Property Investment 101: Property prices falling everywhere. What’s the next action to take?
Advanced property market to provide a clue?
Malaysia property market is a small one. Ours is also not so advanced. People still think anywhere above 20km away from the city centre as VERY FAR. Haha. I always encourage everyone to take a look at the definition of suburbs in some advanced countries to understand that even 50km is not considered as ‘impossible’ and meanwhile 30km from the city centre is considered normal.
Since everyone define some property markets as more advanced, we should look to them for some clues? Now, since advanced property market are showing falling property prices, would this also affect the Malaysia property market? News here for reading and understanding. Here’s that article talking about bad news; property prices falling. Just remember to note that depending on how they measure, the results could be different.
Article in theguardian.com As per the article, here are the numbers. Houses in Stockholm has fallen 20 percent from their peak. Sydney prices are down by almost 14%. San Francisco is down by 15% and Auckland by almost 22%. Meanwhile Toronto has falled by 16%. Closer to us, Seoul has reported apartment prices which are down 24% since October 2021.
One major reason is because of the highest interest rate which has dampened buying interest. For example, the Bank of England has raised rates from 0.1% in late 2021 to 4% today. Meanwhole US average long-term mortgage rates are now above 6%. A year ago they were below 4%. Do read the full article here: Article in theguardian.com
Malaysia property market’s price movement?
What about Malaysia’s property market? It’s an interesting trend to be frank. It looks like it’s falling but actually it’s not. Some say not yet. Whatever lah, if it’s above the zero line, it means it is still increasing and not falling yet. The property price increase is however on a downtrend yeah. From a double digit increase in 2011, 2012 and 2013, it has started to fall and fall and kept falling until it’s only super minimal at 0.6%. In other words, the property price is not falling
Your own conclusion?
If we bought a property because the priced increase 10 percent last year, we may have to be very careful for sudden price movement downwards. However, if we did not buy because the property price decreased 10 percent, we may have to be ready for potential loss in opportunity too. Property price movement is secondary because as long as there is inflation, value of money becomes smaller and prices move up naturally.
The property we buy is the primary reason to buy or not to buy. Choose a property with the qualities we want, we like and we need. Chances are someone is willing to buy it from us in the future for the same reasons. Else, we could stay in it for as long as want, save on the rental and make that home a home sweet home with our loved ones. Happy knowing.
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