10% buyers owns 40% of property purchases. Aiming to be that 10%?

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10 percent of property buyers are the ‘owners’ of 40% of the property purchases in 2011. This has risen from 35% in 1997. This was revealed by a paper entitled “Is equality in Malaysia really going down?” This is a joint paper by the University of Malaya (UM) and Khazanah Research Institute. In laymen term, the conclusion was that the gap between the rich and poor is widening when it comes to home ownership as well as the public and private sector wages. Richer are buying more properties versus the poor. Or rather the richer are buying ever more expensive properties while the homes for the lower brackets did not appreciate as much. Salaries for the professionals and management in both the public and private is also rising much faster compared to the lower ranked staffs. Yes, this is true for both the public and private sectors. Ever wondered now why so many are saying they needed a bigger pay as well as access to an affordable home? You can read the full article here: Income Disparity Widening – The Malay Mail online

If we look closely at the 1997 number versus the 2011 number, it has actually not changed a lot. 5% up in a total of 14 years despite the fact that everyone knows, the richer always become richer, unless they bet wrongly. In my previous role, I always tell my staffs, it is true that buying the first property is tough. However, buying the second one would be easier and by the third property, you would be advising people how to get their first property. Despite my advice, only one is actively seeking to increase her property portfolio. The rest? Well, they know it’s very important but words continue to be louder than their actions, for now. This number is likely to stay stagnant or go lower because the total transactions continue to go dow which meant that only those who really need one would buy one and investors are less likely to buy. When we include in the total number of affordable properties today, including the fact that more people are aware that there are still lots of secondary gems in the market, you can see this number either staying stagnant or reducing. We shall see when they run this study again.

Okay, how should we react when we see this ‘equality report’? From the report itself, we can already note that the rich are also becoming richer because of…. property. In fact because they took their chances, buy earlier, it appreciated thus their share of the total property purchases go up. Most of them definitely do not own just one property. What should you do? Well, as they say, the best time to plant a tree was 20 years ago. Second best time? Today. It is just absurd to buy in hotspots and pay through your nose for it but to snub everything else is pretty risky too. Imagine the next report coming out in a few years time, would you want your name in the top or the bottom. Please do not ask about the possibility of bubble bursting. Even if bubble were to burst, if you are renting, you are STILL going to continue renting. Of course, if you do not buy and you really did keep all the cash in readiness for the price falling down, then perhaps you may just get lucky. Yeah, you may just get lucky.  Happy waiting or investing or even renting. Never do things you are not comfortable with.

written on 6 Nov 2014

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