Demographics Malaysia and property demand

Analysis by research houses are usually based on a whole set of data which may not be available to the public. That’s why their accuracy is higher than majority of us. One latest analysis by UOBKayHian Research was reported in the local media. The article was a long one and I think mostly positive though the article had a negative title. The research house was quoted as saying this, “We believe growth in 2016 would still be supported by demand for affordable homes, mainly fuelled by a rapidly-growing population between the prime age of 25-45, supported by an increasingly affluent middle class.”

Demand for affordable homes is a sure thing unless those shouting, ‘renting is better than owning’ wins over majority to believe them. Reason is simple, Malaysia’s population is still growing and the number of new baby shops, baby related products and even baby sections in hypermarkets would tell us this fact. Read here: Kids eat free. Buy property With a growing family, the demand for ‘upgrade’ homes will increase too which is one reason why the landed are the ones which are increasing the fastest when everything else is the same. There are also 200,000 new marriages every year. Read here: 200,000 new marriages, 80,000 new properties

In terms of affluent middle class, I think the research house is only referring to the top quartile because there’s no way majority can buy anything above RM800,000 even if they are buying as a couple. Read here: I do not believe majority can buy RM900 psf sorry This is one reason why the prices have started to normalize for those luxury properties for which prices were chased up during those few years of buying frenzy. At that time, the developers were launching because of the seemingly never-ending demand. Buyers were buying because of the seemingly never-ending price increases every time a new project is launched. Well, sanity has returned to the market and developers, whether big or small are now humming the ‘affordable’ tunes. Read here: Affordable not just focus for developers

malaysia statsBanks are said to have tightened their lending but I would personally be alarmed if the banks keep lending for ever higher property prices even when they could see that buyers are really stretching themselves to the limit. My relationship manager told me that lending is continuing but anyone trying to buy a property of which price is too close to what they should really afford would be under heavier scrutiny. Read here: Easier to obtain loan not best option My good friend Michael Geh always tell me that ‘the focus should be on affordability.’ I think it’s also important not to simply buy whatever the developers are putting into the market. Let’s be really objective. If the developers are really selling at a huge loss, they would have stopped selling, returned your money and just stop the development. Some of them would not even ‘dangle the juicy carrots’ for all buyers currently. Happy believing and more importantly, taking the right actions.

written on 18 Feb 2016

Next suggested article: Yes, it’s definitely safe for a long time yet; property investment

 

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