Issues in Home Ownership - Issues in Home Ownership...

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Issues in Home Ownership Distinguish between different types of home ownership and property investment Types of home ownership: Residential property; owner occupied homes, investment houses/units, holidays houses/units Small commercial properties (i.e. shops) Large commercial properties (i.e. hotels) Land of various types Vehicles for investment : Direct ownership/shared direct ownership Listed property trusts Listed property companies Unlisted property companies A superannuation fund (super funds cannot borrow on assets) Identify advantages and disadvantages of home ownership and property investment Advantages: [LSDCCCT] Security of owning own home Collateral for business ventures CGT main residence exemption Possibility of substantial capital growth Mortgage creates a form of disciplined savings Lifestyle choices Tax deductions on interest of borrowed funds for property investment Income stream with steady capital growth Disadvantages: [PIICO] Price risk Lack of illiquidity Interest rate uncertainty Costs : interest, stamp duty, vendor duty, land tax, conveyance fees, loan application fees, insurance, maintenance and renovations cost Opportunity costs of capital in other investments.
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Explain determinants of property prices and how to obtain information of property prices Determinants of property prices: [SILIS] Interest rate Location – demographics and social class of area vs. Desirable location
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