Falling property transactions and property price. Looks like a familiar situation in the Malaysian property market? That 70% property price reduction prediction By the way, it’s quite a foregone conclusion that property transactions for 2020 will likely drop yeah. Already we have the Movement Control Order (MCO) for over a month and our Prime Minister saying that everyday that we have MCO, the economy loses RM2.4 billion.
With the MCO, property viewings (actual viewings, not just some videos online) has reduced. Booking may still happen for very seasoned property investors during the MCO but for most other Malaysian property buyers, not many will buy anything of a few hundred thousand ringgit or higher by just relying on videos. So, how about learning from advanced property markets instead of trying to forecast what will happen here in Malaysia?
Article in theguardian.com Global consultancy Knight Frank says that the house sales in the UK will collapse and goes into a deep freeze due to coronavirus pandemic. Prices will however fall just 3% and will rebound in 2021. Knight Frank says that the total house sales will drop to just 734,000 in 2020 versys 1,175,000 in 2019. It does not however see property price to also collapse.
It forecast that mainstream UK house prices would fall 3% in 2020 but will then bounce back by a positive 5% in 2021. This is based also on an assumption that the British economy will shrink by 4%in 2020 before rebounding by 4.5% in 2021. Liam Bailey, the global head of research at Knight Frank, said: “The housing market was in a strong position in January and February. A sharp uptick in sales and price growth was seen across the UK, with even the prime central London market seeing a reversal of a five-year-long price decline.” Please do read the full article here: Article in theguardian.com
A couple of important learnings. Number of property transactions may fall a lot but it does not mean property prices would also be dropping. Without a lot of transactions, especially from owners with financial distress meant that property prices continue to be orderly. Would we rush to sell at a much lower price than most other recent transactions unless we are facing financial difficulties?
If the answer is no, then the next question is, would we be dropping into some financial difficulties? The answer usually lies with our income stream. If our job continues to pay us, we will be able to maintain our current life. If we operate a business and we can still at least derive some incomes from this or we have some savings to sustain the operation, we can still hold on and wish for the reopening to happen faster. This is why when we go into a financial crisis, property transactions and property prices may just keep falling. For now, we are not and there’s also a moratorium of 6 months as breathing space too. Earlier article here.
Next suggested article: No transactions, no changes in prices lah