While volume of transactions has declined over the past few months, prices have only dipped 1.2% in the first quarter of 2020. Somehow the numbers do not match the gravity of Covid-19. Why so?
The illiquidity of properties makes it slow to price in market factors. It normally requires six to nine months of lag period to gradually adjust towards where majority of buyers are willing to match sellers.
Previously I mentioned a decline in property launch prices to $800psf. Now we are seeing this moderate sized 1496sqf freehold condo at Telok Kurau for sale at $1.38m ($922psf).
Put on sale by a bank, clearly this is a tough time. The plunge in equities, closure of businesses and an oil crash recently have resulted in significant write-downs for all our local banks. Therefore my guess is they will dispose more foreclosed property this year to avoid further write-downs and negativity next year.
New buyers can take the time to negotiate strongly and avoid over-leveraging. Old, retired and fully paid owners stay calm and stay healthy. There is nothing to worry.