How do property markets learn to adapt to changing environments?

[Nicholas Wallwork]

As the US presidential elections continue to grab the headlines many analysts have been crunching data regarding the impact of individual political parties on economics and property markets. The ongoing campaigns to decide who will replace President Obama in the White House have seen some investors voicing their concerns about the short to medium term

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Quite simply any investment market can be seen as an "information exchange" where many participants make their views known, directly or indirectly, and then we arrive at the market price. Sound simple?

Well, if there is no confidence in a marketplace and the buyers sit on the sidelines, prices are more likely to drift lower than move higher? Alternatively, if there is confidence in an individual real estate market and the buyers are looking to pick up stock at "any price" this can push prices to unsustainable levels. Even more so if property owners sit on the sidelines hoping to sell their assets at a higher level further down the line.

This is how markets react and adapt to different environments and learn to price assets accordingly.