“With so many unsold units, it’s just time that property prices will fall.” A statement which is potentially true as long as that particular property that you are looking for is inside the unsold category today and that particular property developer holding the property is aiming at just selling and not about the margins anymore. However, if we are hoping that unsold units will force the existing owners to sell their properties VOLUNTARILY and HAPPILY at lower prices (and they are not financially distressed), then the answer is No. The answer is also no if the developer has sold enough units to cover the construction costs and needs to sell remaining units at prices high enough to give it margins because developments are over a 3-4 year period and not one.
Looking a little more deeper would reveal to us that after all the ‘excitement’ actually, the main reason for the unsold unit is down to price and affordability. 40% of the unsold residential properties are RM500k or higher. This means the potential buyer must have saved RM50,000 as downpayment or is ready to pay a mortgage of around RM2,300 per month (30 year loan, 4.5% interest and 10% downpayment). For banks to approve this buyer(s), the household gross income should be at least RM4,500 with NO other outstanding credit card debts or instalments or whatever payments which zaps away the salary. Oh yeah, better no overseas trips too.
So, for any household to afford this minimum RM500,000 property, it’s best that they are earning a gross income of RM5,000 – RM6,000 instead. I am very sure there are many BUT after deducting those who are affected by negative sentiments (environment / politics / relatives / friends / whatever), the number is reduced tremendously. Let’s not forget that if the household had RM6,000 income per month, they would have already bought a cheaper property a few years earlier. So, they already have a place to stay and does not need to force themselves to upgrade or buy a new one today.
In conclusion, we should definitely watch the unsold property numbers but depending on the income we are earning monthly and the targeted homes, the unsold numbers should not be the main obstacle. It should just be whether the property we want fulfills all of what we want at a price we could afford instead. Seriously, they should teach this to the working professionals instead because for all the first-timers there are just too many questions which they do not find objective answers to. Happy reading.
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written on 3 Jan 2019
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0 Responses
ya indeed, you are right.thanks for sharing.