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Frankly, is ‘boiling’ a positive word for the property market?

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The number of COVID-19 cases have now increased to over 3,000 everyday. How’s the impact to the property market?

Worrying sign if COVID-19 cases continue to increase

It’s worrying and if this number does not start to reduce, we would soon be reaching the maximum number of available beds and people would again be asked to do self-quarantine at home. It’s not a good feeling and it seems that the positive sentiment did not even have a proper start and we are sliding back into negative sentiment again. Could we do something about it? The answer is yes.

UK was affected badly by COVID-19 but what a turnaround it has been. Vaccinations are expected to reach everyone by July 2021. (At least one dose). Read here for the article in bbc.com Meanwhile, this has happened to it’s proper

Article in bbc.com UK house prices rose by 7.1% compared with a year ago. Lucy Pendleton, from independent estate agents James Pendleton, said: “This market is on the boil. Silly season might be just around the corner. That’s when a seller’s market becomes entrenched against a backdrop of very high demand and you start to see open houses for properties that are nothing special and a return of gazumping.”

Nationwide chief economist Robert Gardner said that price growth was also likely to accelerate as demand is expected to exceed the supply of homes on the market. Mr. Gardner also said, “The fact that around a third of first time buyers in England in 2018-19 said that friends or family helped them to raise a deposit through a loan or gift suggests that the recent surge in savings will help some, but that the impact won’t be spread evenly.” Do read the full article here: Article in bbc.com

When demand rises fast, supply definitely will need time

When the demand for smartphones suddenly increase, production could be increased and delivered in a matter of weeks. Delivery has to be by air but it’s doable. However, when it comes to demand for homes, sudden new demand cannot see a sudden increase in supply. Construction of homes need time. This is why occasionally when demand suddenly rises due to positive sentiment, prices will be pushed upwards because supply has not yet arrived.

However, this may also lead to a lot of supply being planned and then built and then delivered and we see a sudden surge in supply a few years down the road. If demand did not keep up, then of course we would soon face price pressure and the number of overhang units may also rise too. This is how the market works and it’s really not possible to have the exact demand and supply equation. For now, there seems to be a much higher demand versus supply for the UK property market.

Not a similar situation here in Malaysia

At the moment, I do not think something similar is happening in Malaysia. Let’s stay focused on vaccinations first. Sentiment should turn positive only when cases show a downward trend and the vaccination number shows a quick uptrend. Hope everyone around me will start showing the ‘I have been vaccinated’ sign in the near future. Until then, stay safe and PLEASE follow the SOPs. Mask on, distance adhered.

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