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The Behaviour of Residential Rental Property Investors in New Zeland : A Bounded Rationality Framework

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Listed:
  • Anne de Bruin
  • Susan Flint-Hartle

Abstract

This paper attempts to explain the motivations of residential rental property investors in New Zealand in terms of the behavioural assumption of bounded rationality. Despite the fact that returns gained from other investment sources are more attractive, investment in residential rental property stills holds prime place in the portfolio of many New Zealanders. This paper attempts to explain why this is so. Commencing with a rejection of the more standard neo-classical economics view of rationality to explain the behaviour of these investors, the paper sets out the bounded rationality notion. It seeks to both examine the extent to which this notion applies to the behaviour encountered and to elaborate on that behaviour. An intuitive bounded rationality framework is then set out and suggested as useful for examining individual behaviour in the area of residential rental property investment. The discussion is underpinned by the findings of a postal survey of a large nationwide sample of private residential rental property owners, but is more directly based on a study of a smaller sample of investors using in-depth interview techniques. Data collected has been analysed using the SPSS statistical programme and qualitative analysis of the interview data has been overlaid to more thoroughly explore the framework of constraints within which individual investors operate. This also provides an interesting opportunity for anecdotal evidence to be added.

Suggested Citation

  • Anne de Bruin & Susan Flint-Hartle, 2001. "The Behaviour of Residential Rental Property Investors in New Zeland : A Bounded Rationality Framework," ERES eres2001_144, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2001_144
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    References listed on IDEAS

    as
    1. Susan Flint-Hartle & Anne De Bruin, 2000. "Investment Decision-Making In Residential Rental Real Estate: The New Zealand Experience," ERES eres2000_029, European Real Estate Society (ERES).
    2. Brendan O'Donovan & David Rae, 1997. "The determinants of house prices in New Zealand: An aggregate and regional analysis," New Zealand Economic Papers, Taylor & Francis Journals, vol. 31(2), pages 175-198.
    3. Herbert A. Simon & Massimo Egidi & Ricardo Viale & Robin Marris, 1992. "Economics, Bounded Rationality and the Cognitive Revolution," Books, Edward Elgar Publishing, number 409.
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    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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