Property not as hot as investors think according to a research house
I agree and I hope it’s not hot as well (I am not from developer, does not have REN tag and is not attached to any bank)
Regardless of which organisation said this, I agree! 🙂 In fact I also hope it’s not hot lah. Lukewarm is perfectly fine. I am actually against too much of heating up of whatever kind of investment because if it’s an investment it’s NOT supposed to always be HOT! Then, it will soon be too hot to handle yeah. Don’t agree?
Well, what happens if the property market gets hot? Too many people will simply jump in, no one listens to logic and everyone believes there is no ceiling. When prices reaches the cloud, it will then go into the sky and then to the moon and beyond. No wonder property market usually collapses after some duration in a hot situation.
In the stock market, if it’s hot all the time, especially for certain stocks, then the prices will move upwards so fast and furious that in the end some of the smaller, newer and unaware investors will get burnt and then they will cblame the share market as volatile. Ahem… there are so many dividend stocks which does not move much, what volatility are they talking about?
This is the article in themalaysianreserve entitled, “Property not as hot as investors think, says Kenanga Research.” Kenanga Research said that the property sector has retained its “neutral” call.
Reasons include oversupply and home ownership now being even more out of reach given the elevated interest rates, sustained high inflation and the introduction of targeted fuel subsidies that may erode spending power of certain consumer groups.
The report noted that the banking industry loans approval rate for property based on Bank Negara Malaysia’s (BNM) recent July 2023 release reflected a slight increase for the month at 44.1%, compared to 43.5% in December 2022.
It said, “We reckon macro and income conditions could be less worrying as economic recovery is somewhat positive and hence more palatable for the banks’ appetite. That said, present readings are still far from the peak of 50% during the industry’s upcycle between 2011-2014.” Full article here: Article in themalaysianreserve entitled, “Property not as hot as investors think, says Kenanga Research.”
Let’s look at what happens with just a lukewarm market?
Median age for Malaysia is 29 or maybe 30 years old. In other words, probability that demand for property is still existing for the future because at this age, people may just be ready to buy a property. I assume people who wants and could buy a property would need to save 6-8 years for deposit to buy a property. They started working from 21-24 depending on the qualifications they stop at.
As people are not rushing, there is also no need for the developers to be rushing to introduce new developments. Everyone just stay steady and property prices will just follow behind the salary increements percentage or inflation increase rate. Salary increments, according to Mercer is 4.8 percent for 2023. Here’s their report. Meanwhile inflation rate is around 2 percent as per tradingeconomics.com (click here to read)
There’s no need to follow 4.8 percent growth. Perhaps just follow half of the increment at 2.4 percent or even at the inflation level of 2 percent. When transactions are not crazily high, prices will also not go up crazily fast. So, just 2 percent maybe? This should be good so that more Malaysians could buy a property. More Malaysians could save fast enough versus always way behind and could not catch up to property price increase yeah.
So, here’s my wish. Stay lukewarm yeah. It’s fine for me as a working professional and for all working Malaysians too.
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