Can property price in my area keep rising?

Can property price in my area keep rising?

My personal wish has always for 1-2 percent rise in properties I own every year. A 2% increase for a RM500,000 property is still RM10,000 per year. Okay lah. To earn RM10,000 from FD, we need to put RM300,000 into the bank yeah. I wonder how many have RM300,000 hidden somewhere that they can just leave in the bank for a 3.5% FD return. Coming back to property.

Good news for some owners I guess when they read this piece of news. “Klang Valley property prices up 3.2% in 2024: Upscale neighbourhoods in Batu district lead the way.” Klang Valley is huge of course and maybe not all areas may show prices rising. In fact average number do not reflect anything much yeah.

Perhaps some areas are showing double digits increase and some areas are showing low single digit price increase. Perhaps some are even showing a negative number; prices are reducing every passing year. Anyway, let’s look at what the media says.

Article in edgeprop.my The Klang Valley property market experienced an upward trend in 2024, with prices appreciating by more than 3% year-on-year (y-o-y). Batu district, home to prestigious neighbourhoods like Mont’Kiara and Desa ParkCity, emerged as a top performer, with serviced apartments witnessing an impressive price surge of almost 20%.

According to JLL Malaysia managing director Jamie Tan, prices appreciated across major regions in the city by an average of 3.2% compared to the previous year. Although this positive trajectory was primarily driven by strong demand, escalating construction costs were also a pushing factor. Do read here for the full article with a lot more infornation. Article in edgeprop.my

Popular areas have to lead the way yeah, no other choices

Imagine one year when the properties in the popular area stop rising. What will happen to properties in less popular areas then? Yes, it will also have to stop rising too. This is why popular areas have to continue to lead the way. That’s why advanced property markets in the world will show the way. Malaysian property market is unlikely to lead the world yeah.

Number wise, if I am a developer and the property prices are not showing any increase but my construction costs are rising, I need to decide how I can still earn my profit when I develop. Perhaps smaller units, similar margins but a lot more units? I know if my costs are high and property prices are not rising, then the price I can sell for a new property may not be able to give me the returns yeah. So, I better stop developing lah.

When most developers stop developing, supply of new homes will be stagnant and if demand continues to grow with new workforce, then prices will rise again. The cycle continues. This is why the market is always vibrant.

All the best in waiting for property price increase yeah. I am also hoping every year is the same too. I do not wish for any huge increase suddenly because it will suddenly become unaffordable and this is not a good story for the property market. Salaries of people do not suddenly rise. If prices suddenly rises, it becomes unsustainable. So, better rise slowly but surely and consistently.

Happy investing and please do share your thoughts. Thank you!

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