This is the title of an article in EdgeProp.my: Will property prices drop if Bangsar South changes back to Kerinchi? When I was still based in Penang, I used to fly to KL and go to Bangsar South on a monthly basis due to work. My former office was there. I think it’s a nice place, convenient and central enough. Jams were common then and these days it has gotten worse… try driving out of the office from 530pm to 630pm and you will understand. Then again, traffic jam is a good sign, no? I did not even know that it was called Kerinchi until I was there and saw the Kerinchi LRT station and sort of get the meaning that the name was ‘glamourised.’ for development. My ex-tenant bought a place there after she got married. One of the condos there for RM800k plus. She said it’s a good buy because it was a fully renovated unit. She even explained to me that ‘Bangsar South is the one next to Kerinchi LRT station.’ Well, for the both of us, the name has not made much of a difference. One did not know much, one already knew well in advance.
Now, let’s look at the scenario a few years down the road when Bangsar South is no longer the name. Will it affect the property prices? If we are an owner who bought it when it was Bangsar South, do we now tell our prospective buyer that this is Kerinchi? I think we will mention that the area is now called Kerinchi but the developments happened fastest when the name was changed to Bangsar South. In other words, we will still ‘defend’ the name of Bangsar South. Of course if we look at those who have been staying there for a very long time, way before Bangsar South, they would introduce their area as Kerinchi BUT as of today, if Kerinchi does not ring a bell to the outsiders, then they would still say Bangsar South. Whether we are a owner during Kerinchi’s time or even Bangsar South’s time, would we want to sell our property at a lower price than what we paid for? The question is clearly, NO. Prices will change only when transactions happen and prices will go down when transactions continue to happen at ever lower prices.
What about new developments then? I think it depends on what the buyers want to hear, right? If the buyer thinks ‘an area nearby Mid Valley Megamall’ is good enough, then whether Kerinchi or Bangsar South, the buyer would still be willing to pay. Honestly, names would help in the introduction but when it comes to really deciding to buy, it really depends on the area itself. For example, the WHY reasons. An earlier article here. Many times, we may view a development because the area or the name sounds good and that’s a very good marketing strategy but how many would buy a place simply because the project’s name sounds grand but the area is lousy?
Prices rise when demand exceeds supply. In brief, it happens when the number of units on offer (whether by developer or secondary market) is much lower than the demand by everyone who likes the particular area. This is how hotspots continue to increase in price. There’s just too many people wanting the area and every few months, a unit is transacted at 1-2 percent higher. It does not actually depend on the change of the name for an area. There’s a limit to how high prices could go but as long as income continue to rise, then the affordability continues to go up. An earlier article on why prices can keep going higher than income here: Property prices rising higher than income, true. Why can we still buy? Happy believing.
written on 10 Jun 2018
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