Propertyowners quizzed on investment reasons
Massey University researchers have been asking what motivates investors in residential property.
Monday, May 1st 2000, 12:00AM
by Paul McBeth
The vast majority of property investors don't make detailed calculations of their investment returns.
That's one of the conclusions made by Massey University researchers, who found that "good investment return" was ranked as the main reason for investing in residential property by just eight per cent.
Their survey of residential property investors is still being completed, but its findings so far are reported in the latest issue of Residential Property Investor. Based on 960 written replies and the 20 interviews carried out to date, the researchers have found that:
- Not surprisingly, wealth accumulation/capital gain was the prime consideration for people investing in property. Fortythree per cent of those surveyed put this as their first most important reason for taking on rental investment.
- Providing for retirement was also important for a lot of people: 26 per cent put this as their main reason for investing in property, and 20 per cent ranked this as their second most important reason.
- However, "good investment return" was ranked first by only eight per cent of those surveyed and was the second most important reason for 13 per cent. Only one of the 20 people interviewed had made comprehensive calculations of returns, while others mostly went on "gut feeling".
The researchers said that strong underlying social and psychological motivations for investing in property were uncovered in almost every interview. The tangible nature of property was important and there was also the concept of "investor pride".
"There was evidence in some cases that people believed their decisions were based on superior information and that they intuitively had some sort of sophistication in their assessment and reading of market conditions."
The survey data also suggested that a number of rental property investors concentrate their investment in property: 19 per cent of the men surveyed had property-only investment portfolios as did 30 per cent of women.