|Principle of Supply & Demand (Principe de l'offre et de la demande)||
In the appraisal of Real Estate the principle of Supply & Demand refers to the ability of buyer to pay for property coupled with the relative scarcity of real estate. For any type of good or service to have value in any marketplace, it must possess four characteristics: demand, utility, transferability and scarcity. Demand is a need or desire coupled with the purchasing power to fill it, whereas utility is the ability of a good or service to fill that need. Scarcity means there must be a short supply relative to demand. Finally, a good or service must be transferable to have value to anyone other than the person possessing it. In evaluating a property's value or potential worth, attention must be given to such matters on the demand side as population growth, personal income, and the tastes and preferences of people. On the supply side, one must look at the available supply of real estate and its relative scarcity. When the supply of real estate property is limited and demand is great, the result is rising land or property value prices. Conversely, where land is abundant and there are relatively few buyers, supply and demand will be in check or balanced.
88 Prince Street, Suite 201
Montreal, Quebec H3C 2M8