LAST week, I spoke at a seminar organised by the Rehda Institute. The seminar was aimed at teaching participants on how to collate data from the National Property Information Centre (Napic).
The seminar taught participants how to analyse raw data and make sense out of it, to assist in their daily work and decision-making process.
Raw data is useless if you do not have the capacity or expertise to analyse and paint a realistic picture. You must have the ability to interpret this data and project the future with some measure of accuracy.
If you are not in the property market, you may not be able to do this. The best analogy I can give you is this - you and a doctor looking at the same X-ray but the doctor will be able to interpret it in many ways that you are not able to do.
Property consultants are trained professionals with proper qualifications and experience. The right consultants can bring much value to the table and help create strategies to ensure the client’s objectives are met.
According to the data released by Napic last month, the total volume of property transactions last year fell in the last five years except for 2014, which saw a small, insignificant rise in transactions.
The market has been consolidating since 2012, when Bank Negara Malaysia introduced its “Responsible Lending Guidelines”.
These guidelines were introduced as a cooling measure, aimed at slowing down a market that has been overheating. At that time, these measures were welcomed by the industry as an overheating market, if left unchecked, would eventually burst and crash.
The cooling measures were effective in the sense that they slowed the market down.
Total transactions fell from 430,403 in 2011 to 427,520 in 2012. This drop, although small, nevertheless indicated that the cooling measures were effective. As more cooling measures were put in place, the market continued to consolidate, and transaction volume continued its southward journey.
In 2013, there was a big drop of 10.8 per cent, transactions fell from 427,520 to 381,130. Since then, the market has never really recovered. It continued to fall each year and last year was no different.
Although transaction volumes continued to fall through the last few years, the total value of properties transacted never reduced.
From 2012 to 2014, the total value of properties transacted rose each year. All this changed in 2015, when the market saw a drop in total value for the first time in many years.
In 2014, RM163 billion worth of transactions were recorded. This fell in 2015 to RM150 billion, representing a fall of 8.7 per cent.
Last year, the value fell further to RM145.4 billion, a drop of about three per cent from the preceding year.
So, what’s the silver lining here?
The fact that the drop in total value last year was much less than in 2015, it is indeed some measure of good news to the market.
It indicates that the market is beginning to stabilise and the falling rate is getting less steep.
In my opinion, we are very close to the end of the “Property U Curve”. This could indicate that the market will go through a short period where it will register no growth.
We must bear in mind that no growth is better than negative growth. After a short spell of flattening out, the market will start improving, and we should see both volume and values increasing.
So if you are a property investor, there is a small window of opportunity for you to “seize the day”, before the market starts its upward trend again.
We need to constantly remind ourselves that the property market is a continuous cycle of ups and downs. The savvy investor will learn to recognise these ups and downs and will be prepared to take advantage of them.