When we discuss buying and selling of properties, we often talk about the market value of it. But how does the property market as a whole impact the value of your home?
That’s something that’s a little less easy to unpick. So let’s explore market value, and how market conditions can affect it.
What Is The Market Value Of Property?
Market value defines the estimated value which a property is expected to transact for, between a willing buyer and willing seller at a given point in time.
Wanna know how important that valuation is? There’s even an official international definition set out by the globally recognised International Valuation Standards Council!
“Market Value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”
Technical? Yes. Boring? Maybe a bit. Important? Absolutelyyyy!
How Does The Property Market Increase Or Decrease The Market Value?
Market value is by definition linked to the current property market conditions. When the market is positive, and demand is high, prices across the market will rise as demand outstrips supply.
That’s a good thing if you already own a property which you’re looking to sell, but more challenging if you’re looking to buy. That’s what we call a "seller’s market".
If demand is low, and supply is high, property prices are likely to rise at a much slower rate, may even stay level, or fall. In these circumstances you’re far less likely to receive a premium for your home.
This is what’s known as a "buyer’s market", and is a good time to try and purchase property.
Understanding Current Market Conditions
It’s important to understand market conditions when trying to buy or sell property. A good place to start is with a search online for major news stories.
Property is a huge area of investment, so financial insight is often available from expert analysts to explore current conditions.
A good way to understand overall trends is with the help of Malaysia’s House Price Index.
This property market report is compiled by the National Property Information Centre, analysing overall pricing trends in Malaysia over a period of time.
The latest figures showcase a property market experiencing slower growth compared to previous years.
Here’s a quick rundown of the overall growth from the five years preceding the 2nd Quarter of 2018, the latest figures available.
- Q2 2017 – Q2 2018: 3.7%
- Q2 2016 – Q2 2017: 6.8%
- Q2 2015 – Q2 2016: 7.1%
- Q2 2014 – Q2 2015: 7.1%
- Q2 2013 – Q2 2014: 10.1%
Market Conditions Can Vary Across Property Types
It’s important to remember that market conditions offer an average look across the entire ecosystem.
But not all property types or locations experience the same market conditions at a particular time. Different areas and housing types may be more, or less, resilient to property trends.
The latest property market report shows some noticeable contrasts that highlight this reality.
While average year-on-year growth in Q2 2018 was 3.7% across Malaysia (measured against the House Price Index), the average prices in Pahang actually fell by 0.4%, while prices in Melaka grew by 11.1%.
In the same way that different areas experience different levels of growth depending on current market conditions, so too do different property types.
Let’s compare the year-on-year growth for different property types as of the 2nd Quarter of 2018.
- Terrace housing: 7.1%
- High-rise unit: 0.2%
- Semi-detached: 1.9%
- Detached house: -1.4%
Housing figures are obviously complex, and take a long time to analyse, which is why the latest figures often reflect transactions a year or so before.
But that still offers a good insight on how property markets can vary across the country.
How Does The Property Market Impact Me?
Wait a minute you say, that’s a lot of numbers! So what does it mean for me?
It means that market conditions can vary, and working out a detailed understanding requires some committed effort and a fair bit of research.
If you live in a popular area, with a limited number of properties like your home available, chances are your property value will be less impacted by a downturn than other areas.
If you live in a luxury condo in an area with 500 luxury condos empty and available for sale, your property prices will suffer at times when the market is slow.
It’s that timeless question of supply and demand all over again!
How To Increase Price In A Changing Property Market
Of course there are a number of factors which can impact property prices, ranging from the performance of the market itself to the wider economic conditions.
When it comes to individual property, there are a number of elements to consider that contribute to property price.
So what can you do to improve your property price despite the market conditions? Here are three key areas where you can increase the value of your home.
1. Maintenance
If you keep your property in good condition, you’re essentially maintaining the value of that asset. That means important maintenance on everything from a loose door handle to the slight leak in the shower.
The better your property is maintained, the less likely it is to have faults, and thus the more appealing it is to buyers.
2. Presentation
Maintenance is about keeping things working, but presentation is about making things look good. Ensure your property is clean and well presented at all times.
Enhance natural light by removing any blocks. Improve the ambience with plants or pleasing décor. Remove clutter and ensure you present a clear, clean space.
3. Enhancement
Sometimes spending a little money to upgrade your home can make it stand out from the competition.
Upgrading the kitchen with some new lighting or cabinets, redecorating a bathroom to give it a fresh lease of life, spending a little money on upgrading the outdoor areas.
It’s always a balance of cost vs. reward, but it’s definitely an area worth considering.
When it comes down to it, market value may be affected by wider market conditions, but the price someone is willing to pay is influenced by the quality of the property you’re presenting to them.
If you’re operating in a seller’s market, that difference could make a noticeable impact on the bottom line.
If you’re in a buyer’s market, it could just be the difference between losing out, or closing a sale.
Market conditions may be something that an individual can’t change, but reacting to them is vital in order to get the best possible price for your property.
Why not see what the market looks like today, with thousands of properties for sale on PropertyGuru. You can thank us later 😉
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