6 Reasons Causing Property Prices to Go Down

There are many factors that influence the price of a property. Through time, we have seen the value of a property fluctuates. And of course, we have to look at the fundamental supply and demand for a property. That includes the economic condition of the area, jobs, availability of mortgage funds, improvements in neighborhoods and the house itself. Let’s examine the factors that influence the price of a property.

The Economy
If jobs are scarce in an area or underdeveloped, values of property will fall. It’s all linked, when people couldn’t get job they will tend to move away. Selling off the property will be tough then as there are competitions in the neighbourhood whereby everyone is selling. In this scenario, a price war will occur and everyone is willing to reduce their prices in order to get rid of their liability. At the same time, there are no jobs around and investors will think twice whether to invest in a property that has no rental population. This happened in Bukit Beruntung where people invested properties thinking the place will flourish when there were news to turn the township into automotive hub. Unfortunately, the plan failed to materialise. Subsequently, the property prices in Bukit Beruntung dropped significantly.

Most of the time, property owners want to have a greener area to live in. In fact, one of the criteria when buying a property is the surrounding environment. Any changes to the environment will affect the well-being of a township. For in 2013, the local authority proposed a waste incinerator to be built in Taman Beringin near Jinjang and Kepong back. This of course created anger among residents in the area. The argument is that the incineration will produce very fine ash gas that harmful to people’s health. These pollutants will be dispersed over a wider area beyond the 15km radius although the closer you are to the source of pollutant, the worse off you will be. Back to the property side, it will not only bring down property prices in the short and medium term, but it will dampen prices over the longer term beyond. If you are investing but not sure where to start, perhaps you should download and read property investment 101 ebook.

We can identify the trend of housing price in the area:

Taman Beringin House Price Trend - Rapid Property ConnectGraph from EdgeProperty – Taman Beringin, Jinjang
Taman Wahyu House Price Trend - Rapid Property ConnectGraph from EdgeProperty – Taman Wahyu, Jalan Ipoh

As we can see, the news of waste incinerator to be built affects the prices in nearest neighbouring area such as Taman Beringin and Taman Wahyu. Particularly in 2013 – 2014, we can see some fluctuations in property prices. In fact, I have a friend living in Selayang Utama told me that she planning to sell her property and live further away from the plant stating her concern for the fine ash dispersing in the area if the waste incinerator were to be built. This clearly shows that the environment changes will affect property prices in long term.

Sometimes, it is not about you. It is about your neighbour. A good neighbour will fetch up your property price while a bad neighbour will do the opposite. I once went to see a property in Kuala Lumpur and the property that I was viewing was not that bad. Condition was normal just like any other old property with a simple touch up will do. However, the neighbour has overgrown trees, plants, scrap metals etc. There was no chance that you could peek inside the yard. The entrance to the neighbour property feels like as if we were in Amazon jungle and plants creeping into neighbour’s land. Because of that, the property couldn’t get for higher price. Worst still, investor reluctant to buy giving one valid reason — because of the trees!

Neighbour house will affect property prices - Rapid Property ConnectThe photo is for illustration only. This is not the said property.

Auction Property
If your neighbourhood has a surplus of properties that are in auction, the fair market value of your home is devalued. Investors can purchase for a lower-priced property nearby. Often, the properties that are up for auction are put in the market for the public to buy. To compete in this environment, you must show that your home is worth the additional money it’ll take to buy it by making improvements, maintaining the grounds, painting the exterior, repairing all defects and presenting a quality home.

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Abandoned shoppping centre, non-availability of medical facilities, rehabilitation centre, bad schools and poor road work with many pot holes are all contribute to the devaluation of your property. Any news reported for a crime in the neighborhood will scare away any families who may be interested in buying.

Internal Appearance
Outdated kitchens and baths, appliances that are old, patio or driveway cement that is cracked, extensive clutter, and a long maintenance list devalue a home. Any sign of water leakage on the ceiling is the sign for devaluation of your property. Buyers tend to look into all these when making  a decision to buy. For some investors, any condition is okay as they will buy with discount and then renovate it to their like. But for home buyers, they will try to look for a property with minimal renovation with as much discount as possible. If you are planning to sell your property, do consider touching up the area that are not pleasing to the eye of the buyer.

By | 2017-02-22T17:03:10+00:00 March 23rd, 2016|Blog & Article|0 Comments

About the Author:

Danny has experience in various industries from banking, insurance to property development. For the past two years, Danny has been actively involve in property industry and sees a great opportunity ahead.

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