What follows are some rambling, not very well articulated, thoughts.
Emotion as a part of the investment decision making process
I don't have the figures myself, but I believe I am correct in saying that owner-occupiers (or expectant owner-occupiers - ie. people who buy a place so they can live in it "one day") are the largest driver in many property markets.
Having never bought a PPOR myself I can only speculate that when buying a PPOR that the decision is or can be quite an emotionally charged one. This is, after all, not just a house (or a unit or a villa) - it is a home.
I recognise, of course, that emotions wont pay the mortgage and that the folding stuff is required. In the economic sense demand can be defined as the "desire to purchase (the emotion) backed up by the capacity to purchase [a given quantity] at a given price" (the financial aspect).
Regardless, *if* what I have said above is true, or holds true, or is an accurate generalisation - or even if it is simply specific to certain "markets" - then in those markets where it applies we have a situation where a key driver is an emotional one.
And we all know that particularly first homebuyers tend to buy the most expensive place they can afford. That may sound like a big statement to make - but I would argue that it is little more than basic human behaviour / economics 101.
What role does or should emotion play in the investment decision?
To what extent should we, as investors, be looking to capatilise on the emotions of the PPOR buying public?
And I am assuming here, rightly or wrongly, that if people want to live somewhere but for some reason cannot or are unable to buy a PPOR in that location - that in many cases they would be prepared to rent.
Emotion vs. logic
To continue in the same vein as the two questions above, I'd like to very briefly explore emotion vs logic in the investment decision making process.
What I am specifically talking about here is the contradiction that can exist between what the data tells you about the state of the property market in any given area and the situation where that area remains (for what ever reason) ever popular or unpopular as a place to live.
How, as investors, do we reconcile these?
Why am I asking these questions?
I am increasingly of the belief that there are numerous "lifestyle locations" dotted all around Australia and my pet theory at the moment is that for the foreseeable future they continue to offer good opportunities for capital growth - albeit often with poor yields owing to recent growth in those areas.
The demographic drivers are, imho, the baby boomers and so called sea-change phenomenon.
I suppose what I am asking is - is this "boom" simply another cycle like all those that come before it (not that I have any experience) or are the demographics now so different - an ageing population that moves (in general terms) towards the coast and north - that we should throw the book out on what has happened before and start with a clean slate?
I would really appreciate any thoughts that forumites have on any of this stuff - good, bad, indifferent.
MB
Emotion as a part of the investment decision making process
I don't have the figures myself, but I believe I am correct in saying that owner-occupiers (or expectant owner-occupiers - ie. people who buy a place so they can live in it "one day") are the largest driver in many property markets.
Having never bought a PPOR myself I can only speculate that when buying a PPOR that the decision is or can be quite an emotionally charged one. This is, after all, not just a house (or a unit or a villa) - it is a home.
I recognise, of course, that emotions wont pay the mortgage and that the folding stuff is required. In the economic sense demand can be defined as the "desire to purchase (the emotion) backed up by the capacity to purchase [a given quantity] at a given price" (the financial aspect).
Regardless, *if* what I have said above is true, or holds true, or is an accurate generalisation - or even if it is simply specific to certain "markets" - then in those markets where it applies we have a situation where a key driver is an emotional one.
And we all know that particularly first homebuyers tend to buy the most expensive place they can afford. That may sound like a big statement to make - but I would argue that it is little more than basic human behaviour / economics 101.
What role does or should emotion play in the investment decision?
To what extent should we, as investors, be looking to capatilise on the emotions of the PPOR buying public?
And I am assuming here, rightly or wrongly, that if people want to live somewhere but for some reason cannot or are unable to buy a PPOR in that location - that in many cases they would be prepared to rent.
Emotion vs. logic
To continue in the same vein as the two questions above, I'd like to very briefly explore emotion vs logic in the investment decision making process.
What I am specifically talking about here is the contradiction that can exist between what the data tells you about the state of the property market in any given area and the situation where that area remains (for what ever reason) ever popular or unpopular as a place to live.
How, as investors, do we reconcile these?
Why am I asking these questions?
I am increasingly of the belief that there are numerous "lifestyle locations" dotted all around Australia and my pet theory at the moment is that for the foreseeable future they continue to offer good opportunities for capital growth - albeit often with poor yields owing to recent growth in those areas.
The demographic drivers are, imho, the baby boomers and so called sea-change phenomenon.
I suppose what I am asking is - is this "boom" simply another cycle like all those that come before it (not that I have any experience) or are the demographics now so different - an ageing population that moves (in general terms) towards the coast and north - that we should throw the book out on what has happened before and start with a clean slate?
I would really appreciate any thoughts that forumites have on any of this stuff - good, bad, indifferent.
MB
).
