4 Key Differences Between the Property Market and the Share Market | Ep. 108

In this episode, we discuss 4 key differences between the property market and the share market. Only 24% of the property market is made up of investors, the rest is primarily made up of owner-occupiers, this has some important flow on effects in terms of how the market operates:

1. The property market has higher barriers to exit for owner-occupiers than there are in the share market. Property owners need to pay for a real estate agent to sell their house, which can be a real disincentive for property owners to get out of the market – especially as it takes a median of 33 days to sell a property, whereas shares can be traded instantaneously. This means that when the market is not doing so well relatively fewer property owners will opt to sell their properties, which creates a more stable market
2. In the property market, you have the ability to make cosmetic changes to your investment in order to increase its value. You can't do this in the share market, because you have one share. And because there is more emotion associated with property, investors have the opportunity to make quick gains because the market is based on emotion, not on the fundamental value of the asset
3. The property market is less reliant on investor sentiment, as the majority of the market is not made up of investors
4. Individual property investors have more control over what they can do with their investment. If you are an investor and want to make a change to your property, you can. If you're a Westpac shareholder, try telling Westpac what you want them to do.