Donald Runsfield said in 2002 : "There are known knowns, they are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don't know we don't know. "
For some property investors who may had treaded the stock market and took a heavy beating, stocks and derivatives are known unknowns and unknown unknowns. But the property investment is at best, known knowns, and at worst, just known unknowns to them. The element of unknown unknowns are the least of their worries when considering investing their money, hence their preference in property.
In addition, Warren Buffett said: Risk comes from not knowing what you're doing(unknowns), and investment boils down to risk management. Die-hard property investors think they can manage the risk associated with the property market(known unknowns), but find that risk, despite arbitrage and other squaring-off risk trade are available, associated with stocks are un-manageable.
Of course one can argue that risk related to unknown unknowns are not accounted for, but in the eye of property investors, such risk exists equally in the stock market too----the question is the extent and degree of such risk are managed.
One can argue by using averaging-purchase in stocks, the risk of unknown unknowns is spread over time; whilst such technique is not possible when buying property, which is usually a one-off purchase. Since there are so many con stocks in the market, plus the volatile business and fast-changing technology environment e.g. Kodak, averaging out the purchase will still be throwing good money after bad; but the same cannot be said to property investment. Furthermore, the govt's draconian measures had the unexpected consequence of strengthening the balance sheet of the property investors, and thus cushioning the risk of unknown unknowns should they occur unexpectedly.