Real Estate Matters | What Will Influence Property Prices In 2016? This three part article explores the different factors that affecting the market

Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

Last year we published an article in January looking at ‘What will influence Macau property prices in 2015’ ?
The leading influences were supply  and demand, the development of the gaming business and government policy.
These influential factors have not really changed, but we can of course speculate about what might happen in the coming year.
Don’t forget, one of the obstacles in making accurate predications about the future is the number of variables involved.
The more variables there are, the more complex the equation. The more complex the equation, the higher the chance of inaccuracy.
It is important to remember that prices are rarely affected by a single factor.
When this does occasionally happen, it is the neutrality of the other factors that make it appear as though the single factor is the only thing that matters, when in reality all elements are still influencing the outcome, albeit in a neutral manner.
This can of course give the illusion that a particular program or scheme is successful when in fact an outcome may be heavily influenced by what has NOT been done, rather than what HAS.
So, having laid the groundwork with absolutely no certainty whatsoever, let’s have a look at what will influence 2016 property prices and what might lay ahead.

In no particular order:
Supply and  Demand
We are familiar with the basic economic principle of supply and demand, and saw the effect it had on the rental market when hundreds of apartments in the One Oasis development came on to the market at the same time last year.
This temporary over-supply created a competitive environment amongst landlords eager to fill their apartments with tenants, and prices were driven down. It wasn’t long before the ripples reached other properties in Taipa and Macau, and prices started to drop in order to compete with those at One Oasis.
Whilst the economic climate had already taken a downturn, rents did not decrease with any significance until there was an over-supply of apartments. The combination of the two factors was enough to drive prices down.
Over the last 10 years the population of Macau has grown by more than 30% to around 645,000 according to government statistics. They all need housing, and the pipeline of new property has to keep up with the demand.
As we pointed out last year, the numbers themselves may not look dramatic in percentage  terms, but when you consider the exponential problem of supply and demand, the enormity of the situation starts to hit home.
To illustrate the point; If there are 10 apartments available and nine people looking for housing, it is a buyers / tenants market.
However, if there are 10 apartments available and 11 people looking for housing, the market swings in favour of the owners and prices start to rise.
The difference in this seemingly minor increase cannot be over emphasized.
Its not an easy job, but one of the major factors affecting property prices will be the governments ability to enable a sufficient pipeline of property is available.

Next Week: Three More factors that will influence what you pay for your apartment in 2016.
For further information on leasing or buying property please call me or visit our website www.JMLProperty.com, or e-mail me on Juliet@JMLProperty.com we are always happy to give you our opinion and experience whenever we can help.

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