In the age-old rivalry between shares vs. property, ASX shares won out in FY25.
S&P/ASX 200 Index (ASX: XJO) shares rose by 9.97% and produced total returns, including dividends, of 13.81% in FY25.
The national median home price rose by 3.4% and delivered total returns (including rental income) of 7.1%, according to Cotality.
So, what's ahead in FY26 for shareholders and property investors?
Shares vs. property in FY26
Domain researchers expect median house and apartment prices to rise everywhere as interest rates come down in FY26.
However, the team forecasts the strongest growth to be in Sydney and the weaker "relatively undervalued" Melbourne market.
Domain's chief of economics and research, Dr Nicola Powell, explains:
When you think about the level of growth that we've seen in recent years, it has been Adelaide, Brisbane and Perth really charging ahead, but we are expecting those affordable markets to rapidly slow down.
The dynamic is going to revert back to what we normally see: our big two capital cities [Sydney and Melbourne] will be leading growth.
Ray White chief economist, Nerida Conisbee, added:
Sydney is the most sensitive to interest rates of all capital cities, and primarily because it is the most expensive market.
Here are Domain's forecast percentage changes in house and apartment prices by the end of FY26.
| Houses | FY25 growth | FY26 growth | FY25 median | FY26 median |
| Sydney | 4% | 7% | $1,717,107 | $1,829,576 |
| Melbourne | 0% | 6% | $1,046,246 | $1,112,623 |
| Brisbane | 5% | 5% | $1,037,357 | $1,093,414 |
| Adelaide | 12% | 4% | $1,013,204 | $1,049,117 |
| Canberra | -2% | 4% | $1,057,460 | $1,096,043 |
| Perth | 7% | 5% | $934,225 | $981,808 |
| Combined capitals | 4% | 6% | $1,194,942 | $1,264,614 |
| Apartments | FY25 growth | FY26 growth | FY25 median | FY26 median |
| Sydney | 3% | 6% | $835,819 | $888,822 |
| Melbourne | -3% | 5% | $555,522 | $584,400 |
| Brisbane | 12% | 5% | $670,798 | $701,490 |
| Adelaide | 10% | 3% | $568,000 | $586,366 |
| Canberra | -13% | 3% | $531,784 | $546,265 |
| Perth | 12% | 6% | $519,551 | $552,487 |
| Combined capitals | 3% | 5% | $680,568 | $717,266 |
Source: Domain
What's the outlook for ASX shares in FY26?
Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Ltd (ASX: AMP), says the share market could remain volatile.
In an article, Dr Oliver said ASX shares rose 2.3% in July, which "left valuations stretched" with a lot of good news factored into prices.
He says this leaves the market "at risk of a correction" over the seasonally weaker months of August and September.
Dr Oliver said:
But with Trump pivoting towards more market friendly policies and central banks, including the Fed and RBA, likely to cut rates further, shares are likely to provide reasonable gains into year end.
Dr Oliver said balanced growth superannuation funds had delivered three consecutive years of 9% to 10% growth.
In FY26, he says, "some slowing is likely to a more sustainable pace around 6-7% particularly as share valuations are high".
You can read about FY25 superannuation returns here.
Dr Oliver said Australia's US tariff remaining at 10% is "a relief", but the greater threat of lower global trade and growth remains.
In terms of shares vs. property, Dr Oliver said:
Australian home prices have started an upswing on the back of lower interest rates.
But it's likely to be modest initially with poor affordability and only gradual rate cuts constraining buyers.
We see home prices rising around 6% this year.
