I am not sure about the actual number of people who actually own at least one property, regardless of low cost, medium cost or even a luxury property. However, my hunch tells me that more people are without a property to their name versus people who actually owns a property today. In fact not just for Malaysia but I would think most nations in the world, even advanced ones. In other words, it’s best that we also hope and wish that property prices do not rise so fast, for their sake.
Anyway, if it rises too fast, the market will collapse and it’s not going to be good for the whole market too. This was why I was alarmed when someone forwarded to me a piece of news and tells me that the Malaysian property market is ‘doomed.’ He said, ‘Recovery will be very slow!’ Read on yeah for that before my comment at the end.
Article in thestar.com.my . Alliance DBS Research estimates that Malaysia’s property market will need at least another three years to absorb the unsold properties. It said, “Therefore, a meaningful recovery for the property market is only expected by 2023.”
It said, “Based on data from the National Property Information Centre (NAPIC), we estimate that Malaysia’s property market will need at least another three years to absorb the unsold properties, assuming status quo in historical transaction volume.”
Besides that there is the issue of depressed rental yields as well which will further discourage investors from entering the market and this is an uncertainty that will continue to undermine the confidence of the potential buyers.
This is what it said about the property stocks. “Property stocks are currently trading at multi-year low at 0.49 price/book value (P/BV) which is two standard deviation below its 10-year mean, pricing in the worst case scenario. While there is a lack of imminent catalysts, we continue to favour developers with clear earnings visibility and decent dividend yields to tide over the challenging times.” Please read the full article with more details: Article in thestar.com.my .
Please read the analysis very carefully yeah. What it says is this. Recovery will take three years. It did not say anything about property market collapsing. What it says is that property stocks are now priced so low that it has already included in the worst case scenario. It meant that whether it’s on property or on property stocks, both are showing good opportunity!
The property is NOT going to suddenly increase in price. Developers are going to compete with one another to take our money. The property stocks are meanwhile already attractively priced because it has even included the worst case scenario. Happy understanding that bad news may be good news for some. Good news meanwhile may be bad news, especially for those who are not yet inside the market. Let’s get more people into the property market yeah. So, please keep the prices almost stagnant except for the usual inflation. happy understanding and buying!
<Featured Image is courtesy of Stock Photos from Gustavo Frazao>
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