Property Investing

Inflation: An increase in the overall price level of an economy, often measured in terms of CPI (consumer price index) via the changing cost of a ‘basket of goods’ over time. Down from a 7.8% peak earlier this year, inflation now sits at 6%. A definite improvement – but still well outside the 2-3% range that the reserve bank is tasked with maintaining.   (RBA, 2023)  Understanding the major effects of this upon the economy is simple enough. Goods and services are getting more expensive, and our purchasing power is eroding, as the ‘value’ of a dollar declines.

A couple of weeks ago, the media was abuzz with reports of a new housing policy discussed at a meeting of the national cabinet in Brisbane. Alongside state leaders, the Prime Minister announced ‘a better deal for renters’ via a $3 billion assault on perceived low housing supply. "All governments recognise the best way to ensure that more Australians have a safe and affordable place to call home is to boost housing supply," Prime Minister Anthony Albanese said in the announcement.

Game theory, in essence, is the study of how people make decisions in strategic situations, where the outcome depends not only on their own actions but also on the actions of others.   At first glance, you might wonder, "How is this relevant to real estate?" As it turns out, the art of property negotiation can involve many of the same principles. Game theory can offer a fascinating lens through which both buyers and sellers might enhance their negotiation skills.   In this article, we’ll explore some simple game theory concepts and discuss how they apply to real estate.