WHEN THE STORY CHANGES

Decades ago, there was a small store that sold milk.

At the time, nearly all milk came from a single importer sourcing from NZ. Most distributors bought from the same source and sold at similar prices.

Except for one store.

This shop sold milk significantly cheaper, often even below what others paid for it. Naturally, people bought from them.

The big distributors noticed their sales dropping and complained: “Why are they getting better prices?”

The answer: they weren’t. Everyone paid the same.

Confused, they investigated further—and uncovered something unexpected.

The milk store also owned a furniture business.

And the key was the wooden pallets used to transport the milk.

Instead of discarding them, the owner repurposed those pallets into furniture—cutting production costs significantly.

So while they sold milk at a loss, the overall system was highly profitable.

The milk wasn’t the business. It was the fuel for something bigger.

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Now, how does this relate to RE?

In finance, we’re taught:

Market price ≠ intrinsic value

Market Price is what someone is willing to pay.

Value is what the asset is actually worth.

And not all buyers value a property the same way.

Some buyers are like the milk store owner.

They’re not buying purely for rental yield or end use.

They’re buying because the property unlocks value elsewhere.

Maybe it’s beside family.

Maybe it completes a larger land assembly.

Or maybe… they believe they can sell it at a higher price later.

Simply put, price can be distorted by factors outside the asset itself.

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Since 2010, RE prices kept rising—driven by the belief that properties could be easily flipped. That belief became the backbone of the pre-selling market.

But today, that assumption is weakening—if not gone. Liquidity is thinner. Buyers are more selective. And fewer can exit at a higher price.

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So the real question is:

Take away the easy flip… and you’re left with buyers who will only pay what makes sense.

The property didn’t change. It’s still the same luxurious condo—top-notch amenities, near the CBD.

What changed is what people are willing to pay for it.

And in markets like this, prices eventually catch up.