Indian or Chinese? Not sure. What do you prefer, I’m not talking about property, I’m talking about food. I mean, you know, if you have to go and eat something today, let’s say it’s lunchtime and you’re hungry. Would you like a nice Indian tikka masala with naans Or maybe some Chinese chop suey (now that’s also making my mouth water).
Well, of course, property and food are not the same thing, but with food you have a choice. If you go for Indian, you don’t need Chinese. And if you go for Chinese, you don’t need Indian.
But That’s Not The Case For Property.
See, the thing with property is there’s no choice. If you want to live in a house, you want to live in a house. There’s no choice. Well maybe there’s a tent option, but it’s not really a solid long term option, and maybe outside is an option depending on where you live. But really, there is no alternative for living in a house. Yeah, you can buy or rent, but that’s the same thing: living in a house.
So when we talk about the demand for property, people wanting to buy property, does that demand ever disappear?
Because there’s no real option for that demand to go to. The demand for property is always there.
It’s either “inaction” or “out of action”. And of course, when it’s inaction, you have buyers in the market buying property and investing when it’s out of action. You have people renting property because they still have to live in a property.
Now, if you think about it, that’s really good news for us property investors, because no matter what’s happening, there’s somebody getting involved in property. And if they’re not buying, they’re renting.
The Demand for Property Gets Pent Up
So the demand for property never disappears. It just gets pent up. Why does it get pent up? Well, it gets pent up because people don’t want to take the action on that demand. Maybe because prices are gone too high, maybe because interest rates are too low. That caused prices to go too high. Maybe interest rates are too high. Maybe there’s doom and gloom in the market. Maybe everyone’s emotional about the market because, “oh, my gosh, it’s going to pieces”.
So the action gets curtailed, and of course, when the action gets curtailed, banks get anxious… because they want to lend money, don’t they? So they come up with crazy schemes of lending money when there is no action. And that can sometimes be a sign that the market is going to turn.
So does the demand ever disappear? No, because there’s no alternative. It’s just the action that’s taken on that demand appears and disappears from time to time.
Hope that’s food for thought.