Psychology feeds purchase vs. rental decisions - study

About 76 percent of those surveyed preferred owning a property over renting because of the sense of freedom and independence it gives them.

By SHARON WROBEL
galilee house 88 (photo credit: )
galilee house 88
(photo credit: )
More psychology and less economic theory thinking play into decision making when it comes deciding whether to buy or rent a property. "We found that people connect a sense of 'freedom and independence' more to the ownership of a property than to renting a property,' said Dr. Dani Ben-Shahar, who headed a research study on the subject at the Faculty of Architecture at the Technion. About 76 percent of those surveyed preferred owning a property over renting because of the sense of freedom and independence it gives them. While 83% explained the preference to own over renting as the "good feeling," while about 85% attached the "feeling of belonging" to their preference and 89% tied the decision to marriage. Furthermore, 70% felt that owning a property elevated them to a "higher social status." Among the economic parameters taken into account by the 315 surveyed students when deciding were tax issues, property brokerage fees, advocate fees and budget restrictions. About 85% of those surveyed, believed that owning a property was preferred to renting since once the mortgage was paid, they had a property in their hands, while renting meant making rental payments all their life, leaving them with nothing in the end. "[Yet] Without examining interest rates, risk levels and additional economic parameters theoretically, this argument is not correct," said Dr. Ben-Shahar. Meanwhile, the annual economic survey of the contractors union, forecasts that property prices in popular demand areas will rise by another 10% in 2007, as supply is shrinking and construction and building costs are mounting.