This got me thinking. Why are many new property launches and existing homes exorbitantly priced? Why are there few to none of the bread-and-butter houses being built?
If developers keep developing and selling higher priced properties, this will lead to an imbalance in supply and demand in the housing market.
A gauge of what a house is worth would be the rental it can fetch. As prices of homes rise and the rental market, which is more linked to the disposable income of people, remains static and rigid, the inflated prices of property becomes more apparent.
Yes, price inflation of properties – if it remains strong – would offset the loss in returns from rent if people buy properties as an investment.
But then people should also consider whether they are better off renting and investing their money in higher yielding assets.
The value of houses is so expensive now. It’s this a right time to buy houses to invest? Even you have the money to invest you know that somehow the houses is not worth that amount of money. Find the right vehicle to park your money while waiting for the prices of the houses to drop. Whatever go up will come down! A return of investment that can give you low risk and moderate return (higher than fixed deposit). Something like an oversea investment.
Source link: http://biz.thestar.com.my/news/story.asp?file=%2F2010%2F8%2F12%2Fbusiness%2F6842280&sec=business
