What Can Falling Cats Teach Us About The Current Property Market?
Back in the 80’s a couple of whacky New York vets ran a study on the injuries sustained by cats that fell out of skyscraper windows.
Their cruel kitty research revealed something surprising; cats sustain the least injury from lower falls but significantly more injuries from medium height falls than from very high falls.
How is this possible?
A lot can be explained by what a cat does during a fall, and the forces of nature acting on the cat.
During a fall with only enough time for instinctive reaction, a cat will stiffen its legs and this lack of flexibility causes more damage.
A fall from a greater height gives a cat time to relax, and adopt a more suitable landing position.
For a falling cat as for us during COVID, the level of risk and potential damage we will suffer depends on how quickly we are forced to respond.
Here in Australia, there has been much talk of the ‘September cliff’- the unraveling of stimulus leading to an ‘impact’ point- which will create significant economic damage.
In reality, this cliff has been imagined and labeled by us. Our government has provided, more importantly than massive financial support, a long and stable timeline to react. The severity of the fall has prompted an unprecedented response to buy time to allow us to land in a safer position.
A contracting economy will put downward pressure on property prices in some areas and markets
However it is the humble opinion AND observation so far, that the holders of the best quality properties won’t sell if they don’t need to, or if they do, they won’t discount.
For this reason, educated rational investors or home buyers looking to purchase blue-chip property-there will be no cliff. Not in September, nor in March. The great fall has been telegraphed and we have all been gifted time to take action.
Rather than brace for imaginary impact, should we instead use this time to strengthen our positions and look for opportunities?