Huh? So negative still up 7% in Q1 2015?

Negative news everywhere. Yet, in Q1 2015, Malaysian home prices rose 7% versus the same corresponding period in 2014 according to Knight Frank Global House Price Index. Okay, the fortunate thing perhaps is that 7% up meant Malaysia is out of the top 10 highest growth property markets in the world. Based on a a six-month period from Q3 2014, home prices in the country only rose by 2.5 percent while based on a quarterly basis, Q1 has actually shown a decline of 0.2 percent basis.
Top spot for the past 12 months increase was clinched by Hong Kong with 18.7 percent, followed by Turkey at 18.6 percent and Ireland at 16.8 percent. Sometimes I always wonder, why markets such as Hong Kong with the prices way above the usual affordability ratios can continue rising as if the sky is the limit. According to the report, lack of supply together with the popularity of smaller apartments contributed to this growth. The rest of the top 10 are not the usual markets Malaysians buy. They are Luxembourg, Estonia, Colombia, new Zealand, Iceland, Sweden and Norway. Take a look at the chart by Knight Frank below which was published in property guru.com.my

What this tells us is an average number. It should be taken at face value that every property has increased in price by 7 percent. However, this also tells us that prices may continue to increase when the demand exceeds supply. Yes, even if the supply is HUGE but it’s not at the places that majority wanted, it would still meant demand is higher than supply and prices would still increase. Today, in KL, it is easy to see that anything below RM500,000 remain popular but many are still not willing to accept to buy in more secondary areas. Just look at the success of Westside III in Desa Parkcity for an idea about demand versus supply and affordability which is totally not true. Oh yeah, an agent even told me that RM250,000 can only buy a flat today, another grossly untrue statement unless one is talking about all the hotspots.
Buy objectively in times of uncertainty. However, the certainty is that home is a necessity and thus whether in a good market or a bad market, certain properties would remain popular and once affordability is so bad that everyone has to consider secondary areas, then rest assured that it’s time that the prices in these areas will rise. It is certainty safe to say that majority of all Malaysians will not be able to afford those above RM1,200 psf properties.  those with a family would certainly not be buying a SOHO 500sf for RM500,000. Stay savvy, stay objective. Happy buying.
written on 13 June 2015
next suggested article: 6% GST but property prices up 6.2%