issue. Budget an additional $50,000–$100,000 over the life of the investment above what's included above.
Vacancy and letting fees: Two weeks of vacancy per year is the conservative assumption used above. Difficult rental markets, tenant changes, and between-lease gaps can push this higher.
Land tax: Not included above. Investors with property in most states (excluding the primary residence) pay land tax on investment property. In Victoria, land tax on a $500,000 property is approximately $975–$1,500/year. Over 20 years, this adds $19,500–$30,000.
Agent commissions at sale: Selling an investment property typically costs 2–2.5% of the sale price in agent commission. On a $1.6M property, that is $32,000–$40,000 — directly reducing the net proceeds.
Including these costs, the property's net 20-year outcome on total capital deployed is materially worse than the headline equity figure suggests.
Use our Investment Property Cash Flow Calculator to model the complete annual cash flow for your specific property scenario.
The downside scenario: what if markets fall?
A fair comparison includes the downside. Here is what a 30% market decline in year 5 looks like for each investor.
Property investor (year 5, 30% price fall):
- Property value falls from ~$670,000 to ~$469,000
- Loan outstanding: $400,000
- Remaining equity: ~$69,000 (from $270,000)
- Loss of equity: ~$201,000 (-74%)
- No margin call — can hold and wait for recovery
- Cash shortfall continues: still funding ~$24,000/year from salary
Geared ETF investor (year 5, 30% underlying market fall):
- Portfolio before fall: ~$200,000 (at 15.1% p.a. growth from $100k)
- 30% market fall at 1.55× leverage = approximately 46.5% portfolio fall
- Portfolio after fall: ~$107,000
- No debt in investor's name — no margin call
- Fund de-gears partially during the fall
- Can hold and recover
Both investors are hurt by a 30% decline in year 5. The property investor loses more in absolute terms (from a larger base). The ETF investor loses more as a percentage of the current portfolio. Neither faces forced selling.
The key difference: the property investor must continue funding ~$24,000/year in cash shortfall through the downturn regardless of the portfolio value. The ETF investor has zero ongoing obligation.
The honest verdict
This model does not declare shares the winner unconditionally. These are the reasonable conclusions:
For investors deploying new capital after 12 May 2026: The post-budget rules substantially reduced the cash flow benefit of established property investment (quarantined losses, no annual tax offset) while leaving geared ETF investing untouched. On a return-on-total-capital-deployed basis, geared ETFs are clearly more capital-efficient.
For investors who can afford the ongoing cash shortfall: Property's absolute equity at 20 years is competitive with geared ETFs, but only if the investor has consistently funded the shortfall, managed the property effectively, and avoided major unexpected costs. The property's leverage (70% LVR) is higher than the geared ETF (effective ~40%), which explains why the raw equity figures are closer than the capital-efficiency numbers suggest.
For investors with existing properties (pre-12 May 2026): These investors are grandfathered. The comparison above does not apply to them — their negative gearing is intact and the cash flow calculus is different. The question for them is whether to deploy additional capital into property or into shares.
Neither asset class eliminates risk. Property can fall 30% and leave you funding a cash shortfall through the decline. A geared ETF can fall 46% in a severe drawdown and require years to recover. Both require a long-term commitment and the emotional capacity to hold through volatility.
Frequently asked questions
Does the geared ETF always beat property in this model?
On a return-on-total-capital-deployed basis, yes — the ETF requires far less ongoing capital injection. On a raw equity comparison, the gap is smaller because property uses higher leverage (70% LVR vs ETF's effective 40%). If property growth were higher (say 8–9% p.a. in a strong market), and the investor was in the pre-budget tax environment with full negative gearing, property would be more competitive on both measures. The post-budget tax changes specifically disadvantage the comparison for new established property purchases.
What growth rate assumptions were used?
Property: 6% p.a. capital growth (long-run Australian residential average). Shares: 10% total return including dividends reinvested (long-run diversified equity average). These are reasonable central case assumptions — not cherry-picked. A sensitivity analysis using 8% property growth and 8% share returns would show property performing better on raw equity but still worse on capital-deployed efficiency.
What happens to CGT when I sell each investment?
For the established property (purchased post–12 May 2026, sold post–1 July 2027): CGT is calculated using CPI indexation rather than the 50% discount. Only the real inflation-adjusted gain is taxed, but under a 30% minimum tax floor. For geared ETF units held more than 12 months: the 50% CGT discount applies (for individual investors). Use our Capital Gains Tax Calculator to estimate CGT on both scenarios.
Should I sell my existing investment property to buy geared ETFs?
This is a complex decision that depends on your CGT position, the property's equity, your cash flow needs, and your goals. Existing properties purchased before 12 May 2026 are grandfathered — their negative gearing is unaffected. Selling triggers CGT. In most cases, the better decision is to hold existing properties and direct new capital into geared ETFs rather than selling and triggering a CGT event. Consult a registered tax agent or licensed financial adviser before making this decision.
This article is for general information only and does not constitute financial, tax or legal advice. Individual circumstances vary. Consult a registered tax agent or licensed financial adviser before making decisions based on this information.
Written by
Mahi PatilSoftware engineer & personal finance enthusiast · Melbourne, Australia
Built Dolaro.com.au to create accurate, free Australian finance tools. Invests in Australian and global ETFs and writes about the topics researched firsthand. More about Mahi →