TIPS
diy: Predicting
rate cycle
A
property cycle can be seen as a logical sequence of recurrent events reflected in demographic, economic and emotional factors that affect supply and demand for property, subsequently influencing the property market. Do not stress yourself! There are ways that you can predict the rate cycle to make your next investment a success.
The Share Market
The share market is haywire most of the time but is definitely worth watching in a general sense. If it trends upwards, and then continue to do so, this will ultimately tell us that the rate-cutting cycle is at, or near, its lows. Share markets are a good barometer of global and economic confidence to come – they do not tell us what is happening now but are usually a good guide of what is about to happen down the track.
Global Economic Conditions
If there is less bad news coming out of Europe
68 DECEMBER 2014
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and the United States, this can be a sign rate cuts will be fewer in the future. For an average Malaysian, keep an active eye on your nightly news flow, and note stories that talk of a continued housing recovery in the US and stronger growth coming out of China. When bad overseas news slows down, we know we are closer to the bottom with our rates.
Rising Commodity Prices
This is another guide that we are reaching a low point in interest rates. On the contrary, a drop in commodity prices can signal more rate cuts to come.
Auction Clearance Rates
Usually weekend auction clearance rates are reported in the media on Sundays or Mondays, and are worth keeping an eye on. Housing isn’t the guide for everything, but auctions can be a good indication of whether interest rate cuts are doing their job and homebuyers are re-entering the market.
www.propertyinsight.com.my
11/14/14 5:04 PM