'Rigid' demand for homes is more of a marketing myth than reality
People often say that property prices on the mainland will just keep on rising, but this is not grounded in reality
Commentators on the mainland property market have often attributed the resilience of home prices and their resistance to pressure to "rigid" buyer demand. I have my doubts.
First, the need for accommodation should not be confused with the need to buy and own a home.
People's physiological survival, let alone their emotional well-being, is very much diminished if they don't have a roof over their head for prolonged periods - unless perhaps they are marooned in a tropical paradise. Whether a home is rented or bought has little, if any, impact on survival.
But wouldn't hard-earned money be better used to pay off a mortgage instead of rent - to accumulate wealth and not have to worry about finding accommodation in retirement? Of course, and I think buying a home is a good move for most families in the long run, for social and financial reasons.
However, the decision still depends on individual circumstances, external and internal, and timing - just ask Hong Kong homeowners who bought at the 1997 peak, or for that matter the Americans who entered their market in 2006.
In short, buying a home is not an optimal or even a good choice all the time in all places and for all people.
While the human need for accommodation tends to be rigid, the need to buy a home is not. It is comparatively flexible, or "elastic" to use economics terminology.