Affiliation:
1. Auckland University of Technology , New Zealand
Abstract
Abstract
New Zealanders’ overwhelming favour of residential property investment has resulted in residential properties being overvalued with a house-price-to-income multiple equals to 5.9 for the country and 10 for its largest city – Auckland. With the deterioration in housing affordability; currently ranked the fourth worst in the world for Auckland (the largest city in New Zealand), investing directly in residential property become riskier. Under this scenario, a more passive property investment option such as REIT could be more viable. The objective of the paper is to assess whether REIT could offer a better risk and return contour then direct residential property option to potential property investors in New Zealand. Empirical findings from this study show that there is a significant difference between the rates of return of these two types of property investment options. Further analysis using Treynor ratio indicates that investing in REITs generated a higher return on a risk-adjusted basis. This finding has implications for investors looking for a more affordable and liquid way to tap into the property asset class.
Subject
Economics, Econometrics and Finance (miscellaneous),Business, Management and Accounting (miscellaneous),Social Psychology
Reference19 articles.
1. Bodie, Z., Kane, A., & Marcus, A. J. (2014): Investments (10th ed.), McGraw-Hill Education, New York.
2. Braithwaite, F. D. & Kemp, S. (2007), Safe as houses: Investor confidence in New Zealand. New Zealand Economic Papers, Vol. 41, no. 2, pp. 225-236.10.1080/00779950709558510
3. Broome, A. (2008), Neoliberalism and financial change. The evolution of residential capitalism in New Zealand, Comparative European Politics, Vol. 6, no. 3, 346-364
4. Cheung, C. (2011), Policies to rebalance housing markets in New Zealand. OECD Economics Department Working Papers, 878, July, available online at http://www.oecdilibrary.org/economics/policies-to-rebalance-housing-markets-in-new-zealand
5. De Bruin, A. and Flint-Hartle, S. (2003), A bounded rationality framework for property investment behaviour, Journal of Property Investment and Finance. Vol. 21, no. 3, pp.271-284.
Cited by
2 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献