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Property market depends on the economy. Agree?

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property market depends on economy

Property market depends on the economy. Agree?

Imagine everyone worried about losing their only job. Imagine companies delaying their hiring because they are not confident with potential future sales. Imagine those who lost their jobs struggling to find a new one. Imagine factories asking their employees to take unpaid leaves because orders from the end customers have dropped. Now after all these happen, imagine a booming property market where the property transactions are trending higher and the prices moving upwards. This would not happen in reality and in fact if it does happen, it’s time to be very careful as the property bubble is about to burst.

property market depends on the economy
Photo by Karolina Grabowska on Pexels.com

kopiandproperty.com readers would know that I have actually written about this a few times but today let’s just listen to some analysts speaking about it yeah. They are after all, experts while I am after all, just a blogger. 🙂 Article in themalaysianreserve.com

MIDF Research analyst Jessica Low Jze Tieng said, “Data from the National Property Information Centre (Napic) shows unsold completed residential units in Malaysia increased 6.6% in the second quarter of 2020 (2Q20) to 31,661 units, after posting four consecutive declines from 2Q19 to 1Q20. Hence, we are having a ‘Neutral’ call on the property sector.”

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen says that low-interest rates and reintroduction of HOC helped to improve sales of properties in 2020. He said, “Without these incentives, the sales could have been considerably lower. These incentives encouraged the least affected prospective buyers to buy their first property or to upgrade their existing residences.” Do read the full article in themalaysianreserve.com for more comments yeah.

Unsold completed property versus total property sold, statistically speaking.

Imagine this. The property is priced attractively. The property design looks contemporary. The location where the property is located is full of amenities. Tell me frankly, do we think this property would still be unsold? If your answer is YES, it should be unsold because the property market is SO SLOW, SO BAD and SO SAD… then I would also remind everyone that just within H1 2020, the total residential property transactions alone top 75,000 units yeah. Read here. Within 6 months period of which 2 months were under MCO…

There are certainly major reasons for the unsold properties to continue languishing inside the unsold property numbers. In fact some reasons such as NOT attractively prices, NOT properly designed, NOT at a good location would be some of the reasons for these unsold properties of which the number is at 31,661 units yeah. (Refer to what was shared by MIDF Research’s Ms. Jessica above)

Low-Interest rates and HOC boosted the property market, statistically speaking

Imagine this, the interest rates are at record low. There is also the incentive of Home Ownership Campaign (HOC) where the buyer is exempted from paying stamp duty. Is it a buy for everyone then? Actually, the buyer has to feel confident about his financial capability, first. If he felt that his job is not secure, he would not proceed even if rates are low and there is HOC. This is why if we look at the property market, we better start with the economic outlook yeah.

Conclusion

I think 2021 will still be a good year even if things do seem bleak at the moment. My reasons for feeling positive? Vaccinations have already started in some of the COVID-19 worst-hit countries. It’s also on its way to Malaysia. That sudden turnaround can happen in a few days as soon as everyone feels safe again yeah. Watch the unemployment numbers too okay. That tells a lot too. Just remember to note that unemployment rate has always been around 3.5% yeah. So, if currently it is at 4.5%, that’s 1% higher and NOT 4.5%. There was never 0% unemployment before. Take care and stay safe.

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