Leverage is the property side's real argument
Banks routinely lend most of a residential property's value at mortgage rates; nobody lends like that against managed-fund units. Leverage multiplies both directions: a 20%-deposit buyer gets five times the exposure per dollar of equity — and five times the sensitivity of that equity to price movement, plus interest as a permanent carrying cost. Most "property beat my fund" stories are leverage stories; most negative-equity stories are the same mechanism reversed.
Costs: transaction-heavy vs percentage-per-year
Property costs cluster at the edges and in the running: legal and inspection costs on entry, agent commission and legal on exit, and continuous rates, insurance, maintenance and any body-corporate levies — plus vacancy periods for rentals. Funds cost a disclosed annual percentage (median 0.84% across reported NZ retail funds) and small one-off spreads. Like-for-like accounting means counting ALL of the property line items against the fund's single charge — a comparison most property spreadsheets skip.
Liquidity and divisibility
Fund units redeem in days, in any amount — you can withdraw $2,000 for an emergency. A property sells in weeks-to-months, entirely or not at all, with meaningful transaction costs. Divisibility also matters on the way in: a fund position can be built weekly from small amounts; property requires the deposit threshold first. Listed property funds — a category this site tracks — offer property-sector exposure with fund-style liquidity, sitting deliberately between the two.
Tax: bright-line and rental income vs PIE
Residential investment property: rental profit is taxable at your marginal rate (interest deductibility applies under current rules), and sales within the bright-line period — two years for most property acquired from 1 July 2024 — are taxed on gains. Owner-occupied homes are largely outside these rules. Managed funds: PIE income is taxed at your PIR, capped at 28%, with no bright-line equivalent on redeeming units. The regimes move with politics — both have changed materially in the last five years, which is itself a risk factor to price in.
Concentration, effort, and honest accounting
An investment property is one asset, one location, one tenancy market — plus genuine ongoing work (tenants, maintenance, compliance with healthy-homes standards). A diversified fund is hundreds of securities and zero landlord hours. When comparing outcomes, count the hours, count every cost line, and compare against the same period's fund category medians — this site publishes year-by-year category medians so the fund side of that comparison is a lookup, not a guess.