Economics: a specific market
The price of Real Estate property is usually dynamic and subject to variations depending on the nature of the surrounding social and economic activities within the vicinity. This implies that prior to acquisition of property, it is vital to put into consideration future price changes, and forecast the pricing trends of the property in a given time period, in order to evaluate whether the investment could generate the desired returns within a speculated time period (Shavell, 2004). Such decisions are based by conducting a thorough analysis of the background information and economic analysis in order to determine whether it will be appropriate to acquire a property at the current time, or after a well forecasted time. This paper provides an economic decision about the acquisition of property in Raglan (New Zealand) basing on an analysis of the background data and an economic analysis of the trends of property in the area.
The first and foremost requirement when planning to acquire property in Raglan is that the acquisition decision should be part of the strategic plan for the buyer. It is imperative that the buyer have a well laid strategy in property acquisition prior to embarking on economic analysis of the locality in which the property is located. Factors to take into account when analyzing the economic analysis of the locality of the property include an economic forecast of the value of the property and the trends of business in the region, which may result to an increase in the market value of the property. The strategic plan for property acquisition must outline the buyer’s core objective behind the acquisition of the real estate property, and the expected value of returns that the buyer has in mind in a particular period of time (Thomas, 1996).
The perception of the residents of Raglan is one of the prime factors for conducting an economic analysis regarding the acquisition of property in the area. Currently, Raglan is gaining international fame with respect to its tourism growth and increase in growth. Research studies concerning tourism perceptions in the area report that tourism is likely to foster growth and development in the area, this implies substantial returns in the area is bound to increase in future. Some of the potential economic benefits associated with tourism in the region include availability of jobs and an increase in the rankings of the local economy (Cooter & Ulen, 2003). This translates to the fact that property prices are subject to being increased in future, consequently, there will an increase in substantial returns. The underlying argument is that in order to avoid property acquisition when the price has skyrocketed, it is advisable to purchase the property now owing to the fact that returns are also increasing. The decision on acquisition of the property in Raglan therefore depends with the buyer’s objective behind acquisition of the property, which is either for commercial or residential reasons. Given that Raglan is primarily a tourist center, and future predictions reveal an increase in tourist activity, property prices are bound to increase (Shavell, 2004). This is also evident in accordance with the perceptions of the residents of the locality. Other factors that are likely influence the demand of property in Raglan include demographic factors and the availability of surplus properties currently. Demographic factors such as population increase play an integral role in determining the demand, which in turn has an effect on the availability of surplus property in the region. A reducing trend of surplus property implies that property prices are likely to increase due to an increasing demand. It is therefore imperative that such factors be put into consideration, and depending on the urgency of property acquisition, the buying decision to acquire the property in the present time can be beneficial due to the projected increase in returns and the need to avoid falling victim of increased demand to property (Cooter & Ulen, 2003).
Basing on the perceptions of the residents of Raglan and an empirical analysis of background information, it is evident that tourism activities are majorly responsible for economic development in the area, and future of economic development in Raglan significantly depends on tourism, which is probably going to increase the economic returns in the area. As such, it would be advantageous if the acquisition of the property was done currently, with a principal objective of avoiding the trap of increasing prices, reducing availability of surplus property, the increasing population and demand for property in the region (Shavell, 2004).
According to the statistics provided by the Real Estate Institute of New Zealand, there are an increasing number of property sales in the region. The median sale price of property in the region is dynamic although it is characterized by a notable increase after the period of fluctuations for both the case of dwellings and fluctuations. The underlying implication of this trend is that there will be an increase in the prices and demand (Shavell, 2004), coupled with a reduction in the availability of surplus real estate property in Raglan. The decision concerning the acquisition of property in Raglan is fuelled by the fact that the statistics reveal that Raglan is in the verge of economic development, as a result, returns on investments are likely to increase in future. This translates to an increase in the prices of real estate property, an increase in demand and a reduction in the availability of the real estate property (Cooter & Ulen, 2003). Therefore, it is advisable for the acquaintance to obtain the real estate property currently in order to maximize the returns on investment in future (Shavell, 2004).
Basing on an empirical analysis of the economic statistics of Raglan, a notable trend is the increase in the market value of the real estate property in the region due the increase in economic activities associated with tourism in the region. Therefore, it is advisable to acquire the property now in order to maximize the returns on the property.
Cooter, R., & Ulen, R. (2003). Law and Economics. New York: Addison-Wesley.
Shavell, S. (2004). Foundations of Economic Analysis of Law. London: Harvard Univ. Press.
Thomas, D. (1996). Thompson on Real Property. Charlottesville VA: Mitchie Co.