Property Investment 101: Falling Average House Price in Q1 2024!

Property Investment 101: Falling Average House Price in Q1 2024!

Home prices are falling lah. Especially the high-rise units. Only the landed properties will always be increasing in price lah! Yes, I hear all these statements all the time and it does not change my views much. How I invest remains the same and how others invest is up to them. As long as everyone continues to do well in their investments, I am already a happy man. It does not need to be that I am the only one whos right. Everyone can be right!

Let’s start by referring to the latest Q1 2024 Malaysian House Price Index by National Property Information Centre (NAPIC).

Average Price have fallen for High Rise, Semi-Detached and Detached

Property price has fallen for high-rise units, semi-detached units and also detached units. The only price increase is for terraced homes. let’s look at the high-rise units first.

If we look at high rise units, we can see it’s in red, indicating a drop. These average price is based on total price divided by the number of units. It has fallen by 0.8 percent. From the average of RM370,705 in Q1 2023, it is now RM367,631 for Q1 2024. This RM367,631 is also not the price for all high-rise units yeah. There would be many units which are above this number and there are more units below this number.

This is why that condo you want to buy is not priced at RM367,631 lah. Most probably twice the price depending on size and area.

Why is it lower in average price?

There could be some owners who are willing to sell lower than the price they bought. Finally, they realised they have bought at a price which was too high for the market to accept. Wrong timing, wrong price and wrong expectations. Thus to sell, they have to lower their asking price and it could be lower than even the price they bought.

At the same time, there are more properties which are priced lower in the market too. Maybe it’s smaller in size, maybe it’s further away or maybe the developer is willing to cut some of its gross profit margin in order to sell it lower. Once all these transactions happen, it will also pull down the average property price too.

Are there sellers who are happy then?

Just remember that at the same time, there is a group of sellers who are smiling because they bought the property at the right price and they have managed to sell it higher than the price they bought. That’s why we can see very clearly that some condos do show increase in price when they are transacted. Demand for the attractive ones are higher than the supply which is usually small.

Semi-Detached Homes also cannot be RM703,228 per unit lah

These days, even double storey terraced homes may be higher than this RM700k ++ price. However, the reason the average is this low is also because this is an average number. There may be more transactions of the cheaper units because there are less new units being built today simply because the price would need to be higher than RM1 million and there are not that many buyers who can afford to pay this price. Successful businessman may prefer to buy a piece of land and build or even buy a RM3-4 million home instead versus a typical semi-detached home which may not be big enough for them and family.

Hope this explains why average prices may be moving down but some sellers are still able to sell higher than the price they bought. Last year, I did exactly that, sold a high-rise unit for RM80,000 extra than the price I bought 6 years ago.

Do refer to the chart again and you may see that for most years, the price is increasing… cheers.

Thank you for reading! Please do share if you believe others could benefit too. Thank you.

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