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It’s not the price. It’s the motivation.

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oversupply or not

People continue to tell me that property prices are coming down. I pointed out to them that property prices as in the listing in property sites or property prices as in actual transaction? Many look at me blankly…

Many times, we fail to distinguish between perception (when everyone is viralling some news) and the reality (actual transaction, actual price, actual volume). This was last year, 2019. In case you did not know, 2019 was a year when the transactions were higher than 2018. If you did not reach, actually 2018 was higher than 2017.

This is OVERALL market.
This is for RESIDENTIAL market

Look at the actual numbers over the years and we would realise that when we heard about property prices CONTINUING to increase in 2012 (as if the sky is the limit), it was already nearing the peak. RM800,000 for a condo of 1,000 sq ft? Please look at the household income of Malaysians and please understand that demand vs supply means nothing if the demand does NOT come with ability to buy. In many surveys during the hotter times, it’s always showing people wanting to buy, people say they will buy in 6 months etc. Move back a couple of steps and you realise that the upcoming new launch may NOT be the one they could buy. Mismatch in the supply versus the demand even if the demand remain very high!

As for actual price movement, here’s one latest chart from BNM’s housingwatch.my It is NOT in the negative territory. Of course I have no idea when the price would be going to the negative territory. Anyone knows please tell me.

Source: housingwatch.my

It’s never the price. It’s the motivation. If I am from Ipoh and I have to move to Kuala Lumpur to work and I need a place to stay in a very short period of time, I would quickly drive up during a weekend to view many places. I would make a decision soonest possible because I cannot keep driving back the next weekend and the next weekend until I start work! So, my motivation to rent a place out of the few places I viewed is high! The chance that I will choose not to negotiate until the cow comes home is also very high too…

If I am the owner of a condo nearby KLCC and I am a foreigner and I wanted to leave Malaysia as my work here is completed, my motivation to sell is higher than every other seller who is still staying here and can take their sweet time to sell. This is why we could occasionally catch a good buy if we are on the ground looking for it all the time. The seller in this case would want to conclude the deal faster and does not want the hassle to fly back and forth to settle it.

This is why we need to stop thinking too much about whatever viral news we receive all the time. Else, our perception will cloud our judgement. That’s not good as we will miss many opportunities. Just remember that the best time is also the worst time. The opportunity is also the threat as well. Haha. That’s how the world works. Happy investing.

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Next suggested article:  Tenant refuses to co-operate for potential buyer viewings. Tenant is wrong?

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