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Definition

A fixed asset, being land with or without improvements, owned by both private individuals and companies. Property is unique among assets in that its lack of homogeneity means that it cannot easily be traded in any kind of organised exchange. Put simply, every property is different and so the fact that a property sells for a certain price does not mean that the property next-door has the same value - because the location is slightly different and the two properties may have different improvements. The property market's lack of homogeneity means that it is not easy to make a chart of property values as you can with shares where every ordinary share of a particular class in a company is identical to every other ordinary share of that class. Because of its fixed nature, property makes excellent collateral for loans and thus your mortgage bond interest rate is generally one of the lowest in the economy. The fact that property does not trade through and organised exchange means that it is more difficult to sell and sales take longer than, for example, sales of equity. For this reason, it may be better to invest in the shares of a listed property company, or real estate investment trust (REIT), than directly into property itself.

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