Supply and Demand

 

The Law of Supply and Demand in property.

If you really want the economists view then just go and google it but you already know how this works.

When there is a shortage of something the price goes up. Think of oil prices when OPEC decide to reduce production.

When there is a spike in demand and the supply remains the same the price goes up. Think Brussels sprouts at Christmas time.

Stocks, shares, currency markets, frozen orange juice and every other commodity or asset class behaves in this way and property is just another asset class.

Of course the asset prices can go to a level where that particular asset becomes less popular when compared to another satisfactory alternative but property works in a different way because there really is no satisfactory alternative to property but there are lots of different price points. For example the price of a three bed detached is beyond somebodys reach so they have to settle for a three bed terraced.

Property is the one asset class that is likely to remain popular for the foreseeable future along with oil and wheat and rice I guess. At the moment we cannot do without oil and certainly not wheat and rice. Half the world lives on a staple diet of rice and or wheat and the other half rely on oil to keep their economy going. Clearly the UK is in the latter half where people demand certain things of life.

Like a roof over their head!!!!!!!!!!!!!!!!!!!!!

Now clearly over the last year and a half oil prices have tumbled but that isn’t because people are not using oil. Its because the US has discovered and implemented fracking. But that actually proves our point. The price of oil has plummetted because of a lack of demand for that kind of oil.

Now clearly that could happen to property prices if everybody suddenly decided it was ok to live in a tent, instead of a house or apartment.

But everybody has to live somewhere and in this country that tends to be a house or an apartment and I don’t know about you but I don’t see that changing anytime soon.

It is true of course that there is a maximum price that people will pay to have a roof over their head and that is what they can afford but the numbers are just staggering.

According to Government figures we need around 400,000 new dwellings every year and we’re building about 200,000.

According to Government figures  we will need almost half a million extra primary school places by September 2016 because of an increase in birth rates.

(According to a family friend who is a midwife and several of our student tenants who are also training to be midwives the Government has underestimated the growth)

According to the 2011 census allied with Health department figures there will be twice as many octogenarians in East Anglia in 2025 than there were in 2001.

According to the latest figures from the ONS Nigel Farages’ predicition that most of the newer Eastern bloc countries will be moving to Britain for work is proving to be not far wrong. And why would they not?.

Whether you beleive the policticians or their statistics it the fact is that for a variety of reasons our population is increasing and our housebuilding remains static. In fact we have not built enough houses in the UK since the late 1950s.

This means whichever way you look at it there are more people chasing less places to live and you can’t live in a glass of frozen orange juice or build a hut out of Brussels sprouts, (although I imagine Tracey Emin would get lots of money no doubt if she tried)

So which way do you think property prices will move despite what the people who sell stocks and shares might tell you!

Now all you need to do is to find some suitable houses or apartments in a place where people want to live and you can ask us to find them for you or you can ask us how you can find them for yourself.

 

dixie@buytoletshop.com

or

dixieglobal@aol.com

01799 519003

07976 104709

Providence House
Little Sampford
Essex CB10 2QQ

 

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