Young Australians are increasingly choosing exchange-traded funds (ETFs) over property as high prices, borrowing costs and the expense of home ownership reshape the traditional path to wealth.
Brielle Basmadjian, a 29-year-old technology worker in Melbourne, recently decided not to buy the near-identical apartment she rents in Malvern, despite being able to afford it.
“I certainly looked at it because it’s not beyond the realms of possibility for me to purchase the apartment that I’m in,” she said. “But running the numbers, it didn’t make a lot of sense for me.”
Ms Basmadjian has previously owned property, having bought a home with a former partner in her twenties. The relationship ended and the property was eventually sold, but she has since continued building an ETF portfolio instead of returning to the housing market.
She began passively investing at the age of 20 and said renting had allowed her to retain greater flexibility, including maintaining her current lifestyle and travelling.
“I still have some of those old beliefs ingrained in me from my family about bricks and mortar,” she said. “I think there’s definitely something to be said for the growth property can deliver.”
But she added: “It’s become extremely challenging for young people to get into the market. If you’re saving money and it’s just sitting in a bank account, not really working for you, that money may as well be invested and growing in some way.”
Ms Basmadjian said a $150,000 deposit would not necessarily leave her able to afford her current home and lifestyle. She admitted she had sometimes wondered whether she had missed out on Australia’s housing boom.
“I did think for a while that, ‘Oh God, I missed the boat’,” she said.
ETFs gain ground among younger investors
The shift is reflected in figures from the Australian Securities Exchange, which show that nearly three million Australians now own ETFs, more than twice the number recorded in 2020.
Interest in investment properties has fallen from 36 per cent in 2023 to 20 per cent in 2026. Among investors aged between 18 and 29, ETFs are now as popular as investment properties as a first investment.
Eric Peterson, chief executive of Trading 212 Australia, said property could present significant barriers to younger investors, including the need for a large deposit, access to bank credit, stamp duty and broker fees.
“Having to come up with a sizable deposit, accessing credit from a bank, paying stamp duty and broker fees are all intimidating barriers to entry,” Mr Peterson said.
He said share-market investments could also fall in value and that all markets could be volatile in the short term. However, he said long-term, pre-inflation returns had averaged about 10 per cent, while warning that different assets carried different levels of risk.
Trading 212 allows customers to buy fractional shares, meaning portions of stocks that might otherwise be unaffordable, without brokerage fees.
Jasper Twigg, a renter in Perth, still hopes to buy a home but is investing in ETFs while building a larger deposit. He said rising house prices had pushed that ambition further into the future.
“If house prices hadn’t surged by so much in the last few years, I probably would have bought a house already or at least looked at buying one more seriously,” he said.
Mr Twigg said renting in Wembley, in Perth’s western suburbs, allowed him to live in an area where he could not currently afford to buy. Sharing a house also reduced his costs, he said.
“Renting lets you live in a more expensive location,” he said.
Chris Brycki, the founder of Stockspot, said a young person who could afford to buy a unit but preferred to rent and invest in ETFs could be making “a smart financial decision”.
“More young Australians are waking up to the fact that buying property isn’t the only way to build wealth… and in some cases, it’s not even the best way,” he said.
“Buying an overpriced apartment with a massive mortgage isn’t automatically a smart investment. It can become a ball and chain if you pick the wrong one or are unlucky at the top of the cycle.”
