Owen Raskovich

They just read it in a headline or they heard it on the news.

And of course, the news media is incentivized to tell us the worst case scenario because that gets the most clicks.

That gets them more eyeballs on the TV sets in the morning.

But I want to come back to making forecasts, and I want to talk through four really important things that you can look for when you're just thinking about how people are coming up with this.

The first is supply.

If you're in an area, let's say you live on an island.

An island is slightly smaller than Australia.

If you're living on an island and there are only 10 houses available,

Chances are, even if there's coronavirus, there's still only 10 houses available.

So the supply is constrained.

If they're really nice houses, those 10 houses, chances are they're going to fall less than houses in an area where there's a lot of new development.

You know, they're cutting up blocks and there's just an ever increasing number of dwellings for people to live in.

So that's why you have a problem with apartments.

If you're an investor in apartments, is that even if you have a fantastic apartment and you buy one of these things,

In a year from now, there could be a huge skyscraper next door with another 1,000 or 2,000 apartments in it.

And this is why we always caution people about buying off the plan.

Because even if you commit to that investment, in a few years, once the building has been built and your apartment is shiny and brand new, another one might have been developed.

So that comes back to this supply thing.

If there's more supply in the area that you're looking at, chances are those could be the areas that might be more affected.

And I'm just basing that on basic economic theory.