Forget the home loan! How to invest in property with ASX shares

Generations of Australians have been raised to believe that property is the key to creating wealth.

The message from our folks: Buy a home as soon as you can. Work hard to pay it off before retirement. And if you have the capacity, buy an investment property along the way, too.

There's nothing wrong with that, and it's what many Australians have done.

About 66% of Aussies own their own home, either outright or with a home loan. About 2.25 million of us also own one or more investment properties. That's not a lot within a population of about 26.5 million.

According to Australian Tax Office data, seven in 10 Australian landlords own just one investment property. Less than 10% own more than two, and just a tiny fraction — less than 1% — own six or more.

In the current rental crisis, landlords have been characterised in the media as greedy for raising rents. What most people don't realise is that the majority of landlords in Australia are negatively geared — often for the lifetime of their investment — which means rental income does not cover outgoings each year.

Fun fact: FY21 was the first year in two decades that landlords secured a net profit as a group. And that only happened because interest rates went to emergency lows during a once-in-a-century pandemic.

The trade-off for being negatively geared is, of course, very reliable capital growth over the long term.

But what if you simply can't afford real property?

Well, that's where ASX property shares can help.

Not only are they an alternative way to invest in property if you can't afford bricks and mortar, but they are also arguably a much less stressful avenue. No tenants to damage the place. No burst pipes or other emergency repairs. No council rates and insurance premiums. And no stamp duty when you buy. For less than $20 brokerage, you can buy property — with no ongoing maintenance costs — via ASX shares.

The only catch is you won't be able to get a lot of exposure to residential real estate via shares.

Let me explain.

ASX property shares come in two main forms.

The first is real estate investment trusts (REITs). These are companies or funds that own and operate property assets that typically produce an income stream. REITs are similar to mutual funds in that they raise money from many ASX investors to buy and hold property assets.

The second form is property developers and managers, such as Mirvac Group (ASX: MGR) and Lifestyle Communities Ltd (ASX: LIC), which build large developments and manage a portfolio of properties.

Property vs. shares

If you want to choose one or the other, the best option comes down to your individual goals and beliefs as an investor and the amount of money you're willing to invest.

Let's have a quick discussion about the major differences between property vs. shares.

In terms of yields, ASX property shares are known for delivering reliable and stable dividends (or 'distributions'). So, if passive income is important to you, then they could be a good option. You'll typically receive your investment income (via dividends or distributions) bi-annually or every quarter.

Direct property investment also provides reliable passive income via rental returns. You'll typically receive these payments fortnightly or monthly via your property management agency.

However, real property involves high and ongoing investment holding costs of up to $8,000 per year (tax-deductible) for a typical house or apartment. Examples of costs include council rates, insurance premiums, strata levies, repairs, and property management fees. All of this eats into the rental returns and lowers the overall yield.

Affording a home—whether it's your first or your next—often depends on how well you manage your existing assets. Many investors and homeowners find themselves holding onto a current property while considering a new purchase, only to realize that maintaining two mortgages, insurance policies, and ongoing upkeep can quickly stretch a budget. Before committing to another investment, it's wise to review whether your current property still supports your financial direction or simply adds pressure to it.

In some situations, the most practical path forward is to sell your house before moving ahead with another purchase. Doing so can free up equity, reduce financial strain, and provide the flexibility needed to secure a property that better aligns with your long-term goals. Rather than juggling holding costs and hoping for the right buyer at the right time, many homeowners now look toward faster selling options that allow them to access funds and transition smoothly into their next investment without prolonged uncertainty.

Selling a house quickly for cash can also simplify the timing between selling and buying. Without waiting months for a traditional sale to close, you can move forward with confidence and clarity about your available budget. This approach helps avoid the burden of double expenses and keeps your property decisions rooted in sound financial planning—ensuring each step you take in the real estate market remains both strategic and sustainable.

Capital growth performance of property vs. shares

In terms of capital growth, ASX property shares won't deliver the exciting skyrocketing price growth in short bursts like residential real estate can when it's booming.

Over the long term, property stocks haven't delivered as much growth as bricks and mortar, but they're less costly to hold and less hassle to manage, so it depends on what matters most to you.

For the record, the median house price across the combined capital cities has risen from a median of $520,000 at the end of FY13 to $882,006 at the end of FY23 — that's about 70% capital growth in total, according to CoreLogic data.

Over the same period, the S&P/ASX 200 A-REIT (ASX: XPJ) ascended by about 32%. That's less than half the comparable growth, but you didn't have to plough in up to $8,000 a year in holding costs, either.

Examples of ASX property shares

We mentioned two developers earlier, and here are a few more examples of ASX property shares.

Should you buy ASX property shares?

Forget the old debate over property vs. shares.

It doesn't have to be a contest. They are both great avenues for investment.

If you can afford to do both, then why not?

Your real property will give you full exposure to the powerful Australian residential market.

Your ASX property shares will give you exposure to commercial, retail, offices, hotels, and industrial property, and perhaps a bit of residential property if you own shares like Mirvac.

The key to doing well via both is researching your options and always buying quality.

To do well with investments today, it's important to leverage the right digital tools. Fintech platforms make tracking multiple portfolios, analyzing market trends, and executing trades faster and more efficiently than ever.

By using apps and software that consolidate data from various accounts, investors can make more informed decisions, spot opportunities early, and manage risk without getting overwhelmed by manual tracking.

Guidance from experienced professionals can further sharpen your approach. Eric Hannelius can help with his venture capital experience, shows how combining technology with strategic insight allows investors to move confidently, identify scalable opportunities, and optimize returns across multiple asset classes.

And pairing digital tools with sound expertise, you create a system that supports smarter, more agile investing.

To review five examples of ASX property shares just upgraded by the brokers, click here.