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Unemployment rate rises, a worry for property?

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Okay, let’s cut the suspense. As per the Statistics department of Malaysia, it has risen by 0.1% from 3.1% in January to 3.2% for the month of February 2015. In fact this rate is similar to one year ago. The number of employed rose 0.5% to 13.664 million in February, a 0.5% increase from 13.601 million in January. The unemployed stands at 454,900. In January, it was 442,000. Thus, 12,900 got unemployed within one month. Unemployed here means those who do not have a job but are interested to work. In Malaysia, the labour force participation is defined as the ratio of the labour force to the working population. (15 – 64 years) and expressed in percentage.

To those who are now thinking about the huge number of 12,900 who got unemployed, well, the unemployment rate of 3.2% remains very low. We can worry a little if it hits 4% or higher but for now, this 3.2% remains a low number. Compared to our two neighbours, Thailand is at below 1% while Singapore is at 1.9%. Both are based on Q4 2014 data. These numbers are known as extremely low unemployment. Do note that even IF you are only working at your own little orchard or farm and you have some income, you are still considered as employed in Thailand.

Will this affect the property market then? I think the property market currently is active because of the middle income Malaysians and above. The percentage of unemployment has also not varied much for many years. Thus, the current numbers should have very little impact on the property market. Nevertheless, if you happen to rent to anyone who become unemployed, then perhaps the rental this month may be late. Besides, when we look at the actual demand vs the actual supply and stripping out those which are priced way above what people can afford, the demand far outstrips supply even today. Read here: 100,000 new units vs 140,000 new household formation. Prices up? Do not agree. In fact, even when we calculate just the typical marriage numbers versus the new supply of units, the demand is still higher than the supply. Read here: 200,000 new marriages, 80,000 new properties 

It’s always good to note all these economy indicators because these indicators would provide an early indication of what to expect when it comes to property market. After all, the default in loans would happen ONLY after the worker is unemployed and not before. Happy knowing.

written on 24 Apr 2015

next suggested article: Are you buying for VALUE or GLAMOUR?

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