Financial news: Countries with decreased housing prices. Does this mean it’s easier for the people to buy a property?
If I could see that property price seems to be on a downtrend, do I buy now or later?
It’s quite funny, really. When we think prices are moving up, we buy. It does not matter who made us think so. We may also not have any idea if we are already buying at the peak but it will only matter later. The worry is not being able to get anything if we do not buy now. I have friends who bought into the craze of a certain area many years ago and until today, that same little unit is still not fetching the rental which she thought she would. Perhaps just need to wait a little longer.
This same situation may also happen when we think prices are moving downwards. When we think prices may be moving downwards, we hold. We want the best price which is the bottom price. We learn very little from experience that predicting when is the bottom is hard. Better to buy as long as there’s already good value. I have a friend whom I advised to quickly buy because I think the price of that particular property is already very attractive.
He said, better view a few more units. Later on he told me that he failed to buy any unit. Turned out that the few units he saw were all posted by different real estate negotiators but were all the same unit. This was not the end, a few years later, when I wanted to sell my unit, I told him that I would most probably be selling my unit. He asked for the price and after I told him, he said that he wants to compare first. I sold for a slightly higher price than what I told him and when I told him that I have sold, he asked me why I did not sell to him… hahaha.
Now let’s look at some countries with decreased housing prices. Info source: visualcapitalist.com (please click to go view the whole article yeah. Else, refer below for some of them plus explanations too)
Look closer at the numbers and what it tells us it how owning a property may just helped the owner to hedge against inflation too. Indonesia for example did not have real price growth increase at all for 12 years. However, people were still complaining of high house price because it was increasing at the same rate as the inflation. In other words, an owner who bought a property did not lose any value even though there was inflation.
Some countries such as Russia or Italy have experienced a real price growth which was decreasing and at the same time, inflation still happened. For these countries, when the owner tries to sell their property, they could only sell it lower and at the same time, they were also affected by price increase of other things too. Not a great experience if we look at the chart above.
One last thing about decreasing property prices
Decreasing property prices do not mean lower rental rates yeah. The number of units within that area loved by many is still the same number of units and the people who love that area would still be more than the number of units. Meanwhile because the prices are not attractive, property developers will choose not to build or build very selectively. Just need to imagine if this situation lasts for a few years. What would happen to the supply of units versus the potential demand?
Unless of course we are talking about an economy which is also shrinking… That’s NOT TRUE at all about Indonesia yeah. This is one giant which will be a top 10 largest economy in the world. Any business which is thinking of international markets and skipping Indonesia or ASEAN may need to change their consultants yeah.
Here’s an earlier article about increasing home prices versus the inflation rate. Property prices after taking out inflation
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