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The role of investor sentiment in property investment decisions

Author

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  • Paul Gallimore
  • Adelaide Gray

Abstract

Property decision-making is typically characterized as a structured rational process, using factual data and leading to optimal decision-making. To augment, or substitute for deficiencies in, such data, property investors may turn to perceptions of investor or market sentiment. Reliance on sentiment in the wider financial markets is, however, regarded as suboptimal behaviour that leads to mispricing. Discussion of these contrasting views of sentiment is coupled with the results from a survey of property investment decision-makers. These results indicate that investor sentiment is an important factor in property decision-making, despite its neglect in formal explanations of property market functioning. The conception of investor sentiment held by survey respondents is explored and confirmed as different to the concept applied in the wider financial markets.

Suggested Citation

  • Paul Gallimore & Adelaide Gray, 2002. "The role of investor sentiment in property investment decisions," Journal of Property Research, Taylor & Francis Journals, vol. 19(2), pages 111-120, January.
    • Handle: RePEc:taf:jpropr:v:19:y:2002:i:2:p:111-120
    DOI: 10.1080/09599910110110671
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    Cited by:

    1. Prashant Das & Julia Freybote & Gianluca Marcato, 2015. "An Investigation into Sentiment-Induced Institutional Trading Behavior and Asset Pricing in the REIT Market," The Journal of Real Estate Finance and Economics, Springer, vol. 51(2), pages 160-189, August.
    2. Diego Salzman, 2013. "Behavioural Real Estate," ERES eres2013_334, European Real Estate Society (ERES).
    3. Joe Doak & Nikos Karadimitriou, 2004. "Land Re-Use, Complexity And Actor-Networks: A Framework For Research," Real Estate & Planning Working Papers rep-wp2004-09, Henley Business School, University of Reading.
    4. John Henneberry & Claire Roberts, 2008. "Calculated Inequality? Portfolio Benchmarking and Regional Office Property Investment in the UK," Urban Studies, Urban Studies Journal Limited, vol. 45(5-6), pages 1217-1241, May.
    5. Helen X. H. Bao & Steven Haotong Li, 2016. "Overconfidence And Real Estate Research: A Survey Of The Literature," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-24, September.
    6. Soosung Hwang & Youngha Cho & Jinho Shin, 2020. "The impact of UK household overconfidence in public information on house prices," Journal of Property Research, Taylor & Francis Journals, vol. 37(4), pages 360-389, October.
    7. Peter Ö. hman & Bo Söderberg & Stig Westerdahl, 2012. "Property investor behaviour: qualitative analysis of a very large transaction," ERES eres2012_376, European Real Estate Society (ERES).
    8. Zhou, Zhengyi, 2018. "Housing market sentiment and intervention effectiveness: Evidence from China," Emerging Markets Review, Elsevier, vol. 35(C), pages 91-110.
    9. Diego A. Salzman & Remco C.J. Zwinkels, 2013. "Behavioural Real Estate," Tinbergen Institute Discussion Papers 13-088/IV/DSF58, Tinbergen Institute.
    10. Joe Doak & Nikos Karadimitriou, 2007. "(Re)development, Complexity and Networks: A Framework for Research," Urban Studies, Urban Studies Journal Limited, vol. 44(2), pages 209-229, February.
    11. Enwei Zhu & Jing Wu & Hongyu Liu & Keyang Li, 2023. "A Sentiment Index of the Housing Market in China: Text Mining of Narratives on Social Media," The Journal of Real Estate Finance and Economics, Springer, vol. 66(1), pages 77-118, January.
    12. Catherine Jackson & Craig Watkins, 2011. "Planning Policy and Retail Property Investment in the UK," Urban Studies, Urban Studies Journal Limited, vol. 48(11), pages 2321-2338, August.
    13. Shulin Shen & Yiyi Zhao & Jindong Pang, 2024. "Local Housing Market Sentiments and Returns: Evidence from China," The Journal of Real Estate Finance and Economics, Springer, vol. 68(3), pages 488-522, April.
    14. Cath Jackson & Allison Orr, 2011. "Real estate stock selection and attribute preferences," Journal of Property Research, Taylor & Francis Journals, vol. 28(4), pages 317-339, April.
    15. Qiulin Ke & Karen Sieracki, 2018. "Exploring sentiment-driven trading behavior of different types of investors in London office market," ERES eres2018_112, European Real Estate Society (ERES).

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