ASX 200 shares vs. property: Which has performed better since the COVID crash?

Do you remember how the COVID-19 market crash began, with ASX 200 shares plummeting almost 700 points in just five trading days?

Oh, the shivers up my spine! And that was just the start of it, too.

ASX 200 shares vs. property during the COVID crash

The first case of COVID-19 was registered in Australia on 31 January 2020.

Just three weeks later on 21 February, there was fear in the share market.

The S&P/ASX 200 Index (ASX: XJO) closed at 7,139 points on Thursday, 20 February… and then began its month-long fall. The benchmark index hit its trough of 4,546 points on 23 March.

All up, ASX 200 shares cratered 2,593 points or 36.3% over those four-and-a-bit weeks.

That was a terrible month for investors and a scary time for all of us for many other reasons, too!

Meantime, in the property market…

Discussions among experts about potentially large price falls due to COVID-19 began in March 2020.

SQM Research director Louis Christopher said a 30% decline in Sydney and Melbourne home values was possible in his worst-case scenario.

AMP chief economist Dr Shane Oliver referred to Treasury forecasts of a potential explosion in unemployment to 10%, which he said could lead to 20% house price falls at worst (courtesy abc.net.au).

But as we now know, that didn't eventuate.

At best, property could be described as experiencing a 'blip' compared to what happened to ASX 200 shares.

The national median value fell for five consecutive months in 2020, but only in small amounts.

According to CoreLogic data, the median value declined -0.4% in May, -0.7% in June, and -0.6% in July. It then fell a further -0.4% in August and -0.1% in September.

Shares vs. property: Which has done better since COVID?

In analysing shares vs. property and their performance since COVID-19 hit us, it is clear that ASX 200 shares have come out the winner if we take an overall view.

Eleanor Creagh, a senior economist at REA Group Ltd (ASX: REA), said PropTrack data covering the four years from March 2020 to 2024 shows a 39.9% uplift in the national home price.

Meantime, the ASX 200 has risen 50.2% from 31 March 2020 to 27 March 2024.

So, ASX 200 shares win from an overall perspective.

But as you'll see below, some capital city and regional property markets did better than 50.2% growth.

So, it's fair to say that both asset classes have delivered impressive gains since COVID-19.

Pandemic property boom

Emergency low interest rates, government stimulus payments such as Jobkeeper, and the ability to work from home, thanks to technology, enabled many homeowners to continue repaying their loans.

The banks offered loan repayment holidays to those doing it tough to limit arrears. A moratorium on evictions stopped landlords from evicting tenants who couldn't pay their rent due to job losses.

Lockdowns prevented people from leaving their homes, and open homes were disallowed for periods.

These were some of the factors that kept the housing market from collapsing during the first year of the pandemic. After that, a boom ensued, and home values soared across the country.

The prolonged period of emergency low interest rates was an incredibly powerful factor in the boom.

Once-in-a-lifetime rock-bottom mortgage rates encouraged more people to upgrade their homes or buy more property investments after lockdowns were lifted.

A lack of stock for sale kept supply lower than demand, forcing prices higher across the nation.

Creagh notes several trends during the pandemic. These include regional property prices growing faster than capital city prices as thousands of people who could work from home left the major cities.

People also left expensive inner-city areas to buy larger and more affordable homes in city outskirts areas.

Creagh said:

At the very onset of the pandemic, there was a pause in the housing market as lockdown restrictions, closed borders and uncertainty weighed, with many thinking home prices would fall.

In fact, the opposite occurred. Housing demand surged, and along with record low interest rates and limited stock for sale, combined to drive a price boom that saw national prices growing at the third-fastest rate in Australia's history.

After the pandemic boom, prices began to fall shortly after the Reserve Bank began increasing interest rates in May 2022. But this price moderation did not last long.

Strong population growth after the border reopened, continuing low stock for sale, a tight rental market and continuing low unemployment led to a new property growth cycle commencing in early 2023.

Creagh commented:

Net migration has hit record levels since the international borders reopened, and insufficient housing supply coupled with strong demand has offset the higher interest rate environment and deterioration in housing affordability.

Here is how property prices moved between March 2020 and 2024, according to REA's PropTrack data.

V-shaped COVID recovery for ASX 200 shares

As stated earlier, ASX 200 shares fell 36.3% between 20 February and 23 March 2020.

Then began the recovery in a fairly pronounced V-shape, as shown in the chart below.

ASX 200 shares went from the trough of 4,546 points on 23 March to 6,198.6 points on 9 June. From there, the benchmark index moved sideways before a Santa Rally in November and December 2020.

The chart shows the journey from there through til today.

During the four-year period we are examining in this article, ASX 200 shares rose 50.2%.

Today, the ASX 200 shares index is 7,799.1 points, down 0.62%.

And a fun fact: the ASX 200 reached a new all-time high of 7,910.5 points on 1 April.

5 top rising ASX 200 shares over 4 years

Here are the ASX 200 shares that had the highest share price growth between 31 March 2020 and 31 March 2024, according to data from S&P Global Market Intelligence.

As you can see, ASX lithium shares and ASX uranium shares dominate the list.

Here are 9 other ASX 200 shares that you should have bought during the pandemic crash and held.

And here are some ASX shares that were COVID winners but crashed after life returned to normal.