Property price expected to rise in 2022
This is not an article about the property price in Malaysia yeah. This is the property market in the largest economy in the world, as at 2021; the U.S. property market. By the way, if the advanced property markets are showing a negative sign, let’s understand that this will affect the developing economies. This is why the stock markets are usually following the trend from advanced economies.
Let’s look through some of the comments in the Article in cnet.com Dietz says that home owners are in a fortunate position due to skyrocketing home values. However, at the same time, this has created a difficult situation for prospective homebuyers. In fact this situation is unlikely to change in 2022. With the potential for higher interest rates in 2022, this will mean even more headwinds for buyers throughout 2022.
Federal Reserve has indicated that it will raise interest rates in 2022. With a rising inflation, it will also be increasing both the cost of home building materials and skilled labour. The National Association of Realtors’ is expecting a 5.7 percent increase in annual median home prices. Nevertheless, mortgage interest are still quite low. In fact, this was the comment in the article, “Mortgage rates are still at historical lows, and it’s been harder than ever to predict where things are going thanks to the ongoing COVID-19 pandemic.” Please do read the full article here: Article in cnet.com
Home owners in Malaysia are also very fortunate
Just like the home owners in the US, home owners in Malaysia will also be fortunate moving forward because the lockdowns are lifted and the economic activities are picking up. It’s also quite certain that the GDP numbers for Q4 2021 is likely to be the highest for the whole of 2021. My good friend has said that his AirBnB unit is now fully booked every weekends ever since inter-state travel has been allowed again.
Inflation and Interest Rates in Malaysia has the same signs as the U.S. as well
When the inflation moves up in the U.S. their interest rates would also have to rise to counter this. It is the same case here in Malaysia where our inflation has started to show signs of moving upwards. However just like the U.S. the current interest rates for home loans remain the lowest in history. I have never seen home interest rates of 3 percent from the time when I started buying a property until today.
Will property price be rising then?
I am not an analyst from a bank with lots of data to crunch. However, I do think that good times should be coming back especially if we compare to the bleak times of 2021 or even 2020. The latest Covid-19 variant Omicron seems to spread faster but thus far, it has not been showing a much stronger hospitalisation and death rates. There are signs that these two effects are lower for Omicron versus Delta.
Happy anticipating 2022 and happy viewing.
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