Even as many younger friends said they think buying is no longer necessary, I beg to differ. I hope they realise that Malaysia is a young country compared to some ‘older’ nations where the investment landscape may already be different. How different? Well, some are having median prices of over AU$1 million per home and some would be just over 160 sq ft and HK$4 million. A few reasons why they argued that renting is now best? Renting is cheaper, they may not stay in the same city forever and the other major reason which is normally prices getting too high. The last reason is really the main reason why they will be renting forever. This is also the exact same reason why they should own a place instead because the rental market will be safe for a very long time more to come.
More people would need to rent and not the other way around. Funny right, those who own a home, gets enough downpayment for another property after many years. Those who do not believe they can continue to move around for the best deal which can always be true but they are also merely enriching the home owners. I told a younger colleague the other day that even the rental yield these days are either way too low or sometimes negative. So there are definitely some truths to the argument that renting is better. Besides, with the feverish launches and construction of affordable homes, the property prices should not move too much. In fact the average property prices may even drop. However I remain very positive about the long term potential for property investment.
There’s actually one great reason too, based on stats. Here’s that full article in TheStar about the demographics of Malaysia. We have reached 32 million. Most importantly, the median age is now 28.3 years. Please note that this is NOT average age. If it’s average, the significance is not that awesome but median age meanwhile would tell you that Malaysians at this age is the most common! When we are 28 years old, what’s happening? Well, assuming we graduated with a degree at 24, by 28 we would already have 4 years of experience and perhaps looking to buy our very first property. Before we reach 28 however, we would need to rent a place for a few years. Great to know right. The percentage of those aged from 0 – 14 years old continues to drop. Yes, birth-rate is dropping… The largest group, around 70 percent would be those aged from 15 – 64. Yes, with this kind of numbers, Malaysia will definitely become an ageing nation by 2035
Economic growth aside, as long as it continues to grow, our demographics would mean that property investment will remain an investment for a long time yet. By the way, there are a lot of calculations by many people which really do show that rental beats owning a property. Plus all the hassles and worries and potential issues if the developer we buy from runs away. I have no such calculations but I would urge you to note that unless everyone starts to stay in tents, the future looks brighter for those owning a home versus those without. Happy believing. More importantly, whether renting or buying, both are just strategies. Just follow these with your eyes wide open. Cheers.
written on 15 July 2017
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