Tey Yong Qing Explain Prices & High Interest Rates Impact Real Estate Investments?
During the period of economic expansion, when there are rises in interest rates, various asset classes react uniquely to this. Price and high-interest rates diminishing the principal of bonds, affect the value of stock and other financial assets. It also influences interest payment on the debt.
Tey Yong Qing says When it comes to real estate the use of MLM ( multi-level marketing) concepts has been considered by real estate agencies. MLM involves selling products to family and friends and training other people to do so. It can also be used to know the significant difference between the commission earned by estate agents, negotiators, and their agencies.
Real estate agencies earn their income from commission, so as an agent who needs to earn more commission you need to put in more hard work. Even though MLM has not been legalized or acted in Malaysia that Thallows agents to operate on such a basis
Real estate price didn't just go high out of the blur, some factors contribute to the high-interest rate like,
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Infrastructure development
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Economics situation
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Changes in policy
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Availabilities of amenities
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Local development
Even though real estate investments have the characteristic of performing well in a rising rate environment, there is still some impact. High interest can either impact real estate in negative or positive ways.
Here are some impacts of price and
high-interest rate by Tey Yong Qing
Increase in cost of construction
An increase in construction costs due to inflation often has an impact on real estate investment. The rise in wages, land cost, machinery, and building materials increases the cost of building a home. The cost of employing engineers and other workers needed while building and designing estate also inflates. This makes developers and real estate investors increase the amount they sell to buyers.
High-interest rates increase the interest rate on loans incurred by real estate investors and developers. These disrupt their cash flow, leading to low share price growth
Are you planning to build or invest in real estate in an inflation environment? Increase your overall cost because building materials have increased by 13%. This year, building materials such as ready-mix concrete, lumber, gypsum board have also increased.
Income-generating asses
Investors tend to search for assets that generate above and beyond the inflation rate. This increases the price of purchasing real estate.
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