Can the drivers of property investment deliver value in a global Literature review

Can the drivers of property investment deliver value in a global economic downturn - Literature review Example The risk was so big because the collapse of the housing bubble in the USA affected not only the valuations of homes, but also several other agencies, industries, and personnel that included but were not limited to the mortgage markets, real estate, foreign banks, home builders, and home supply retail outlets. The Case-Shiller home price index noted the largest ever drop in the prices of houses by the end of the year 2008. It was because of the anticipated risks imposed by the bursting housing bubble that President George W. Bush announced the housing market’s bailout for those homeowners who could not compensate for their mortgage debts. Economic recession and massive foreclosures of housing caused by the global financial crisis was a potential threat to the investors. When a financial crisis hits a country’s economy, it affects the value of property investment just like it affects all other industries, though there is variation between the value delivered by property i nvestment and other business options in such times. The real estate business has conventionally remained the best investment of all time, including the time of financial crisis. Knowledge of the potential drivers of the business of property investment provides the investors with a way to transform the risks into opportunities. Population Growth during Financial Crisis and Its Impact on Property Investment One of the most fundamental drivers of property prices is population change. People want to dwell in popular areas. Prices of popular areas are higher than the rest because there are more interest parties than the number of dwellings available. Prices of an area go down when the dwellings outnumber the interested parties. According to the Australian Bureau of Statistics (ABS) that conducts a census every five years to publish the trends of population growth, trends of population growth do not show abrupt changes. While the indigenous population does not show rapid changes in growth , there are other factors that contribute to the growth of population, the most important among them being the immigration rate of a country. â€Å"Things that do change population growth rapidly - and provide investors with opportunity - are changes in immigration quotas, changes in infrastructure making areas more or less attractive and accessible to live in, and changes to employment such as the booming resources industry† (Moore, 2012). During the financial crisis, there has been a decline in the rate of immigration despite the increased tendency among the governments to increase the immigration rate since every immigrant that is allowed hostage contributes to the growth of the host country’s economy. Although immigration rate is generally perceived to have negative effects on the employability of the indigenous population of a country, yet several studies have found that the long term effects of immigration are opposite of what they are generally perceived to be; immigrants increase the productivity as well as the average income (Peri, 2010b, p. 7). Immigration rate is considerably linked with the employment rate. Fig. 1 and Fig. 2 show how the rate of immigration is affected by the rate of employment in a country. Fig. 1: Variation in Immigration rate from 1995 to 2010 (Peri, 2010a, p. 3). Fig. 2: Variation in employment rate from 1995 to