In a conversation with two younger friends not too long ago, I asked them if they believe property prices would be falling since 2016 is going to be a ‘bad’ year. They said they hope so because if it falls, they can then buy. I asked them, ‘After you buy one unit, do you hope for the prices to go up or down?’ They laughed and replied, ‘Of course going up lah.’ This meant that they will switch their views as soon as they sign on the dotted line.
Actually, the owners of properties would not want to sell lower than the price they purchased, even for those who purchased towards the peak in 2012. The banks that lends them the money would also not want the property prices to go down. It meant that their risks would increase since the loan is no longer backed by an equivalent or higher property value. The government would also not want property prices to fall, what would happen to the confidence level from potential buyers and investors? Do we seriously believe the House Buyers Association (HBA) wants the property prices to fall? Read here: HBA: Not hoping for prices to come down suddenly Would the developers want the property prices to fall then? Well, if it falls, I am not sure how many would proceed to build since they may need to accept a lower profit margin compared to their earlier projects. Honestly, not even one stakeholder would want the property prices to fall. In fact if it starts falling continuously, get ready for even lower transactions. It’s a vicious cycle.
The two friends told me that they would do their best to buy one property within 2016. One of them is moving to Shah Alam soon and intends to rent a room first. I told him that he should set a 6 months plan. Save as much as he can plus his earlier savings, buy his first property and rent out two of the bigger rooms. It should cover nearly all his mortgage. Even if he wants to go back to Penang in a few years time, this must be done. By the time he wants to go home, market should have recovered and the prices would have also increased even if based on a conservative 3 percent per year. Working till the day we retire will never give us enough retirement funds. Only through investment that we MAY have enough to retire. Else, get ready to contiue working well beyond 60 like some seniors in a neighbouring country. I wish this young friend all the best.
written on 6 Jan 2016
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