Demand is definitely robust. Jobs, Banks, Developers and us.

Many months ago, a friend who’s working in the developer was asking me about the property market. He said that the conversion rate from people who dropped by the sales gallery is getting very low. It used to be far easier to close a sale. This was my answer then and this is still my answer today. Looking from very high up, we will see that the median age for Malaysians is at 28 currently. This is an advantage which will not always be available. Especially as Malaysia moves into an ageing nation by 2035 or 2040. (A few different predictions) Anyway, looking closer to the ground, that means all the people around us, there is one similar finding. The negative sentiment. Well, apart from negative sentiment, the property market remains supported by 3 strong pillars.

1. JOB. People are still having their jobs which meant income is still intact. No income, no desire to buy. Has income, may spend on unnecessary first which is the reason why the property market is not crazy currently. Only those who has saved for a few years could afford to buy and this is definitely not the majority of all working professionals. The number is still big enough to support the property market.

2. Banks are still very competitive (Just look at personal loans and credit cards and the marketing for more deposits.)  This meant that they will still accept home loan applications, if the applicant is qualified. Remember, qualifying for a RM500,000 loan does not mean the bank will approve you when you try for RM550,000 okay… As an applicant, I would seriously advise you to only buy properties WITHIN your affordability and not based on STRETCHABILITY.

3. Developers do know that they need to launch based on market needs. Just look at the typical prices of new launches today. They are aimed only at the lowest possible price with the smallest acceptable size possible. Typically RM400,000 and lower and usually sized below 900 sq ft. Remember, when we look at advanced property markets, prices would do its best to stay competitive while sizes would continue to become smaller. Well, fortunately for us currently, developers can build further too.

Coming to why I say the demand for properties remain robust, there are always news of launches where the units were all sold out within hours or days being reported in the media. Please do note however that these buyers who have booked and paid a deposit would still have to apply for a loan and if we take the typical approval rate at around 75 percent, then there would usually be 25 percent of the units sold which the developer would have to sell another time. Here’s an article about loan approval rates in Malaysia.  In terms of how many times one unit may actually be sold, it depends. Sometimes, it may be many times before it is sold. My friend who used to work for a developer told me that for one particular low medium cost apartment, one particular unit was ‘sold’ 9 times before it was finally sold. Only that particular unit lah. The rest followed the usual. Happy buying.

written on 18 Dec 2017

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