Recently, a friend told me that she reads my blog quite frequently these days. Quite a lot of interesting articles and her goal is to buy a few properties within a short period of time. When I asked her, ‘when?’, she just laughed. She asked me to teach her. I told her honestly, if she wants to get up to speed fast, she needs to spend some money and go for those workshops by some property gurus. So many of them in the market. These property gurus would teach you how to maximise your property investment in using the little resource that you have; money. I told her though that instead of answers, I could give her four questions. Sort of a guide to how soon she should start her property investment.
1) Would our salary increment be negative? I mean for the majority of us. You can say whatever you like about inflation being higher than your increment but the fact remains that today, you are ever willing to spend RM10 for a cup of italian brewed coffee versus the usual RM1.20 Kopi-O that your parents said is expensive because it all started with a few cents. If your answer is, ‘my salary would continue to increase’, think what would happen to the stuffs that you would need to buy, including property.
2) Would urbanisation stop? Would graduates, after they left their hometown for their higher education be flocking home to their small hometowns and work as, well, as, well, I don’t know, perhaps a bank executive and retire 35 years later as a branch manager, if he/she is lucky? If your answer is, of course not. They would try their best to climb the corporate ladder here in the city, whether it is Klang Valley or Penang or Iskandar or even Singapore. What would happen to the property price when all these people flock to the city, all without a home?
3) Has property prices every stayed the same, ever? Even if you do not include the periods of 2010 onwards? My parents bought their Ipoh house at RM85,000 and it was considered very high then. Today, our neighbours house was sold for over RM350,000. Yes, it’s true, if you count the 25 years that they have owned the place, RM350,000 does not seem a lot but hey, that’s Ipoh! I repeat, ‘has property prices stayed the same, ever?’
4) Can more land be made available? Answer is YES. You can stay further and further away, right? Surely no one needs to stay at the same place that everyone wants to stay? Yeah, sure. If that’s the case, why are prices in popular areas jumping faster than those further ones? Do you know why new launchings in popular places are always condos? That’s because there are no available large pieces of land for landed properties already. Yet, everyone wants to stay there, so developers build condos to cater to the location demand. The answer is, LAND cannot be increased or made available once it’s used.
There are a lot more questions I can ask but if you can answer these four, you have already started on your journey. At least the mindset is now correctly tuned. Note, never ever be a speculator because you may lose everything and may even cause many others to lose everything. The advice is, buy if you can and buy early because buying a property has never been easy and as you get older, it gets even harder. Buying a property? Please answer the four questions.
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written on 9 April 2014.
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