Property vs. Stocks: Which Is the Better Investment in 2024?

16 December 2023

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On average, the S&P 500 have returned a yield of 9.81% annually since its inception in 1928 through to December 2022. On the other hand, the average house price in the UK has risen by over 365% between 1952 and 2022. These fascinating statistics set the stage for an in-depth property vs. stock comparison, revealing some key differences that could impact an investor’s financial goals and risk tolerance.

In this guide, we’ll delve into the key differences between the two asset classes, why investment experts lean towards one of the two, and other insightful topics.

Property vs. Stocks in the UK: 3 Key Differences

When deciding between investing in property or stocks, there are several key differences to consider. Understanding these differences provides more insight into why most experts favour one of these asset classes over the other and informs investor decisions.

The following sections differentiate between property and stocks using these 3 criteria:

  • Nature of the assets
  • Liquidity of the assets
  • Acquiring and managing the assets

1. Nature of the Assets

Property investments are tangible assets, meaning investors can see and touch the physical property. Shares, on the other hand, represent a small part of ownership in a company and are intangible. Also, property values depend highly on location, while stock values depend on company performance and market forces. Hence, investors should do proper research on the best places to invest in property in the UK before committing to any investment. 

2. Liquidity of the Assets

Property is illiquid, meaning it can take months to sell, while stocks can be sold almost instantly. However, investors should understand that most of the benefits derived from property investment accrue over the long term.

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Likewise, transaction costs are lower for stocks compared to the legal fees and property taxes involved in buying and selling real estate assets. The most suitable way to reduce these costs to the lowest and ensure an easy exit is by seeking experts’ advice and buying properties in a location with steady demand.

3. Acquiring and Managing the Assets

Except when using a real estate management company, property requires active management—such as maintaining the property and dealing with tenants—but stocks can be managed passively with little involvement. On the flip side, borrowing money to invest, known as leverage, is more feasible with property due to the lower risk for lenders. Property provides more control and stability as the asset is less volatile.

In summary, while property and stocks are both popular investment options, they have significant differences that investors must evaluate based on their financial goals and risk tolerance. For stable, long-term income, property may be preferable; for short-term, high-growth potential, stocks could be the better choice. In the end, diversifying across both types of assets may provide the optimal strategy.

Overall, experts prefer property investments over stock or shares, and we’ll see why below.

3 Reasons Why Experts Favour Property Over Stocks for Investment

There are several reasons why experts choose real estate when selecting either investment property or shares, and they include:

  • Property provides consistent income.
  • Property has long-term gain.
  • Property is tangible.

1. Property provides consistent income.

Firstly, property investment generates an ongoing income in the form of rent. Rental yields in many areas of the UK currently outstrip stock market dividend yields. For investors seeking regular income, the stable cash flow from rent payments is appealing. Property managers can increase rents over time to match inflation, providing an income stream that keeps up with the cost of living.

2. Property has long-term gain.

Secondly, property investment offers the potential for strong capital growth. This means that apart from the consistent rental income that investors gain from buying a buy-to-let property, there is also the potential for future gain from value appreciation.

Historically, property prices have risen as a result of increased demand and lesser supply, and there are various property tax benefits to encourage investment. Therefore, investors will often sell a property above the purchase price, generating good profit. In contrast, stock market returns are often more volatile and unpredictable.

3. Property is tangible.

Finally, property investment is a tangible asset. Investors own a physical piece of real estate that will always have inherent value due to people’s need for housing. In times of economic uncertainty, property is a defensive investment that holds its worth.

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In contrast, stock values are more closely tied to company performance and can decline sharply during market downturns, leaving investors with assets worth a fraction of the purchase price.

In summary, for investors wanting strong returns and a secure way to build wealth over the long run, property investment has significant advantages over stocks. With professional guidance from wealth advisors to help find the right properties in the best locations, property investment provides an unrivalled combination of capital growth and income potential. Now, let’s examine what’s driving these property benefits in the UK.

What Is Driving Growth in the UK Buy-to-Let Industry? (+Tips for Investors)

Having understood why experts favour property when deciding between real estate vs. stocks investing, it’s essential to expound on its market potential in the UK. Investing in rental property, known as buy-to-let, has become an increasingly popular choice for investors seeking strong returns. In the UK, the buy-to-let market is thriving due to high demand for rental accommodation and rising property values.

Housing Shortage in the UK

The UK faces an ongoing housing shortage, with demand for rental property outpacing supply; there’s currently a deficit of 4.3 million homes in the country. This imbalance between supply and demand helps drive rental rates and provides a steady income stream for landlords. At the same time, house prices in the UK have risen over the long run, enabling investors to gain from capital appreciation of their rental properties.

To take advantage of this rapidly growing market, investors should look into up-and-coming areas. Also, international investors should take advantage of fluctuations in the UK currency.

Investors should exploit the potential in developing areas.

Up-and-coming areas, especially in Northern England and Scotland, offer the potential for significant capital growth. Cities like Manchester, Liverpool, and Birmingham have a large student population, as well as a growing professional demographic, fueling demand for rental housing. Investing in an emerging neighbourhood before prices rise can lead to higher returns. However, investors must consult their property investment advisers to locate areas on an upward growth trajectory.

International investors should leverage currency fluctuations.

For international investors, the British pound’s recent depreciation against other major currencies increases the affordability of UK property. Although currency values fluctuate over time, a weaker pound makes UK property investment more attractive to foreign buyers. For convenience, overseas investors can work with reputable UK-based property management companies to handle tenant placement, rent collection, maintenance, and other critical tasks.

While stocks and shares also offer the potential for strong returns, they tend to be more volatile. In contrast, physical property is a tangible asset, less prone to sharp ups and downs. For long-term, risk-averse investors seeking steady cash flow and capital gains, buy-to-let property in the UK’s high-demand rental market remains an appealing choice. Let’s explore some of these areas below.

4 Up-and-Coming UK Property Hotspots for Overseas Investors

Having understood that property is the better option when deciding between buy-to-let vs stocks, the next step is to choose a good investment location. Some of the top up-and-coming areas in the UK for overseas property investors include Manchester, Liverpool, Birmingham and Leeds. These cities are experiencing major regeneration and infrastructure projects that are transforming them into thriving metropolitan areas, as discussed in the following sections:

1. Manchester

Manchester has a fast-growing economy and population. It is a UNESCO City of Literature, recognised for contributions to science, politics, music, arts and popular culture. The city centre is undergoing widespread redevelopment, with many residential buildings under construction. With its prestigious status and ongoing infrastructure improvements, Manchester offers strong rental demand and potential for capital growth.

2. Liverpool

Liverpool is a port city in northwest England undergoing revitalisation. It has two renowned football clubs, a popular music scene, and several universities. The city’s economy is growing rapidly, especially in finance, advanced engineering, and creative and digital industries.

Residential property values in Liverpool have increased over the last decade and continue to rise steadily. All of these facts establish this maritime city as a hotspot for property investment.

3. Birmingham

Birmingham is a city in the West Midlands and is on a trajectory to becoming one of the major UK tech hubs; it’s even been referred to as the “next Silicon Valley.” Today, Birmingham has a diverse, fast-growing economy based on business, retail and tourism. The city centre is being redeveloped with new offices, homes, public spaces and infrastructure.

Due to these developments, Birmingham property prices and rents have seen steady increases over time, indicating solid potential for buy-to-let investments and capital appreciation.

4. Leeds

Leeds is a city in West Yorkshire with a strong economy centred on digital technologies, healthcare and life sciences, and advanced manufacturing. The city has several universities and was once ranked the UK’s best city for quality of life.

The city centre is undergoing major redevelopment, with new offices, apartments, leisure facilities and public transport links being constructed. Leeds residential property values have risen substantially over the past 10–15 years, suggesting opportunities for both strong rental income and capital growth going forward.

Leeds on Map

In summary, cities like Manchester, Liverpool, Birmingham and Leeds in the UK offer promising potential for both local and international property investors seeking opportunities for rental income and capital appreciation in up-and-coming areas. With solid economic and population growth, as well as extensive urban regeneration and redevelopment projects underway, these cities are poised to continue increasing in prosperity, vibrancy and attractiveness in coming years.

However, investing in either property or stocks and shares comes with both benefits and risks. So, what are these risks, and how do the risks of property investments compare to the risks of stock investments? The next section provides answers to these questions.

Managing the Risks: How Property and Stocks Compare

When comparing investment in property vs. stocks, several factors determine the risks associated with each option.

These include:

  • Diversification
  • Income generation
  • Inflation hedging
  • Leverage

Let’s examine how each of these factors influences risk for property and stocks below.

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1. Diversification

Without diversification, investors risk losing their money to market crashes and unfavourable conditions. However, property investment provides more diversification options since investors own physical assets, often in strategic locations.

Investors can spread their risk by investing in a variety of property types across different areas. Up-and-coming neighbourhoods also frequently offer higher returns as demand and prices rise over time.

Stocks, on the other hand, depend heavily on market performance and the success of individual companies. So, an economic downturn can negatively impact the whole market.

2. Income Generation

Another investment risk is that there is no guarantee of income or profit. However, rental income from properties provides consistent cash flow for investors. Even if property values decline, rental income can remain stable or continue to rise.

In contrast, stock dividends depend entirely on company performance and can fluctuate or disappear during market downturns or if a company struggles financially. For income-seeking investors, the dependability of rental income makes property an appealing choice.

3. Inflation Hedging

There is also the concern of inflation reducing the value of an investment over time. This means the purchasing power of an investment may be less than that of the initial investment in the long run, even if the money value increases.

Property investment acts as an inflation hedge since property values and rents often rise with—and sometimes outpace—inflation over the long run. This means the income generated from property retains its purchasing power despite inflation. 

Stock returns, on the other hand, do not necessarily keep up with inflation and, at times, fall behind. For investors concerned about their money losing value over time, property serves as an effective hedge against inflation.

4. Leverage

Most investors wish to continue expanding their portfolios to include new-builds, often requiring large capital. Investors can leverage their capital through mortgages when purchasing property, allowing them to buy more expensive assets.

The ability to leverage, combined with consistent income streams and long-term capital growth, enables investors to build wealth through property investment. While stocks can also be purchased on margin, the risks are higher, and leverage is more limited.

In summary, for investors seeking income and capital appreciation, property investment has some advantages over stocks in managing risks through diversification, dependable income, inflation hedging, and leverage. However, as with any investment, there are also risks to consider, and proper due diligence and risk management are essential. To succeed, an investor needs an effective long-term strategy, which brings us to the next topic.

3 Property Investment Strategies for Long-Term Wealth Creation

Having established property as the better option between buy-to-let or stocks and shares, it’s important to have a good investment strategy. Property investment strategies require patience and a long-term perspective to generate wealth. Drawing from our experience at API Global, real estate investments have historically outpaced inflation over time, and the patient investor always wins.

By following these tried-and-true strategies, investors can build a property portfolio that provides rental income and capital appreciation for years to come:

  • Buying and holding
  • Adding value
  • Portfolio diversification
Property Investment Strategies Section Image

1. Buying and Holding

One of the most effective strategies is to purchase investment properties and hold them long-term. This allows time for the value and rental rates to increase substantially. Investors should contact reliable financial advisors to help choose properties in up-and-coming neighbourhoods that are poised for growth.

While home prices may fluctuate over time, values generally trend upward, especially over periods of 10–20 years or more. Similarly, rents will increase with inflation, providing a hedge against rising costs of living.

2. Adding Value

Investors can boost returns by adding value to their properties. Renovating kitchens and bathrooms, upgrading fixtures and flooring, and improving energy efficiency are some ways to increase a property’s appeal and rental rates. Once upgrades are complete, the investor has the option of selling at a profit in a strong seller’s market or continuing to hold and benefit from higher rents.

3. Portfolio Diversification

A diversified real estate investment portfolio also reduces risk. Investors should consider buying different types of properties (houses, apartments, etc.) in a variety of locations. A mix of new and older properties provides balance.

Similarly, having both long-term “buy and hold” properties as well as shorter-term “fix and flip” properties creates stability. Diversity also applies to the mix of tenants, from students to families to commercial businesses.

While past performance is no guarantee of future results, historically, real estate has proven to be an excellent hedge against inflation and a stable source of passive income. With patience and discipline, investors benefit from the power of compounding returns in a tangible asset class.

Stocks vs Property in the UK: Our Verdict on the Best Investment Option

Going by our expert analysis and experience at API Global, real estate investment wins the “property vs stocks” battle, and for a variety of reasons.

First, historically, property values have risen alongside inflation, sometimes beating inflation. This allows investors to retain the purchasing power of their property over time.

In addition, property investment allows investors to leverage an initial small capital to purchase a more expensive property. Purchasing a property at API Global via your wealth advisor requires a 20% downpayment; the rest may be paid via other means, like a mortgage with low interest rates. Such leverage allows an investor to reliably make huge returns on a smaller investment.

On the flip side, leveraging the stock market through margin purchase is a lot riskier and typically yields less in the long run.

Furthermore, property allows an investor to consistently collect returns on their investment through rental income. This can cover major expenses like mortgage interest repayments or maintenance. After a while, investors can sell their property for profit or channel rental income towards buying more property to expand their portfolio.

Lastly, investors can also defer capital gains tax payments amid various other tax relief with the right strategy. This flexibility is lacking in stock since investors typically need to sell their shares to make any profit. Plus, the performance of the stock market determines the potential for growth.

For smart investors, the property market surpasses the stock market in growth potential and profitability. But location is key, and the best way to succeed is through expert guidance from investment advisors.

Frequently Asked Questions

Is it better to invest in property?

Investing in property is better as it can provide a consistent income stream and potential appreciation value in the long run. It offers more control over an investor’s investment compared to stocks or shares and can potentially yield better returns than standard savings accounts. However, it’s essential to consider market conditions and personal financial capabilities before investing.

Are stocks more risky than real estate?

Stocks are indeed more risky than real estate due to their volatility. Prices can fluctuate rapidly, causing a potential for higher losses (or gains). This could be stressful unless an investor adopts a long-term strategy. Conversely, real estate tends to have more stable pricing and profitability than stock markets but isn’t entirely risk-free.

Why property is the best investment?

Property is often considered the best investment due to its ability to generate cash flow, provide tax benefits, build equity, and offer competitive risk-adjusted returns. It serves as a hedge against inflation and is a good means of portfolio diversification, reducing volatility. Investing in either buy-to-let properties or REITs is a great way to enjoy these benefits.

Do millionaires invest in property?

Yes, many millionaires invest in property. This is primarily due to the tax benefits and income generation potential it offers. Real estate investment can lead to substantial earnings while also allowing investors to retain more of their income, thanks to various tax rules/policies, such as those offering capital gains tax reduction.


To summarise our property vs stocks comparison, property investment proves to be one of the most lucrative and stable investment options, especially for long-term wealth creation. While the stock market can be volatile, housing is a basic human need, so demand for quality rental property is always high.

For investors looking to build a solid financial foundation, property offers an attractive combination of capital growth and rental returns that stocks struggle to match. However, investors should consult a reputable wealth manager to ensure they’re investing in the best location.

Disclaimer: Any information API Global provides does not constitute financial advice and is for educational purposes only.

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Lewis Finn

Experienced Sales Manager with a demonstrated history of working in the financial services industry. Specialising in offshore investments & UK investment property.

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