Sometimes, secondary property is a better choice.

Three good friends visited me just days ago.I brought them around the park inside my condominium. They asked, ‘I like the park and it’s well maintained. Why is the price still so low?’ I told them that the area is not a hotspot loved by many. It’s Damansara Damai. Read here: Damansara North? Glamour name for Damansara Damai Secondly, the property is a secondary one and they were comparing it to the new launches of today. Truth is, secondary properties which did not join the sudden rise in prices have not caught up with the prices of newer condos of today and even those within the market.

options below rm500 psfMany associate secondary properties with more hassle, dirtier and inability to do own renovations. Actually, is ‘own renovations’ really so important that we want to pay easily 20-30% extra, if not higher? Plus, the waiting period for the next few years especially for the new launches? Everyone have their own choices of course and no one is right or wrong. However, a check online at propertyguru.com.my would easily show why the prices of secondary properties are easily 20-30 percent cheaper. Look at the price per sq ft. How many new launches in the market today which are not in the middle of nowhere is priced at the same as those in the secondary market? Majority would be easily 10-15% higher if not more.

Secondly, do note that most of these secondary properties would already have been renovated which meant that we would do lesser renovations and save even more. The home I am staying now, the owner left one whole set of IKEA kitchen cabinets, six air-conditioners, a twin-door fridge and the whole home was renovated with built in cabinets. We can do a rough calculation and understand why we may save a lot when we buy such units. Yes, some of these new launches provide renovations etc but when we look at the prices, it would be even higher than those launched without these renovation packages included.

There are lots of reasons why buying a new property is better and I agree with them. In fact I have bought more new properties than secondary properties as at today. However, when we need a place to stay and we are able to know our needs versus thinking that secondary would mean a less attractive choice, then do understand my points again. The three friends who visited me? One happened to be a couple who had just registered (marriage). Another is renting a room in KL and his girlfriend would be joining him in a few months time. Tell me, for the three of them, what would have been a better option? Happy choosing and buying whichever we like.

written on 1 Jan 2016

Next suggested article: Rental yields versus property price appreciation

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3 thoughts on “Sometimes, secondary property is a better choice.

  1. A unit of a flat in Cheras Len Sen was put up for auction at reserved price of RM40,000 in mid of 2014, by March 2016, another unit of a flat in the same area was put up for auction at reserved price of RM95,000. Both unit is identical in term of built up, number of room and floors.In less than 24 months the auction price increased 237.5%. This is before the unit actually went under the auction hammer.
    Since the only way is up up and away, will there poised to be a correction at anytime in the near future or it will just be in the scenario of only sky is the limit?

    • Lily, first of all, we should note what’s the actual market value for the flat in Cheras and not just the RM40,000 vs RM95,000. When we understand the actual market price, then we could see that the actual market price definitely did not increase by 237.5 percent. In terms of correction, again we need to look at the overall price for Cheras vs all its surroundings or even other similar areas. If Cheras is the only place where the prices have risen while everywhere else remains very low, then yes, bubble may burst. However, if we could see prices rising in all areas, then we would now look at the affordability. If every single property in Cheras is totally unaffordable for Malaysians, then yes property bubble is about to burst. Sky is never the limit no matter where the property market is. Just look at the example of US 2008 property crisis. Cheers.

  2. “‘I like the park and it’s well maintained. Why is the price still so low?’”
    Because it’s a lousy location. DUH.

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