Crash, No, Crash, No, debate continues. Action is similar.

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On one side of the ring, we have a veteran real estate expert, Ernest Cheong who sees 2018 as the year that the property market may crash. The panic may start right after Chinese New Year in February. He also  shared that developers are in desperate situation and that this was why they allow buyers to pay 1% of the property price and pay the remainder upon completion. When the property market crashes next year, the RM500,000 units would drop to RM300,000.  This is the full article in Free Malaysia Today:  Property market will be badly hit in 2018, says expert.

I received the same article three times in Whatsapp.  One from a small investment group of friends, second one from my ex-department and third one from my close ex-team-mates. I think bad news would receive more attention. Maybe also because it may affect them next year. Besides Whatsapp, I received two Facebook messages asking me for my opinion. The article were all based on the announcement by Deputy Finance Minister Lee Chee Leong about a 40 pct increase in unsold completed units for H1 2017 versus the same period a year before. I wrote my personal thoughts earlier than the article in FMT actually and it was not in response to the FMT article. Here are some of the potential trigger points in my 2-cent opinion.  

On the other side of the ring, one day after the FMT article quoting Ernest, we have a few other prominent property people giving their view points. Full article, also in FMT here. Henry Butcher Malaysia chief operating officer Tang Chee Meng said this in response to Ernest’s viewpoint.  He agreed that the market is sluggish and in fact, the number of unsold properties may even increase in 2018. However, he said, “So for anyone to say that the market will crash next year is a bit too pessimistic.” he gave a couple other points including the economic growth (5 to 5.5 pct), the current non-performing loan numbers (still very negligible) and even the fact that many developers have switched their focus to the affordable segment.  Penang Real Estate and Housing Developers’ Association’s immediate past chairman, Jerry Chan said that developers would not be reducing their prices unless they were in financial trouble.  He said that a crash is unlikely because of strong exports, returning investor confidence, and the lack of mass retrenchments.

Actually, for both predictions, we must still do the same thing. there are 3 things we can do currently. SAVE. Seriously, save whatever we can because if the property prices really do drop 40 percent as predicted, we should step inside the market and buy a unit. Gloomy times do not last forever. If we believe the market is not crashing but is nevertheless negative, we still need the savings so that we can chance upon any good deals, whether from secondary or the developers. Remember, regardless of the prediction we believe, we should still be working very hard yeah.

written on 16 Nov 2017

Next suggested article: Property market 2018: crisis or recovery?

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