There are still people who believe that state governments would do their best to help them in their quest for their first property. This belief has truths because many state governments do have plans for more affordable homes. In fact the total number for the next few years exceed whatever number that the state governments has ever built on a yearly basis before this. So, ok, this is quite true. There are people who believe that the cooling measures are meant to reduce the house prices. Since this has not worked yet, it meant that they should wait a little longer. Surely the sellers cannot wait forever since they have to continue to pay their mortgages right? Let’s be very objective in this small disagreement. There are many first time home buyers, of course. Therefore they should be assisted. However, if house prices suddenly come down, it will affect everyone who has a property today. Every single home owners in Malaysia. Do you think the government, whether federal or state would want to affect every home owner in Malaysia? Think about it.
Developers continue to ask the government for more exemptions, lower compliance costs and many more things so that they can sell their properties, true? Yes, very true. However, their argument from then till now is to ‘maintain their pricing’. All these would help them NOT to increase the prices they sell. Frankly, have they said that with all these exemptions etc, they would REDUCE their prices? Every developer would want profits but every developer is also well aware that all their previous buyers are also looking at how they price their future projects. Come on, first project in the area might be RM500psf, second similar project has to be RM530psf and third project has to be very slightly higher during a slow market. However, do you expect their 4th project to be lower priced than their first project? Haha. think about it. If you are the developer, what would you do?
Okay, now let’s be even more objective. If this current low transaction numbers continue, would the sellers not face pressure to sell? Yes, of course they would. They cannot hold forever. If selling is not possible, they would rent it out. Suddenly, the answer is clearer. What if they rent it out, can they hold on for a longer time? The answer is yes. The reason is because even though the current rental yield is no longer positive like previously but based on the lower prices that the owners bought a few years back, their current rental yield would still be positive. No wonder the fire-sale that everyone was waiting has yet to come. Wait a minute, what if Malaysia goes into a crisis? If Malaysia goes into crisis, it would not be just property prices which would go down, everything would also go down including our yearly increments, our yearly bonuses, the whole economy would slow down and by then, transaction numbers would drop further. At that time, even if the property prices are down, not many people would be confident enough to buy.
I believe we should take actions based on what we believe in. If we do nothing, then we would get nothing. If we want to believe the crisis would come soon, then make sure we work hard so that the company would keep us and fire others. At that time, we would be confident enough to buy that property at the price that we have been waiting for. Your actions determine your success. Just remember to guide your actions objectively. Buying the wrong property, irregardless of good times or bad times is still a disaster.
written on 31 Dec 2014
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