If REITs are already free falling, will property prices follow suit?

Interestingly, the REITs are climbing back slowly. I think this is largely due to the recent package release by government. Property prices will be hard to say as people may not want to sell their house now as it is safer to have a roof over your head. Less trading, more concious buy.

Although there is some correlation, it is not a direct relation.

Prices of REITS may fall due to the possibility that the rentals earned from the poperties may see a drop. Hence people are selling it cheaper due to the expected decrease in income from the reits.

As for property prices, it will be a collective outcome. If many owners bought the properties for investment and are unable to service the loans due to vacancy and no tenants, then yes, we may see property prices dropping if many property owners are unable to service the loans without tenants.

And as property prices fall, many property owners may face a call from the banks to top up the equity due to falling prices. And if they are unable to top up the equity, it would lead to a rush in property sales and we could see alot of mortgagees sales and forced sales.

Hope it helps you to understand

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