Sometimes, the transacted price may not be the median price.

Are property prices on a downtrend for the past few years? Depending on who we ask, some will tell us that prices are dropping. They will give quite a number of examples in some ares which used to be priced higher and is now priced lower. In fact some real estate negotiators are now selling new units with rebates of 20 percent. They say this is the ‘final opportunity’ to own such ‘cheaper’ units. Their pitch may be true because once all these units are sold and the units happen to be completed during a boom market, chances are the buyers may gain from their buy. The reverse is true too, what if the units were completed during a downtrend? Statistically however, property prices are still inching upwards but it’s no longer double digits like a few years back. Image attached. Do transacted price ALWAYS reflect the prices for the whole neighbourhood then?

A few years ago, my brother bought a semi-detached home in Ipoh from the secondary market. It’s on the next lane but it’s linked to the units on the same row as my parent’s home and the advantage is that it’s actually just  two units away from my parent’s home. He paid RM540,000 for it. Of course the rental is nowhere near the mortgage but that’s not the main reason he bought the place. My parents bought their unit for RM85,000 when I was only 12 years old. That’s like 29 years ago. Today, my mother told me about the corner unit on the same row being sold for RM880,000. It’s certainly a great news for every other unit on the same row because this RM880,000 is now the highest transacted. Will this now be the standard selling price? To be objective, it is not going to be the median price. This is a corner unit renovated not too long ago for a few hundred thousand ringgit. The good thing is that it was tastefully designed and yes, I like the interior too.

Many times, I have come across owners who told me that the market price for their home is now much higher because they heard of a recent transaction which was way above what the typical market price. Naturally, when they tried to sell their unit at the newly transacted price, it will take forever unless of course the new buyer has some special reasons to buy the unit. We can usually view the transacted prices in  Do pay attention to the median price because this would usually tell us the most transacted prices for the units in the same neighbourhood. In mature neighbourhoods, the prices will usually rise as and when there are transactions because very few units are up for sale at the same time while people who wants to move into these neighbourhoods usually have their particular reasons too. Thus, their willingness to pay a higher price is stronger than if the neighbourhood is a new one and the availability of units are at higher numbers. Happy buying and selling.

written on 31 Aug 2018

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