20181217 (Mon)
Negative better? Why can’t there be one decision/policy which makes everyone happy? Part 2
Let us assume that the government decides to pump in funds. Everyone suddenly has extra RM200,000 cash! Will this mean everyone can now own a property – be it flat, apartment or even a bungalow?
The answer is “NO”. Why?
Because the property price will increase overnight. A RM200,000 flat will become at least RM250,000 or more. A RM400,000 apartment will increase to RM500,000 or so… It is just free market. Higher demand will push up prices.
So, when suddenly, you have a deficit of RM200,000? What will happen? Now, everyone has less money. Most of the house for sell won’t have buyers. Will the price drop overnight? It won’t!
Will it drop over some time? Yes, it will. How soon will it come down? Nobody really has that answer. It will probably take a few months to a few years. This is simply that not everyone is desperately selling his properties. It will take some time to see the market adjusting to lower prices.
So, positive time is short. Negative time is long. Hence, it is better to bet on the “Negative” because the “Negative” seems to stay. The “Positive” is very much a knee-jerk.