Property price must not keep rising as if the sky’s the limit.
Not many gets double digits salary increment per year
Salary does not increase by double digits, except if one were to resign and got a better offer or if the one got a promotion in title and it comes with a bigger responsibility and bigger pay package. Else, it’s the usual few percent per year just so that everyone is not worse off versus the year before due to inflation. If we get the same pay next year and the cost of meals go up next year, then we will be worse off versus the year before. Sad story yeah.
Property price increase versus salary increments?
Thus, if the property price rises by DOUBLE digits and it continues to rise even though it’s already many times higher than the salary increments, it’s time that the authorities do something concrete about it. By the way, if property prices are to high, it will be make it ever harder for the first-time home buyers to afford a home and what about the first-time home buyers only next year and beyond?
Yes, the government are expected to do something drastic if prices are rising too fast. In fact, sometimes banks may have to step in too. Here’s one such case. Read here: Banks can also help to stop property price from increasing too fast
Article in nst.com.my Australian home prices rose again in September 2021. it’s at a slower pace and this may be signaling that the red-hot property market is losing steam. Residential property values climbed 1.5% in September. Market is up 20.3% versus a year ago. This is also the fastest rise since June 1989.
Tim Lawless, research director at CoreLogic said, “With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers.” Do read the full article with even more facts here: Article in nst.com.my
Not just first-time home buyers by the way
Potential upgraders may now have to stay in their current home for a longer time to save more money. In fact, the ones renting may face financial pressure because when house prices go up, rental will be the next to rise even if it’s not immediately following any price increase. Home owners pay more for their homes, of course they would expect a higher rental to cover the monthly mortgage which they are paying.
Property bubble builds up when prices are rising away from the fundamental; affordability
When property prices rise too fast, there will be some buyers who will have to overstretch themselves financially to buy that property. If some unforeseen circumstances happen, all these people who have overstretched themselves will not have much to fall back on. They may not be able to keep up with the payments and that’s when these houses would have to drop prices a lot to sell quickly.
I wish all the current buyers over there in Australia are still not overstretched even if the prices rose very quickly. Then at least, the risks to property bubble is still low while the authorities take some actions to stop the red-hot condition from continuing for too long. I think this kind of increase is far away from property news Malaysia. Just need to continue doing due-diligence before we buy any property. Happy viewing and buying.
Property News Malaysia? Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). Alternatively, Follow me on Telegram here.
Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles. Else, follow me on Twitter here.
Next suggested article: