20/01/2026
Using your super to buy property? Here is why it could cost you millions!
We are often asked about investing in property and Noel Whittaker wrote an article in the paper on the weekend, warning that property spruikers are targeting superannuation holders with risky investment schemes that could destroy retirement dreams.
Please take a few minutes to read his article, which I have included below and if you'd like to chat further, please reach out to us.
Every few weeks an email arrives from someone excited — or uneasy — about a pitch to build wealth through an investment property.
The salesperson talks confidently about long-term growth and passive income. With today’s prices, most people can’t imagine buying an investment property, but the spruikers have a solution: start a self-managed super fund, roll in your existing super, buy the property inside it, and suddenly the deal is “affordable”.
One recent email was typical. He was 52 with $300,000 in super; she was 45 with $400,000. They earned around $120,000 each and owned their home outright. The advice they were given was to roll their entire super into an SMSF and buy a property. I told them the two jewels in their crown were their home and their super — and neither should be put at risk.
I ran the numbers using the Super Contributions Calculator on my website. If they simply stayed the course and kept contributing, he would have about $1.2 million at 65 and she around $2.7 million. By letting super do its job instead of trying to pick winners in the property market, they could retire with close to $4 million — without the leverage, complexity and stress that come with property.
But the old question — which is better, property or shares? — always sparks debate. I’ve compared the two for decades and, while both have their place, the differences are stark.
Start with entry and exit costs. With shares, they are minimal. You can buy or sell with a click and pay modest brokerage. Property is expensive from the outset: stamp duty, legal fees, inspections and borrowing costs all add up. When you sell, agent’s commissions and advertising can run into tens of thousands of dollars.
Then there’s flexibility. Shares are liquid. If I have $1 million in shares and need $100,000, I can sell part of my portfolio and have the cash within days. Property doesn’t work that way. You can’t sell the back bedroom. To get money out, you must borrow or sell the whole asset, triggering CGT and hefty transaction costs.
Income is another major difference. Dividends from Australian shares often come with franking credits, which are tax-free for people earning less than $135,000 a year. Rent, by contrast, is taxed at your full marginal rate and, after expenses, the net yield is often underwhelming. Negative gearing helps while you’re working, but it does little once you retire.
The cost difference doesn’t stop at the purchase price. Shares can be held for decades at negligible cost. Property comes with an unavoidable stream of holding costs — interest, land tax, council rates, insurance, maintenance, repairs and vacancies — that quietly but relentlessly eat into returns.
Growth is not as straightforward as people imagine. The key to strong capital gains in property is buying well and adding value. You can’t do that with apartments — they simply age. That leaves freestanding houses, where bargains are scarce and competition fierce. Shares may be volatile in the short term, but over long periods the trend has been remarkably consistent, provided you are not forced to sell in a downturn.
The regulatory climate is also shifting against landlords. In many states, bashing landlords wins votes. We now have rent freezes, limits on increases and rules forcing owners to accept “reasonable requests”, including pets or extra occupants. Each change reduces flexibility and pushes costs higher.
Diversification highlights the contrast. With property, success depends on choosing the right location, builder and tenant — and hoping nothing goes wrong. With shares, diversification is easy. A single index fund such as ASX. STW gives exposure to the 200 largest Australian companies. History shows the share market has delivered average returns of around 9 per cent a year for more than a century.
Of course, both have their place. Property offers the comfort of something tangible, and borrowing can magnify returns — or losses. Shares offer liquidity, diversification and ease of management. The claim that property is inherently “safer” does not stand up to scrutiny.
The long-term numbers tell a clear story. Over the last 25 years, average property growth has varied by city, with Adelaide and Brisbane leading at 7.9 per cent per annum. By contrast, the All Ordinaries Accumulation Index has averaged 8.74 per cent per annum, including income and growth.
I acknowledge that the property figures ignore rental income, but they also ignore the real costs that sit on either side of ownership. When you buy, there is stamp duty, legal fees, inspections and loan costs. When you sell, there are agent’s commissions, advertising and legal fees. In between is a never-ending stream of holding costs which, over decades, can materially erode returns.
Share market figures, by contrast, already include income, yet still understate the case. They do not capture the added value of franking credits for Australian investors, nor the powerful benefit of instant liquidity — the ability to sell part or all of your investment at any time, at low cost, without disrupting the rest of your portfolio.
My formula for long-term success has not changed in 50 years: make buying a home your first goal and, once the mortgage is under control, diversify into shares. It’s simple, and it works.
- Noel Whittaker - The Australian Business Network
