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Yes! Property price is dropping.

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How’s the title of this article? Sensational and gotten you to read?

There are so many property experts I learn from everyday because I needed to read in order to write. However, when it comes to writing, I do think writers of property investment article should at least own a property and thus understand a little about the dynamics of the property market, the property owner (if they are one) and the property buyer (they were one).

Once they understood, then hopefully their article title can be more objective and not as sensational.

The unfortunate thing about sensational title is this, people read just the title of the article and assume all the rest.

Then, when there’s an opportunity they will then ask me this question, ‘I heard the property prices are going to fall according to XXXX media. When do you think it will be dropping?.’

Today, let’s just answer this question again though I have answered it countless of times. By the way, I am not from the developer, I do not need to keep telling you to buy now. I am also not from the real estate agency, I do not need to tell you buy the property I am selling now. In fact I also do not run some courses yeah. What I share is just what I believe. True or not, up to you to decide okay. It does not affect me yeah.

Now, coming to the property price, this is from housingwatch.my a BNM related website. Image below.

Does it show property prices dropping? Looking at just the line, it does really look as if property prices were on a downtrend… right? By the way, anything downtrend means it’s negative, so it has be below the zero line. If the line is above zero, that means it is an increase, no matter how little, how low or how small that increase may be. Above zero equals to positive and that’s a growth.

Look again at the image above. How many quarters was the line below zero? One? Yes, the answer is one time from 3Q2014 all the way until 3Q 2020. There was one quarter where the line was below zero. That’s a minus 0.9% yeah.

Will the line still be below zero for the next few quarters? We have to wait to see what happens, I have no idea. However, what is also shown was that if we stretch the line from 2013 to 1990, then the average price increase was 6.3%. Meanwhile if we look at 2014 to 2019, then this increase has dropped to just 6%. It does show a trend of lower growth yeah. Who knows, in the next 20 years, the growth average may even be below 6%.

Now, for the question again, are property prices dropping? Yes, for one quarter thus far. Should I now be afraid? Sure if that’s how one feels about property investment. Just need to remember that in those good years, we still have people who got burnt in the property market. Bought too high… bought too many… bought the wrong one… and many more reasons.

At the same time, real estate has also continuously created new wealth for the ones who bought undervalued, bought within financial capability and bought the right one. Happy knowing the answer based on the stats yeah.

But I thought there are now more affordable launches!?

This statement is definitely true as well. There were days when homes were pushing above RM700,000 but these days, the push is to be closer to RM500,000 or even lower. The push is for smaller sized landed homes which many call starter homes. The push is for lower prices for high-rise with a higher density.

Basically the push is for NEW properties to be priced lower than previously and developers do this by building more units on the same piece of land (with approval from authority of course) or they build further away where land cost is more manageable. So, did property prices move lower in this case? Yes, same price for a smaller home, further away. What happens to the prices of the properties which are bigger and nearer to the city centre then? Happy answering.

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