Property prices dropping…. No demand, more supply

I think all of us have read about the probability of property prices dropping further in 2016 after a lacklustre 2015. So, how many percent should it be dropping? If you ask me, my answer is, does it really matter what’s the percentage? The reason is because the grossly overpriced ones would have to drop more while those not overpriced ones may only drop slightly. So, which should you buy then? No right, no wrong, choose one you believe in and view, then offer an attractive enough price in your opinion. It’s a good time for potential buyers but by no means a desperate time for sellers. Read here: Property market from my observations on potential buyers Sorry, I really do not see that coming unless the whole world suffers an even worse situation than today. China’s growth has dropped to the lowest since 2009 and that’s already an extremely bad news.

Reported in the local media on 20 Jan 2016. According to James Wong, the organising chairperson of the 9th Malaysian Property Summit, 2016 will be ‘challenging’ because of the economic slowdown and the higher cost of living. My earlier article: Property market: Nothing much in 2016 as per Maybank Research He said, “If you look at primary market transaction, there’ll be less launches this year, take-up rate will be lower, the oversupply that is in the property market, the overhang, will build up if you talk to the banks more auction and foreclosures of properties this year.” He was however not expecting a property bubble but a moderate decline in the property market. He said something which is already happening today; developers staggering their launches in order to control the new properties entering the market. As usual, expect more freebies as developers step up their efforts to sell. He said that for 2016, it will be the secondary market that will be driving the market instead of new properties. My earlier article: Sometimes, secondary property is a better choice

It’s good that his prediction is close to my personal analysis. Just this morning, a colleague asked me about buying a certain primary property. I told him that I personally like the developer that he was asking and that the new condo, at RM560 plus per sq ft is not really excessive BUT the secondary market has many choices below RM500 per sq ft. Look slightly further, older and less attractive meant even RM400 per sq ft or lower. Read here: Staying further away is a fact of life, everywhere Anyway, there’s no such thing as a perfect choice. Buying a new property may mean one has less hassle when it’s completed. There’s also no guarantee that the prices of these secondary units would be increasing too.

Do note that when overall  transactions drop, it simply meant supply is much higher due to much lower demand. The major cause is however due to market sentiment influenced by everything people read and everyone they met. Primarily, it is not due to the 6% GST, the depreciating Ringgit (we are buying local property in local ringgit, what’s depreciation got to do with it?) or even unemployment or lower salary etc. When unemployment really rises up suddenly, the property market will not be slowing down, it will stagnate and prices will ‘jump’ down. Let’s hope this does not happen and that the market continues to just slow down while waiting for these negative mood to pass. My personal 2016 plans? Here: 2016 – Personal focus, plans and strategies Happy viewing and offering.

written on 21 Jan 2016

Next suggested article: Slowing market and the auction potential 

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