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Property market will have to depend on economy. How’s the economy?

A positive sentiment is important for the property market. However, demand comes only when the people have jobs and for people to have jobs, the economy must continue to grow. So, how’s the economy? Every time I tell people that the Malaysian economy’s doing okay (based on articles I read and my personal opinion from observations), they would give me those looks. “Who am I?” It’s okay, let me show just two slides from the first speaker in REHDA Institute’s CEO Series 2018. The speaker is Prof. Dr. Yeah Kim Leng (Professor of Economics, Sunway University Business School) and the title of his presentation is Restructuring of Malaysia’s Economy Post Ge14: International Factors and Perspectives Impacting Malaysia’s 2019 Economic Outlook.

The slide shows the few reasons why the Malaysian economy is still growing. First of all is the fact that Malaysians continue to have jobs. Number of jobs being created is aplenty but the only issue is that the people may not be ready because of the changing trends. Manual workers may face issues to acquire new skills; IT for example.  Second reason is because of rising income even if wages are still depressed. What this tells us is simple; shortage in skills meant that some are earning exceptional incomes but when the skill is something available everywhere, the salary is no longer moving up. Next one is due to the increased wealth from higher asset prices. Remember the times when people bought condos for RM250,000? For example, in 2007, 2008 periods? When people sell these condos today, they have more money to spend / invest. Dr. Yeah also mentioned many other factors which are also helping to push the growth too.

It’s not all smooth though. The world economic growth can push us up but there are also many instances when the world growth itself may be derailed. First up is the current US – China trade war. In brief, if China’s exports drop, it meant that their imports would drop too. This will affect many countries which are exporting to China. As the US’s policy is to ensure Americans have jobs, it meant that most smaller nations would not be able to compete; no way they can invest so much to build factories in the US and then export to the world. Recently, we start to see some volatility in the financial market. Funds are being pulled out of emerging markets simply because another emerging market was seen to be sliding into a crisis. Last but not least would be the aggressive policy tightening in many governments around the world. All these may slow down the world growth which will in turn affect Malaysia’s economy too. As I learn more, I will share more too. Next few articles in the next few days.

written on 24 Sept 2018

Next suggested article:  REHDA Penang has reduced property prices between 6-10%

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kopiandproperty.com is everything about property related writings and news. Enjoy reading with a latte.

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