The economy should determine property prices. More natural.

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Ever imagined what will happen to the property market if the economic growth was 4.5 percent per year and the salary increment was 5 percent but the property prices were rising by double digits? Now, what happens when the same thing happens for the next couple of years? We will soon have a situation where salaries are said to be insufficient to support the property price growth.

Fundamentally, what has happened is that property prices are no longer supported by fundamental and this may soon turn out to be the start of a buildup of property bubble. Some signs for a bursting property bubble? Here’s that earlier article. Three property bubble signs Let’s look at a country where the property prices are rising slowly amidst a slowing economy. I think it’s a good thing to follow.

Article in globalpropertyguide.com Singapore’s house price rose 1.67% during the year to Q3 2019, a sharp slowdown from a y-o-y growth of 7.93% a year earlier. Quarter-on-quarter, house prices increased 1.23% during the latest quarter. Meanwhile, Singapore’s economy grew by 0.1% in Q3 2019 from a year earlier. This is the slowest year on year growth within a decade. This was due to a decline in manufacturing and exports sector, amidst the ongoing US-China trade war.

On a quarterly basis, the Singaporean economy grew slightly by 0.6% and this is a turnaround from the previous quarter’s 2.7% contraction. The government’s previous estimate was 1.5 percent to 2.5 percent and the expected economic growth this year is between zero percent and 1 percent. Please refer to the full Article in globalpropertyguide.com

The Malaysian economy is expected to grow positively within positive territory this year and 2020. In fact, these are the predictions thus far. Predictions on GDP growth for Malaysia in 2020. The property market is expected to show transactions numbers which are higher in 2019 versus 2018. Earlier article here: Property transactions in 2019 vs 2018? It’s up As for the property price, I prefer for it to stay stagnant or very small increase. Reason was because it has gone up way faster than salaries during the 2009 – 2013 period. Happy understanding.

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Next suggested article: Further, Smaller, Future, Same price?

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