How Capital Growth Happens

?? HOW CAPITAL GROWTH HAPPENS. Seller wants to sell for X + $50k, Buyer buys it. Suddenly, similar properties will also sell for X + $50k. Another seller sniffs that the market sentiment is very positive and decides to increase his price to X + $75k, and BAM…Buyer still agrees to buy it at that price. Suddenly, similar properties will also be marketed at X + $75k. It just keeps going on and on. Read on ⬇️

Just like when someone who is very keen to attend Bon Jovi’s concert for example, and willing to pay whatever it takes for the tickets so he can take his partner with him. The same principle applies to property prices.

The motivation of the Buyers are clearly unknown of why one would buy a property at X + $75k in the first place. In my opinion, it is all perception-based. When one feels missing out, he/she will pay whatever it takes to be part of it. From what I observe, most people in this world are “followers”. Not many are willing to be “leaders” because becoming a leader is very difficult. You have to take risks and often, becoming an “early adopter” hurts.

It is easier to just follow. Whatever other people are doing, let’s jump into the bandwagon. The winners however, are often the ones who come in at an early stage. When something becomes so popular, and has entered the “hype” stage, it is often too late because you will be just another number in the system.

The challenge for all Property Buyers is…will you be the leader and jump in early?

Especially with property prices that are so low at the moment, which, some of them have started to creep up, will you have the guts to jump in now? All I can say is, when major media outlets start to report on the growth, it might be too late. By then, prices have gone up and sellers will often not budge in their sale price.