7 reasons why property price will still be rising…

I know many wants to buy the best property money could buy today. However, the best property one could buy today and many years later will not be the same. In fact that best property today may look old and jaded next to a new property in the future. By then, should we not upgrade so that we could then stay in a better property than what we bought today? Think about it. The only important thing is to buy as soon as we could afford and not when that best property is now within our salary’s reach. Here are 7 reasons why property price will still be rising. (not the overvalued ones okay…) 

#1 – Salaries will still be rising. I know, someone wanted to say that the fresh graduates are having almost the same pay today compared to 10 years ago. Fact. Today, there are by FAR more Malaysians earning salaries of over RM5,000 compared to 10 years ago. Today, there are also by FAR more Malaysians earning over RM10,000 per month than 10 years ago. This is why they could afford to pay higher. 

#2 – Costs will still be rising. I am not sure about you but I remember long time ago, cement was just a few ringgit per 50kg. Today the prices are many times higher. Land prices was also a few ringgit long time ago. Today, if it’s a small plot and it’s nearby KLCC, it’s safe to assume that even when one bids for it at RM1,500 per sq ft, chances are, they will NOT get it. 

#3 – New catalysts will continue to come. Let’s remember those times when there were NO Petronas Twin Towers and KLCC area. Prices were cheaper… Let’s remember those times when there were no MidValley Megamall. Remember those days when The Curve and IKEA was not yet in Damansara? How about areas with popular LRT stations today and future MRT stations? All these continue to push attractiveness of a certain area and when demand increases faster than supply, prices move up. 

#4 – Urbanisation rate. In case we wonder why prices in major cities rise faster than small towns, that’s because of career opportunities. When more people graduate (over 350,000 tertiary graduates per year), they will move to the major cities such as KL, Penang, JB and KK to work. Demand for properties will grow. Assuming one landed home could be rented out at RM500 per room and there are 4 rooms, that’s RM2,000. The property price which used to be just RM200,000 will now double to RM400,000 because new buyers use rental yield as a benchmark.  

 #5 – Preferences. Somehow people wants proper gated & guarded homes. Somehow if they could afford, they also want a clubhouse or for high-rise, they want more than just one car park, they want more than just a small swimming pool and they prefer to have a very well equipped gym and a landscaped park. All these meant that the cost per unit will rise and this will push up prices too. 

#6 – Malaysia is a follower.  Frankly, if the property prices in advanced property markets had stayed stagnant without any movement, our (Malaysia) property market prices would have stayed the same too. However, when the whole world moves, it’s hard for Malaysia not to move. Every time people talk about affordability and they look at Australia, Hong Kong and even Singapore, we are actually nowhere near them yet. 

#7 – Owners hate selling at lower prices. I have asked listeners of my talks this question many times. ‘Would you sell the property you bought at a lower or a higher price?’ The answer is 100% YES for Higher thus far. Let’s remember that prices move up or down when there are transactions. If owners are selling higher… Developers of the same township are also selling slightly higher every time they launch new projects within the same townships. I have not heard of any developer selling ever lower every time they launch something new. If you know, please tell me! 

There are many other reasons but I think 7 is more than enough to tell everyone that property prices will only be dropping when there’s a financial crisis. Well, there was the 1998 financial crisis and the 2008 sub-prime crisis. What happened to the property prices then was that it fell… slightly but today, prices have already recovered and moved higher than 1998 or 2008. If a financial crisis do happen in 2019 for example, the prices may again drop but the question we should ask ourselves would be, ‘Would we recover?” If the answer is a YES, buying is still safe. If the answer is NO, I have no answer for you. Happy believing. 

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written on 13 Dec 2018

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