Australia’s long-standing fondness for direct property investment appears to be facing a period of reassessment. Higher borrowing costs, changing tax settings and concerns around property valuations have encouraged some investors to reconsider how they allocate capital.
At the same time, exchange traded funds (ETFs) have continued to attract strong investor interest. The ASX reported that more than $50 billion flowed into ETFs during 2026 financial year, with ETF assets exceeding $350 billion across 458 products. ETF trading activity also increased by 26% over the year.
The shift in property sentiment is notable. According to ABS data, new lending to property investors fell 8.6% in the June 2026 quarter, following a 4.7% decline in the previous quarter. Recent tax changes affecting negative gearing and capital gains have added to uncertainty for investors considering established residential property.
ETFs offer a very different investment proposition. Rather than committing a large amount of capital to a single property, investors can gain exposure to hundreds or even thousands of shares, bonds or other assets through a single listed investment. They are also generally more liquid, allowing investors to buy or sell during market hours.
Importantly, the growth in ETFs does not necessarily mean investors are abandoning property altogether. Property remains an important asset class for many Australians. Rather, the recent trends highlight the value of considering a broader range of investments when constructing a diversified portfolio.
The question is not whether ETFs or property is “better”. It is how different assets can work together to provide an appropriate balance of growth, income, diversification, liquidity and risk over the investor’s timeframe.
Sources: ASX, SBS News, Australian Bureau of Statistics and Reuters, 2026
Financial Lifestyle Partners and its advisers are Authorised Representatives of Fortnum Advice Pty Ltd.
ABN 52 634 060 709, AFSL 519190. https://fortnum.com.au
Any information on this website is general advice only and does not take into account any person's objectives, financial situation or needs. Please consider your own circumstances and consider whether the advice is right for you before making a decision.
Always obtain a Product Disclosure Statement (If applicable) to understand the full implications and risks relating to the product and consider the Statement before making any decision about whether to acquire the financial product. PrivacyPolicy
