Property vs Index Calculator
Compare investing in property against a market index over the same period, including buying and selling costs and ongoing fund charges.
💼 Are you a real estate agent or broker? Send this calculator to your buyers on your own branded listing page — every enquiry comes straight to your WhatsApp. Create free agent page →Property and market investments are usually compared on headline returns, which flatters property because its costs are large, one-off and easy to forget. Buying and selling costs of eight percent combined are a permanent drag that no annual return figure shows.
This applies those costs at both ends and an annual charge to the index side, so the comparison is like for like. It deliberately ignores leverage, which is property's real advantage and belongs in a separate calculation.
The comparison
Buying costs are deducted first, so less than your capital is actually working. The remainder compounds at net yield plus growth, then selling costs are deducted at the end. The index compounds at its return less the annual charge, with no transaction costs.
Worked example
Investing 100,000 for ten years. Property at 3% net yield plus 4% growth compounds at 7%, but 5% buying costs mean only 95,000 is invested, and 3% selling costs come off at the end — leaving about 181,273. An index returning 7% less a 0.5% charge reaches 187,714. The index is ahead by roughly 6,441, entirely because of the transaction costs.
What this deliberately leaves out
Leverage, which is the genuine structural advantage of property — you can borrow 75% against a building and almost nobody will lend that against a fund. It also ignores tax, which differs sharply between the two, and the work a property demands. Use it to size the cost drag, not to settle the decision.
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Create your free property pageFrequently asked questions
Does this mean property is a worse investment?
No. It shows that transaction costs are a real drag that headline returns hide, and that on an unleveraged basis property needs to outperform to win. Borrowing changes the picture substantially in property favour.
Why exclude leverage?
Because it would compare two different things — a borrowed position against an unborrowed one. Leverage magnifies both gains and losses, and it deserves its own calculation rather than being buried in a comparison of assets.
What return assumptions are reasonable?
Long-run figures rather than recent ones, for both sides. Using a boom decade for property or a bull market for equities produces a projection that will not repeat. Test the comparison at two or three points lower on each.