- Jeremy SheppardParticipant@jeremydsrdataJoin Date: 2015Post Count: 0
I’ve heard plenty of experts say something like, “This area will always be in high demand”. But it is a misleading kind of “demand”.
A teenage boy might “demand” a Ferrari, but that demand has no impact on the price of Ferraris.
Historical data shows that exclusive, affluent, nice areas don’t outperform lower socio-economic areas over the long-term. High capital growth has nothing to do with how nice an area is, or how desirable it is.
Imagine a thousand mansions and only 10 millionaires. That’s over-supply and it leads to prices falling.
Conversely, picture 10 dog-boxes and a thousand bogans. That’s a case where demand exceeds supply, which leads to price growth.
Notice how it had nothing to do with price or nice. It’s all to do with Supply & Demand. That’s all there is to it. But we gotta read the right demand. Wishful thinking doesn’t count. A genuine buyer offering a higher price is the demand of interest to us.