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Skip to 0 minutes and 4 secondsReal estate matters because all of human life exists with real estate. And all wealth in the world is tied to real estate. But aside from wealth, real estate has a utilitarian function. The vast majority, almost certainly 2/3 of the wealth of all real estate in the world, is the roof over your head. And it forms the utility of providing you shelter. And it's a very basic human need. Now in some places in the world that's a shanty made up of bits of corrugated iron or bits of cardboard boxes. And I've been to those places. A billion people on the planet live like that. And yet, there are palaces where kings and queens live.

Skip to 0 minutes and 51 secondsAnd that's the other end of the spectrum. The very wealthy live in extraordinary circumstances. But in the first world, the way we live and occupy real estate is very important to us. It is a store of wealth. It is a source of aspiration for us all. It's a place where we enjoy time with our families. And they're places where we take holidays. And that's an aspiration for all of humanity, and that's a good thing. So real estate in the utilitarian sense is an important critical part of what makes us human beings. Of course, making it sustainable, making it environmentally friendly, is something that we're continuing to work at.

Skip to 1 minute and 34 secondsAnd hopefully we will work to a positive solution in making real estate environmentally friendly. There's is the wealth side of it. And the wealth side of it is different all around the world, because tax structures are different. And people's aspirations of what they prefer to invest in are different all around the world. In America, for example they prefer to invest in businesses. In Australia, we prefer to invest in real estate, and the tax systems support both those sorts of investments. In Europe, people prefer to rent rather than to own. So there's all sorts of different ways to occupy real estate. And it's important to understand those differences. Then there are businesses that occupy real estate.

Skip to 2 minutes and 21 secondsAnd there again, that's a small narrower part of the real estate universe. But neverthless, a very important one. So we have government. And government's there to govern on behalf of the people, for the people. And they occupy a lot of space. And it's very important they have appropriate space to occupy. So as the rest of us are concerned, we generally work in that commercial space. We're either involved in retail, or the manufacturing of goods and it's just then, the distribution. Or we work in office buildings. And we certainly use that commercial space for our daily lives. And that's moved from the village to the town and into big cities now.

Skip to 3 minutes and 9 secondsAnd whilst technology will continue to change the way we relate to one another, and will continue to have impacts on the built environment. But at the core of everything is the utilitarian need for shelter. And that is why real estate will always be a critical part of human existence on the planet.

Why does property matter?

Property holds emotional and financial value.

Why do people want to own property? Usually it’s for one of four reasons:

  1. to occupy the property (to live in or perhaps even for its components like oil, water, sand etc.)

  2. to rent the property (and earn an income) allowing someone else to occupy the property

  3. to borrow money on the property

  4. to sell the property for money.

As Tony Crabb, an experienced Property professional in Victoria, Australia says in this step’s video property matters because of its utilitarian value – it provides shelter – and because it provides meaning: we call it home.

Your task

Can you think of any other reasons why people want to own property?


> Unit MMP713 program page

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What Influences Property Value?

Deakin University

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