When it comes to property vs shares, many New Zealand investors are asking which asset class is more likely to build wealth in the years ahead. While both have historically delivered strong returns, the big question for 2026 and beyond is whether that trend continues.
In this discussion, Mike and James explore the historical performance of property and shares, what may change in the future, and how younger generations might build wealth differently.
The Historical Wealth Builder
The debate around property vs shares often starts with history. For decades, property has been New Zealand’s go-to wealth builder.
On average, house prices have historically increased by around 6-7% per year. However, recent years have been more challenging for property investors. In some cases, house prices have dropped 20–30%, and changes such as interest deductibility rules and tighter regulations for landlords have made investing in property more difficult.
Looking at shorter time frames also changes the story. Over the past ten years, Auckland house prices have grown by around 3.8% per year, partly reflecting the recent correction in the market.
Shares have delivered stronger performance over the same period. For example, the S&P 500 has averaged roughly 10% annual returns, and a $10,000 investment 20 years ago would now be worth about $82,000.
However, property has one major advantage: leverage. With a relatively small deposit, investors can control a much larger asset through a mortgage, amplifying potential returns.
Will Future Returns Look Different?
The property vs shares debate becomes more complex when looking ahead.
While property has historically delivered strong returns, several structural factors could change how the market behaves in the future. These include:
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Changes in housing supply and demand
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Potential tax changes such as capital gains taxes
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Government policies designed to level the playing field between asset classes
These factors could mean house price growth slows slightly compared with the past.
Instead of averaging 6-7% per year, future property growth may sit closer to 5-6% annually. Even a small change like this could significantly alter long-term investment outcomes.
Another factor is income growth. Median incomes have increased around 4.3% per year over the past decade, and over time housing affordability tends to move in line with income levels.
Despite these changes, the broader takeaway is that markets move in cycles. At times property outperforms shares, and at other times the share market leads.
Will Younger Generations Invest Differently?
Another major question is whether younger generations will prioritise shares over property.
Some investors argue that younger people may lean toward shares because they are easier to access. Buying shares today is simple and inexpensive, while purchasing property involves deposits, legal costs and ongoing expenses.
Shares can also be purchased gradually, allowing investors to start with smaller amounts.
However, others believe the desire to own property will remain strong. Property ownership has long been associated with financial stability and long-term security, and that cultural mindset may continue to drive demand.
There is also a broader economic discussion around wealth inequality and housing accessibility. If wealth becomes more concentrated over time, it could affect who is able to buy property and how housing markets evolve.
What Role Could KiwiSaver and Shares Play?
Over time, KiwiSaver and share market investing may become a larger part of how New Zealanders build wealth.
KiwiSaver has gradually shifted how many people think about investing. As balances grow and financial education improves, more investors may become comfortable building wealth through diversified portfolios.
At the same time, property may continue to play a role as both a home and an investment.
The outcome may not be a winner-takes-all scenario. Instead, household wealth in the future could be spread more evenly across property, KiwiSaver and other investments.
Could Lending Rules Change the Property Market?
Another factor that could influence property investing is bank lending.
Because mortgage default rates are typically much lower than business failure rates, banks tend to view housing loans as less risky. This is one reason home lending remains easier to obtain than funding for businesses.
In the future, banks may even loosen certain restrictions if housing market activity slows. For example, lending rules around investment properties or deposit requirements could change if banks want to encourage more borrowing.
Since banks ultimately make money by lending, incentives could shift if housing demand weakens.
Key Takeaways
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Property has historically delivered around 6-7% annual growth, though recent years have been more challenging.
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Over the past decade, Auckland property growth has averaged closer to 3.8% per year.
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Shares have produced strong returns, with the S&P 500 averaging roughly 10% annually over the same period.
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Property’s key advantage is leverage, allowing investors to control large assets with relatively small deposits.
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Future property returns may moderate slightly to around 5–6% per year.
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Markets move in cycles, meaning periods of property outperformance are often followed by stronger share market returns.
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Younger investors may increasingly turn to shares because they are easier and cheaper to access.
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Over time, wealth in New Zealand may be more evenly split between property, KiwiSaver and investment portfolios.
Next Steps:
If you want help deciding how property or investing in shares fits into your own financial strategy, the team at Lighthouse Financial can help you build a plan aligned with your long-term goals.
If you’d like to watch more, check out this other episode below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
