Value concepts, value information and cycles on the real estate market

Abstract

PurposeThe purpose of the paper is discuss value concepts that can be a complement to current market value, and discuss whether information about these value types can reduce the risk of bubbles.Design/methodology/approachThe study is primarily a critical comment on concepts and arguments put forward in a recent article.FindingsThe main theses in the article are: that there is no “market view” in a market as there always are entrepreneurs who assess the situation differently, and only the future can show who is right; that the valuer should not pretend to be an expert of the future development of a market, as no one can be an expert about the future; and that if any information can reduce the risk of bubbles it is information about past patterns in the market. More such information might reduce the risk of “irrational exuberance” in a market.Practical implicationsThe practical implication is that more historical information could be useful in a property valuation.Originaity/valueThe value of the paper – for researchers, valuers and valuation clients – is that it questions some concepts often used, and points to a way to make valuation reports more useful