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Why it’s not easy for property prices to fall?

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Why it’s not easy for property prices to fall?

My personal view as a property owner

If I am to sell my property, I will sell it at a price I prefer after taking into account the typical market price for the property. Anyone can always come to me and say, “Market is bad… Covid-19 is getting serious… better sell as prices will fall…” and I will tell them to go look for another owner instead. If another owner sells at a lower price, it also meant that there is one less competition in the market.

No one knows if the remaining owners would now comprise of all those who could hold on to their properties. Potential buyers would thus have to buy at a price which the seller wants to sell instead. Yes, I have a property in Penang which I wanted to sell but I prefer the price to be a minimum of RM600,000. No one has offered that price and thus, I am still waiting. I am very sure some owners could have sold lower. I will wait.

What if the seller has financial difficulties then?

If I have financial difficulties, then I do not need all these people to come tell me to sell my property at a lower price that what is typical. I would have already proceeded to sell the property at 10, 15 and even 20% below the typical property price. So, the question on whether prices will fall does not depend on what people say. It depends on the owner’s ability to hold. If the owner has no financial difficulties, they can hold for a very long time.

We have an article which basically is telling everyone that prices are unlikely to ease anytime soon.

Article in themalaysianreserve.com CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said it is the right time to buy properties for “own occupation” largely due to the affordable pricing and incentives offered by the developers. He said, “Notwithstanding this, buyers should be financially ready to pay the instalment now and be ready for the instalment amount to increase by up to 20%.” He added, “If not, it is not advisable to purchase properties right now.” Read here for the full article: Article in themalaysianreserve.com

What if property prices continue to fall then?

If property prices continue to fall, then fewer people would want to buy a property. Not many people is crazy enough to buy something that depreciates… right? Except for their dream car maybe. In fact, if property prices continue to fall, even property developers would have to find another business to venture into. Building homes which will take 3 years and at the end of 3 years, the property price their property could fetch is lower than the property price three years ago?

Banks would not want to lend money for property purchase. Especially if it is proven that property prices would continue to fall. Banks would now move all their lending to other purposes and will just skip any home loan applications by rejecting them. By the way, banks need to earn profits because they have their shareholders and also their huge number of employees too.

Yea, this is why it is not possible for property prices to continue falling. Maybe if an economic crisis strikes, then property prices may undergo one round of steep fall but as soon as the economy shows a recovery, property prices will rebound. Such is the case when it comes to property prices and this is also why so many people think of property investment as a very good form of investment. Happy understanding.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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