Why do property transactions happen and prices usually up.

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Two good friends of mine were discussing with me the other day about buying a home sweet home. The guy, Mr. C said that he has viewed a family-sized condo in Kuchai Lama and he loves it. In fact his wife likes the thoughtfulness of the design too. However, they would still be buying back nearer to their current home which is actually next to the parent’s place inside ‘PJ.’ Petaling Jaya is actually a huge area which covers even the PJ Utara and PJ Selatan. The ‘PJ’ we are talking about for this article covers just landed homes which are RM1 million and above, if you know where I am talking about. SS2, SS3, for example? So, they are considering another family-sized condo but which is priced about 30 percent higher in terms of price per sq ft.

The reason that he was moving? Well, his landed double-storey terraced home was broken into just recently and he fears for the safety of his wife and kids when he travels. Landed homes which are gated and guarded is meanwhile too expensive to his liking (My personal thoughts, ‘actually he could afford it!’) Plus the fact that he has started to like the idea of having a swimming pool and a gym that he could use occasionally. The other good friend, Ms. J then commented that it is almost impossible to move ‘PJ’ people out of ‘PJ’ because ‘PJ’ is a city by itself. It has everything. She did however manage to convince her husband to move to Puchong which is near to her parent’s home. The reason her husband agreed to move? Their new home is just 20 minutes away from the husband’s working place. She meanwhile uses the public transport whenever she could. So, the reason for moving in this case may just be the duration of travelling to work.

Mr. C is moving into a high-rise for safety reasons. Ms. J managed to move her husband out of PJ into Puchong because of travelling duration to work. The reason why she wanted to be in Puchong? Well, her parents are there. The reasons are all different but the outcome is the same. There are now more property transactions. In fact, when both of them move, total transactions are a minimum of 4 property transactions, if not more. They buy a new home and people buy their current home. Both could make the decision to move because all 4 of them (husband and wife x 2) are holding managerial positions in multi-nationals in the Klang Valley.

Beyond just the number of transactions, usually, the price paid for the new property today is higher than the price paid for the current property many years ago. People are usually upgrading plus the fact that the value of money is getting smaller due to inflation. This is the reason why the statistics would usually show total prices per property on an average basis is usually up when the transactions continue to happen. There will be years during some financial crisis that the prices would dip. Perhaps that’s the best time to quickly buy and wait for the recovery. Cheers.

written on 6 Oct 2017

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