subject: Why are properties so different to ipads? [print this page] Why are properties so different to ipads?
Last week a friend of mine showed me his new ipad. It was an impressive gadget and after checking out their eyewatering sales estimates I couldnt help but take my hat off to Steve Jobs for anticipating demand ahead of the curve for yet another blockbuster device.
As happened with the ipod and the iphone, other companies are now rushing to launch rival devices, which will soon drive down prices and widen their appeal way beyond gadget enthusiasts like my friend above.
In theory thats how a market works - price goes down and demand goes up. If Zara put an advert in the newspaper saying theyll have 50% discounts on all stock the following weekend, therell be hoardes of people queuing outside the door on Saturday morning. If my favourite restaurant suddenly doubles the price of everything on its menu, Ill start looking for somewhere else to unwind on a Friday evening.
Property isnt at all like that though. It and many other financial assets move to a different rhythm. If property prices are increasing, more people will want to buy them, not less. There are few things that can cause people to rush to their check books as much as seeing a friend getting rich and wanting a piece of the action for themselves.
Over the past 3 years weve seen how the flipside is equally true. Unlike a department store, most people will not rush to buy a technology stock that just fell 30% overnight, and most people dont rush to buy a property when the market is falling either.
