I just read an article by The Business Times (Singapore) that 7% of all transactions in prime districts 9,10 and 11 were sold at a loss within the first eight months of 2014. This was higher than 5.5% in the same period just a year ago. Data was compiled by STproperty.sg from URA Realis. The report said that with the current situation, those who do not have holding power are now selling. Besides that, yields were also under pressure and in some cases, the monthly rentals could not cover monthly mortgage instalments. Of course it also said that not all of these transactiosn were due to pressure, some just wanted to exit today rather than later as they felt that the situation would not be changing anytime soon. The prime districts stated here include: prime districts 9 (Orchard Road, River Valley), 10 (Bukit Timah, Holland, Balmoral) and 11 (Novena, Newton, Thomson). Most of the time, the rental market depends on the expatriates who loves staying near the city. However, these days, with budget cuts, many of these foreign employees are being moved to the city fringes and suburbs and some even HDB flats!
Some examples of the prices of District 11 here: (from propertyguru.com.sg) Examples are only for those of 1,000sf to 1,200sf only.
Hey, I seriously think whatever is happening in Singapore may happen in Malaysia too. Perhaps it is already happening, just that the statistics available is not yet updated. Seriously, I do not believe that luxury condo prices can continue to rise even if they have KLCC view, even if they are next to KLCC, even if they are next to a huge mall that you love to visit every weekend. To expats, the most important thing for them is to have a place which they feel at ease, a mall which they can visit when they needed, perhaps even enjoy a cuppa every few days. Tell me, don’t you think this can be found in many places today? Of course, the only point would be how many expats are staying in that particular area. Most of them love to stay close to each other which is understandable. Just look at Chinatowns all over the developed countries and you would understand why.
I am looking forward to transactions data for these equivalent units in Malaysia. Perhaps the holding power is stronger because most of the time, the prices they bought were much lower than today. It meant that rental may be under pressure but selling at a loss may not be a case even at this moment and even at 20% down from current prices, unless the said luxury property was bought towards the end of 2012? A reader commented that prices of luxury condos are under pressure in even Penang island and thus sellers may be forced to sell lower if they intend to sell fast. I agree. Sell fast, sell lower. However, selling at a loss is another matter altogether. Of course, all these are talking about luxury condos. For those owning the cheaper condos which is being rented out or even your very own home sweet home, I don’t think rental or property prices would be a concern yet. Unlikely too. Happy staying.
written on 16 Sept 2014
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