Property price rising very slowly in Q1 versus previous quarter.

2.8 percent sounds alright for me

As a property owner, I am very happy if the property price rises by 0.7 percent every quarter or 2.8 percent per year. Let me illustrate why with a RM500,000 property. By the way, I do not know many people who bought a property with cash except for one buyer who bought my condo many years ago. The majority pays 10 percent to start telling the world they are a property investor. That’s around RM50,000 to earn the benefits from a property price increase which is based on the full property price and NOT based on the downpayment we paid.

Anyway, RM500,000 property with 2.8 percent increase per year is RM14,000 per year.

Earn RM14,000 via Fixed Deposit?

If we want to earn this RM14,000 in the bank via Fixed Deposit which rate is at 2% currently, then we need to have RM700,000 in the bank in the first place. Please remember, this RM700,000 is a must-have amount. Not just the 10 percent deposit like how a property investment usually is.

Now property price is rising super slowly in Singapore; for Q1 2022. Article in themalaysianreserve.com Property prices climbed 0.7 percent in Q1 2022 versus the previous 3 months when it was a 5 percent jump. This is based on Urban Redevelopment Authority data. This is the slowest for the last 2 years and only Q2 2020 was lower at 0.3 percent. I am very sure everyone remembers why Q2 2020 was a quarter to be forgotten.

The sudden slowodnw is because the government installed property curbs in December. Some foreign banks have suspended fixed-rate home loan packages and this has made the deals less attractive to lenders. Nicholas Mak, the Singapore-based head of research at APAC Realty Ltd. unit ERAsaid, “The property curbs may cool the market in the short term but not so much in the long haul.” Do read the full article here: Article in themalaysianreserve.com

Just need to remember, curbs can only curb…

When the property market is slow, the government will try to boost the total transactions. One of the steps they do is via the banks; increase interest rates to deter some potential buyers. However, please note that lowering property transactions has no direct influence on property prices. That depends on actual demand and supply on the ground. Certain areas do better, certain areas not so good etc.

If I am an owner, I am not selling my property at a price lower than what I thought it should sell just because the government moved the interest rate. Unless of course I am financially challanged, then I would sell lower and that has again nothing to do with lower or higher interest rates too.

Property will always be a need

Some people got married and forced to buy a home versus renting a room. Some people got a new baby and had to buy a bigger unit than the small unit the couple were staying. Some people needed to ensure there’s a room for the grandparents and some people changed job and had to buy a new place which is nearer to the new office. Oh yeah, some people get to work from home and now could buy a new place further away from the office so that she could have more space! All these are the demand for property.

Inflation creeps in as usual

If one were to ask me if the value of the property is now higher, my answer is it really depends. However property prices wise, yes, it’s just going to get higher because of inflation. When the price of raw materials go up, the price of that bowl of noodle goes up, that rental for the shop goes up, that barber would need to charge higher, the car prices move up and well when everything is showing upward movement, then we know that inflation has started to creep in and the property price would also slowly move upwards.

Happy understanding and by the way, I seriously do not want property prices to be rising by double digits every year. That’s the road to a crash further down the road. By the way, Singapore property market is an advanced market. What happens there may happen in developing property markets in the near future too. Cheers.

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