Stocks vs Property: Which Builds More Wealth After Tax?
Published 5 August 2026 · 10 min read · By the BecomeHH Team
Judged purely on headline returns, this is not a close contest. Using NYU Stern's long-run dataset, $100 invested in the S&P 500 in 1928 grew to roughly $1.16 million by the end of 2025 — about 10% a year compounded. The same $100 in 10-year Treasuries reached around $7,750. US housing over comparable modern periods has returned closer to 5.5%.
Yet most household wealth worldwide sits in property, and plenty of people have grown genuinely rich through real estate who never beat the index. That is not irrationality. It is four things headline returns do not capture: leverage, rental income, tax treatment, and the fact that you can live inside one of these assets.
The headline numbers, stated fairly
| Period | S&P 500 (with dividends) | Real estate | Source basis |
|---|---|---|---|
| 1928–2025 | ~10.0%/yr | — | NYU Stern (Damodaran) |
| 1965–2024 | ~11.8%/yr | 10.6%/yr residential | Sarwa analysis |
| 1992–2024 | 10.39%/yr | 5.5%/yr US housing | Sarwa analysis |
| 1928–2025 (bonds) | 10-yr Treasuries ~4.9%/yr · T-bills ~3.3%/yr | NYU Stern | |
Note the spread between the 1965–2024 and 1992–2024 housing figures. Real-estate return series vary enormously with start date, index construction and whether rental income is included — treat any single number with suspicion, including these.
There is also a deeper point from Robert Shiller's work, which built US house-price data back to 1890: in real (inflation-adjusted) terms, US home prices historically showed a strong tendency to return toward their long-run level rather than trending steadily upward. Much of what feels like house-price growth over a lifetime is inflation wearing a convincing costume.
Why property still wins for many people
1. Leverage — the decisive factor. This is the whole game. No bank lends you €300,000 at 3.5% over 25 years to buy an index fund. They will for a house. Put 20% down and a 3% rise in the property's value is a 15% return on your cash. That asymmetry is why property builds fortunes despite lower unlevered returns — and why it destroys them in downturns, since leverage is perfectly symmetrical.
2. Rent is a second return stream. A stock index returns price growth plus roughly 1–2% dividends. A rental property returns price growth plus a gross yield that in our dataset ranges from 1.6% (China) to 7.2% (UAE). Our country comparison shows the net figure after tax and maintenance, which is the one that matters.
3. Tax treatment often favours property. Mortgage interest is deductible against rental income in most countries. Many jurisdictions exempt the primary residence from capital gains entirely — Germany exempts property gains after 10 years of ownership. Depreciation allowances can shelter rental income. Equities rarely get comparable treatment.
4. It is behaviourally sticky. Nobody panic-sells a house at 9am because of a headline. Illiquidity, usually a drawback, quietly protects investors from their own worst instincts — the very instincts that cause real-world equity investors to underperform the index they hold.
Where property loses, plainly
- Transaction costs. Round-trip costs of 6–10% of value are normal, and reach ~14% on a Spanish resale purchase before you even sell. Buying an index fund costs approximately nothing. This alone erases years of outperformance.
- Concentration. One property, one street, one city, one legal system, frequently one currency — and often several times your net worth. An index fund is thousands of companies across dozens of countries.
- Running costs. Property tax and maintenance consume roughly 0.5–1.5% of value annually. An index fund charges perhaps 0.07%. Over 30 years that difference compounds brutally — see our breakdown of the hidden annual costs.
- Liquidity. Selling takes months and cannot be done in fractions. You cannot sell one bedroom to cover an emergency.
- Work. Tenants, repairs, regulation and vacancies. Comparing an unmanaged index fund to a rental property is comparing an investment to a part-time job.
After tax, in practice
There is no universal answer, because tax is national. But the pattern across most of our 17 countries looks like this: property tends to win on income tax treatment (deductible interest, depreciation, and in several countries favourable or zero tax on primary-residence gains), while equities tend to win on simplicity and cost (no transfer tax, no annual property tax, negligible running costs). A leveraged rental in a low-transaction-cost, decent-yield market can beat an index fund after tax. The same property in a 14%-transaction-cost market with a 2% gross yield almost certainly cannot.
Put your deposit, rent and expected returns side by side and see which builds more over your actual holding period.
Open the Invest vs Rent calculatorThe honest bottom line
Stocks have compounded faster and will probably continue to, and they do it without tenants, boilers or transfer tax. Property wins when leverage is cheap, yields are decent, transaction costs are low and you hold long enough to amortise them — which is a real set of conditions, not a marketing slogan, and one you can actually check before committing.
The genuinely wrong answer is treating it as a rivalry. A paid-off home removes your largest lifetime expense; a diversified portfolio provides liquidity and growth. Most financially secure households end up with both, in that order, for reasons that have far more to do with sequencing than with which asset "wins".
Sources
Long-run asset returns: Aswath Damodaran, NYU Stern — Annual Returns on Stock, T.Bonds and T.Bills 1928–2025 (S&P 500 ~10.0%/yr compounded; 10-yr Treasuries ~4.9%; T-bills ~3.3%; $100 in 1928 → ~$1.16m). Stocks vs real-estate comparison: Sarwa, Real Estate vs Stocks: Historical Returns (S&P 10.39% vs US housing 5.5%, 1992–2024; S&P ~11.8% vs residential 10.6%, 1965–2024; property transaction costs 6–10%). Long-run real house prices: Robert Shiller / Case-Shiller inflation-adjusted index back to 1890. Gross rental yields, transaction costs and running costs by country are BecomeHH's own dataset — see the country guides. Historical returns are not a forecast; real-estate return series differ substantially by index and start date, and tax treatment is country-specific. Educational content, not investment advice — consult a licensed advisor.