support@kopiandproperty.com

Previous
Next

Advertisement Banner

No speculative investments in housing market

keys

No speculative investments in housing market.

Housing bubble in the market?

When people ask me if there are housing bubble which is about to burst. I tell them to search for the properties in major property listing sites. If most of the properties are already in unaffordable categories, then housing bubble has indeed formed. However, transactions continue to happen and the median price continue to be affordable to M40 households then chances are there are no bubbles.

More often than not, they would challenge me and if they are my friends, I will share more. If they are not, I just tell them that everyone should read and believe what they want to believe and take appropriate actions. For example, if we believe a bubble is forming, then it’s time to sell the property and then wait to pick up great deals in the near future.

If not willing to take action, then stop lying yeah…

If one is not willing to do that, then stop trying to force others to do it yeah. I am not falling for that trick. Anyway, what I say is not so important. Let’s listen to what Bank Negara Malaysia (BNM) has to say.

Article in theedgemarkets.com As per Bank Negara Malaysia (BNM), despite the low interest rates domestically and globally, there are limited signs of credit-fueled speculative investments. BNM shared in its Financial Stability Review for the second half of 2021 report that the growth in owner-occupiers continued to outstrip that by household investors. 

It said, “Banks have maintained prudent lending standards when financing household investors by applying lower debt service ratio (DSR) and loan to value (LTV) ratios, compared to borrowers who are owner-occupiers.”

BNM’s report also revealed that about 75% of household investors are those earning more than RM5,000 per month. Meanwhile house hold investors earning below RM5,000 per month are largely associated with house purchases in the lower and mid-priced market segments (below RM500,000).

BNM added, “Risks of a sharp correction in house prices in this market segment are generally lower, given sustained demand.” Please read here for the full report: Article in theedgemarkets.com

I am definitely not selling below the price I bought, sorry

The fact remains that all the potential buyers always want lower prices while all the sellers would want higher prices than the price they purchased. This will always be true. This is why property price will always be determined by demand and supply and definitely not some average number in the whole property market. Meanwhile sellers would only sell below the price they bought if they are in financial difficulties.

That includes me as well. I had wanted to sell one condo of 1,100 sq ft in Penang but my ‘desperate’ price was not accepted by potential buyers. So, after 5 years, I am still ‘desperately’ trying to sell my condo… Has the price gone down then for the last 5 years? Not my unit…

Now imagine if I had bought the unit at very high price per sq ft and now new launches are at a lower price point that mine. Of course I would be forced to sell lower if I needed the money. However, the real issue here is not the market yeah. It’s because the owner bought at too high price per sq ft! I do not think this has got anything to do with the market apart from the owner making a speculative purchase previously. Happy understanding.

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: 5 Must-Do steps for property investment.

Property Investment always start with knowledge. Equip ourselves with more here.

Motion arrow towards right
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Motion arrow towards right
Share on facebook
Share on twitter
Share on linkedin
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.

Previous
Next

Advertisement Banner

Facebook Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Table of Contents

Most Recent Posts

join the family

Like us for daily investment news and more

Hit the like