Today I learned that the meaning of investing in house.
Investing in house is equal to investing in supply and demand or "the market"
The reason is: the price of a house depends on supply and demand;
demand > supply, house price rise;
supply > demand, house price fall
Once the equilibrium reached, the house price will be in stable.
So, when we are talked about using house as investment, it means that we are expecting a higher demand than supply in the near future. If we expected a supply is higher than demand in the future, nobody is willing to invest in house, as we know that the price will drop, and you will earn nothing from a house.
So, what makes the demand increase? it depends on a lot of factors.
But no matter what, you still see the house price increase year by year even the price reach equilibrium, why? Because it is the inflation. The price of the house rises owing to inflation but the value of the house has no changed.
