Market vs Industry
We often say a phrase for almost all the businesses, i.e. “Market is good” or “Market is not good”. What does actually this mean? What does people actually mean saying this phrase? Are those really aware of using this phrase? What actually people want to convey and what are the expectations? What are the effects in the industry? What is the difference between market and industry? We try to find out these answers.
First let us know the difference between market and industry in a simple way.
The Market
Market is accumulation of buyers. When the number of buyer is high, it is high demand which seems to be good market and vice-versa. However, we will discuss some scenario below where we will try to elaborate to understand demand and supply.
Scenario 1 – Demand is High (Good Market)
This time is very favorable to any business and it is said that market is good when demand is high. But there may be many reasons for this situation and this situation may not be as it looks like. Demand is compared to supply. Let us discuss some reason –
It may be true, that the number of buyer is growing, so demand is peaking up. The number of buyer may grow due to good economic condition of the country and state. More job exposure to people, new recruitment, and more exposable money to invest in real estate make the situation favorable. This time, the investors or home buyers should not wait for a long time as options are less and the price may grow rapidly and one may miss a good deal for a good property.
There may be another reason for demand to show high. If the supply is getting lower, it seems like demand curve is going up and market is good. But the scenario may be the number of buyer is same where the number of supply is going down. So, it looks like market is good with high demand. This is the time, all the investors and home buyers should be cautious before deciding to invest. The picture may not be as it looks like. One may invest in a good property as the options are very less to find out your desired one. If found, one should not wait.
Scenario 2 – Demand is Low (Bad Market)
We sometimes say the market is down or bad. What is the reason behind a bad market? A bad market is the time when the demand is very low. It has also some angle to see.
Demand can be low according to the current economic situation of the country and state. Less job, less recruitment, low business etc. can be the reason for low demand of properties. This is the time the buyer can get a good deal of a property. This would be the right time to invest for a long term.
There is also a scenario where it seems the market is down though it is not like that in reality. Sometimes when the market is growing, builders and investors tend to invest more in the real estate projects. As lot of money comes in, the supply gets high. Though the demand is same but as the supply is very high, it seems like demand is low. This time, home buyers search for a marginally low rates, however, it is quiet impossible to get the desired price. The buyers should not wait for a long time to buy a property at this time.
The Industry
In a simple definition, the industry is accumulation of seller. All the builders and developers, investors, re-sellers are considered as seller and therefore the industry. Real estate industry is a big industry in India. The industry is worth $180 billion and 65% of GDP controller. 2nd largest employment generation is by real estate industry. The industry is not bad; however, sometimes it gets challenges due to economy and different policies by Government. Sometimes, if the inventory is not clear within a stipulated time, money gets stuck and it affects the industry. It also affects the industry for giving huge discounts, offers and lower pricing. Everyone should understand if releasing the money is only the focus, industry cannot provide a proper service to customers. The customers or buyers will get demoralized and affect the whole cycle.
It is the duty of realtors to educate everyone about the market, industry and real estate. The more education will be provided, the more awareness will generate and the total market will be good because all are inter-related. Some unethical practices by the buyers as well as the sellers spoil market. One should understand, winning short term unethically is not good in a longer run. It will affect the market and affect everyone. Industry always wants to provide the best to the market. It is not good to make over expectation from the industry.
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Author – Arnab Ray
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