Property Investment 101: Yes, property price dropped.

Property Investment 101: Yes, property price dropped.

Did you heart also dropped or you are now very happy?

I think it’s okay. Haha. Dropped, okay also. Up a bit, okay also. I just worry when prices keep dropping for a few quarters, that may indicate the whole economy is not doing well and that’s really worrying. Would I still get property event speaking engagements? If it goes up and it goes up very much faster than the salary increase for a few quarters, I also worry. It’s simply not sustainable.

Please do not wish for those numbers. Go elsewhere and find other investments that could give you double returns in a day (many of those around). Just let property market just be stable and increase due to the inflation and not speculation. Okay, statistically speaking, what’s happening? Take a look at the chart below then. Truth, it has dropped.

Can you see the drops over the past 20 over years?

Yea, it’s true yeah. Property prices do have dropping instances. In the most recent quarter, the 3Q 2023 for Malaysia, tradingeconomics.com said this, “House Price Index YoY in Malaysia decreased to 0.10 percent in the third quarter of 2023 from 4.30 percent in the second quarter of 2023.”

This statement meant that home price on average has dropped from it’s increase of 4.3% in 2Q 2023 and it’s now only increasing at 0.1% for Q3 2023. Of course, I could not predict with any accuracy but if it drops again, then property price should be decreasing. If it remains at the same 0.1% increase, it meant this (in calculation).

RM500,000 home with a 0.1 percent increase = RM500,000 x 0.001 and this is an increase of only RM500. Now… if this is the case every year, Perhaps it’s time to move away. 🙂

How’s the comparison then? Maybe with FD?

Anyway, coming back to the typical scenario. A RM500,000 home would at least require a 10 percent down payment of RM50,000. If one were to put this RM50,000 into a FD for 3 percent return per annum, that’s RM50,000 x 3 percent = RM150 per year. Wow! Still 3 times smaller than the above. Let’s also remember that the number of 0.1% is for one quarter. If it stays the same, then it’s 0.4 percent per annum. This is the calculation:

RM500,000 x 0.04 = RM2,000 per year. Definitely not a lot and if this is indeed the case, one should move away too.

Maybe it will continue to drop with more new affordable launches?

This statement is definitely true as well. These days, developers are definitely doing their very best to make the properties as affordable as possible. We just need to remember that even the people wanting to buy these affordable units and the ones wanting to buy into an established neighbourhood are different groups of people. This is why even when some car models are launched and it’s way cheaper, it does not mean it will even cause issues to the much more expensive cars in the market yeah. The same for handphones. The same for any product and service.

Happy guessing. I am also guessing too.

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