Scarcity is an important aspect of investing in real estate: Veronica Morgan

By Jit Kumar
0
411
Veronica Morgan

“I’m not going to propagate this myth that Chinese buyers have been pushing up Australian property prices because I don’t believe that. I think it’s a lazy argument”

While location is always a key consideration, scarcity is also an important aspect to look for while investing in real estate, says Sydney-based property expert Veronica Morgan.

In a recent podcast interview with Digital Finance Analytics, Morgan juxtaposed the scarcity principle in economics—in which a limited supply of a good, coupled with a high demand for that good, results in a mismatch between the desired supply and demand equilibrium—against the real estate narrative to explain its importance in driving the value of a property.

According to her, when there’s a scarcity of a particular kind of property at a particular location, the demand for that type of property does the rest of the work.

“Scarcity is an important aspect of investing in real estate. Supply and demand is what fundamentally drives a property market, but often the demand comes from completely ridiculous beliefs, and so it’s regardless of whether there’s a hot market or a slow market, it’s the scarce property the one that always has a market, multi-faceted buyer pools,” she told host Martin North.

Morgan also cautioned potential buyers not to be over enthusiastic and invest in property where there’s oversupply, yet the prices are inflated.

“In Melbourne, for instance, how can you have a situation of oversupply coexisting with undersupply in a booming market, which is what was happening from 2013 to 17. How can that even happen if it is over supplied. I think this is where it’s the Warren Buffett thing, when the tide goes out you see who’s been swimming with pants down.

“There is so much stock out there that it’s been built without an actual local buyer in mind and without that local buyer in mind and if you owned that sort of property then you are going to get stuck if you need to sell it,” she said.

Morgan also dispelled the popular myth that Chinese buyers have been pushing up the overall property prices in Australia.

“I think a lot of highrise buildings have been built with a certain buyer in mind. But I’m not gonna propagate this myth that Chinese buyers have been pushing up Australian property prices because I don’t believe that. I think it’s a lazy argument. However, there are certain developments that have been built specifically with the Chinese buyers in mind and pitched to Chinese buyers,” she said.


Follow The Indian Sun on Twitter | InstagramFacebook

 

Spread the love and Earn Tokens


Comments