House prices? 3 important things: savings, preference and interest rates.
By the way, there are many other factors affecting house prices, not just these three stated in the title of the article but we look at these three for this article as these are the three main factors said to be pushing UK’s home prices up by double digits and it is said to be the highest rise since the 2008 financial crisis.
Actually the 2008 was a mortgage crisis started by the biggest economy in the world and it affected many other markets too. Briefly, it was all due to greed. Hopefully they have learnt their lesson well and will not repeat it. Coming back to the double digits growth in property price in the UK.
Remember yeah, there’s no way that the median salary increase in % could not have been even half of the price increase. In other words, this kind of crazy increase must not continue and it’s clearly not sustainable.
Article in guardian.com UK house prices rose by 10% in the year to May. This is the fastest rate since before the 2008 financial crisis. In some parts of the country there are stamp duty holiday and this helped to push some buyers to take advantage of it
Jamie Durham, an economist at PwC, said stamp duty was not the only factor pushing prices up. He said, “The market continues to be supported by a shift in preferences towards more spacious properties,” he said. “It has also been supported by household savings during the pandemic, estimated to be about £7,800 per adult, and continued low interest rates.” Please do read the full article here: Article in guardian.com
Do we have similar situation in Malaysia?
Okay, we are in a lockdown currently. However, we have Home Ownership Campaign (HOC) which is a stamp duty exemption campaign. We also have moratorium which will likely boost savings for the ones who actually does not need the moratorium in the first place. Assuming, the typical repayment is RM2,000 per month, then the savings could be RM12,000. Malaysia’s interest rate is also as low as I could remember.
Our Overnight Policy Rate (OPR) has been reaffirmed at 1.75% by Bank Negara Malaysia (BNM) just last week as well. So, actually we do have the similar situations as the UK. So, we need to wait to see what will happen once things get better; vaccinations got to the point of 50%. With 400,000 per day or higher, this is really possible by end August. Let’s hope okay.
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