In a slowing market, sanity returns. How true.

Market is slow. Everyone knows. I already have one agent friend who could barely make ends meet and is now a UBER driver. The net pay may not be huge but it gives certainty. With more people on a wait-and-see mode, demand has slowed and with supply still continuing, more choices are available and property prices are softer. Just two years ago, there was no way that any sane seller would be willing to give you RM20,000 discount as soon as you asked for it. In my two recent viewings, one in Sungai Buloh and another in Ipoh, the sellers were more reasonable. The agents told me that RM20,000 discount is possible. The bank valuation was slightly higher.

However, these two were not desperate sellers. The one in Sungai Buloh was selling because he is moving with his family to Mont Kiara, a big sized condo. His lifestyle has changed and a condo would be much better. The one in Ipoh was selling because she needed more funds to be ready for a commercial property purchase. She was looking to expand her business. In recent years, she was renting and was forced to move despite putting in over RM300,000 worth of renovations. She has learnt that for a business, owning a place is much more safer than renting a place.

Another two colleagues were looking for good deals and one has started viewing furiously. In fact, he has viewed many properties over the past two weekends and even this weekend. Before this, he has NEVER put in any effort to view any units at all. The other one wanted to have lunch with me to decide whether to buy and upgrade and selling his current place or to hold on to his current place but buy an investment property instead. So, should we be buying now? Read here: Sometimes, secondary is a better choice

Seriously, I do hope everyone noticed that market is slow versus a distressed market are two different things. During a crisis, there are many sellers but very few buyers. If I have a place to stay, I would do nothing and wait. If I have some spare cash, I would be worried to buy a home because property is extremely illiquid and if something happens, my funds would be tied for a very long time. In fact there’s just no way that I want to expand my business during a crisis, I may just lose everything that I have built. Currently, the market is regaining its sanity. Read here:  Speculators, Interest Rates and Over-leveraging The crazy rentals of yesterday may be drying up. Normal rental rates? It will continue, people could not just sleep on the streets. Even the seemingly bullish prices in prized areas are no longer moving up.

These current ‘shifting’ of one property to another may be continuing for some time. At least until the mood starts to get better. Currently, with the many reports about slowing China, about the possibility of oil prices hitting US$10 per barrel and even the heightened security risks meant that some stretched sellers would prefer to offload some units first while waiting for the uptrend cycle to return. For those who has been in the market for a long time, they know that good times do not last forever and this applies to bad times too. Repeat buyers will always buy…

If we know some areas well, then we may be presented with an opportunity to buy some undervalued property. This is not the time to bid the highest but this is definitely the time to bid lower than the usual. This is also the worst time not to view, not to read more and not to attend seminars. The decision to buy or no buy should be backed with knowledge and not the pessimistic view of your colleague who owns just one property. It should also not follow that colleague who has clearly paid too high a premium simple because they believed there is no limit. Remember this: MRT stations willchange the area dynamics Where there are better choices, even if not as good as the hotspots yet, these secondary areas would start to flourish. Hotspots? I wish those buyers who keep pushing up prices all the best. Lower end, higher end and mixed blend? Happy deciding.

written on 18 Jan 2016

Next suggested article: Property investment: size, area, price, affordability

 

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