Property prices staying put till 2016

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I read one different opinion from the research houses of banks today. It also provides a different point of view from some property outlook seminars lately. Instead of the terms such as cautiously optimistic, Siva said that prices will not recover until 2016. He stated clearly that the prices would be tough for 2014. Instead of recovering within this year, albeit towards second half and beyond, Malaysian property market will only start rising again in 2016. One of the main causes was due to the speculation in the primary market, so much that there were more properties bought than there are real demand. In other words, it was not bought by people who needs them but more on people who wants to flip. 

In fact, he said that the days of 20-40% appreciation within just a few years are now over. There is however a silver lining. The secondary market would begin to show its shine. He gave an example, ‘A new launch in Bangsar could set you back RM1,500 per sq ft, compared to RM800-RM1,000 per sq ft for an existing property. The discount goes up to 50% in some prime areas,’

An analyst with TA Research also said something which has been happening, property players have noticed a marked slowdown in sales since the various curbs were put in place. I think this is already happening and we are starting to see a lot of launches are said to be super cheap, RM500psf etc.   My friend showed me a project in Old Klang road, a new condo for just slightly above RM500psf. I think the buying interest is still there but uncertainty meant that a lot of people may put off their purchase until it is clearer on where the market is heading.

One thing’s for sure. If new property launches continue to be cheaper, it will start to also affect the current market. This is indeed a good news for real buyers who need a roof over their head. Alternatively, if you believe what Siva is saying, the perhaps you may want to consider secondary properties as your primary choice instead. Oh yeah, remember REHDA announced that property prices will increase in 2014 due to costs? They represent the property developers. Siva said secondary property should be the main focus this year. He represents the real estate agents. Both arguments have its merits but the final decision should belong to your investment objective. Happy buying or waiting or thinking.

written on 14 Jan 2014

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