Safe to buy, why not. Challenging time, sure too.

I was in Singapore for a business trip, conducting some workshops and was speaking to a senior manager who asked me if it is really safe to still buy properties. He said his brother-in-law wanted to buy a property in Iskandar but said that the prices are already over a million ringgit. First question, is it safe? I told him that let’s just say if I come across a good deal, I hope the bank can approve my loan application. In brief, as long sit is not a speculative buy, yes I personally think it is safe. Note, buying overvalued properties due to some special reasons will always be unsafe. Regardless of economy. Secondly, his brother-in-law who is thinking of buying should have a reason why he is buying. It’s not about the price. Is it for his own home? Well, if he could afford it, nothing wrong with a RM1 million property. If it is because he believe that the prices are already bottoming as per a report by PropertyGuru, then I hope he is right. I do not have so much money to ‘gamble’ on buying a RM1 million property to wait for any rebound.

There’s one article in NST telling us that the property market remain a challenging one. Here’s that full article: Property Mart Still Challenging A few key messages from the article. Share prices of some developers are already moving up but the property market is still tough. Reasons for this include weak sentiment, low affordability, stricter bank lending and rising supply. (Weak sentiment, I fully agree. Somehow despite the economy chugging along, the market is pretty negative. Low affordability is something I disagree. Again I think it’s acceptability and the ‘buyer quality.’ Spending too much would cause the bank not to lend them money. stricter bank lending? Haha. Okay, if they say so, surely they have their reasons. Thus far, many friends told me that their loan application has been approved. Perhaps they applied to the right bank. Rising supply is quite true, usually the number of units  per development are now over 1,000 units easily.)

Despite all these reasons, Public Investment Bank Bhd (Public Invest), analyst Tan Siang Hin said that prices will hold up well. The few positive reasons include ample liquidity, high input costs due to compliance and land costs, a low interest rate environment and strong secular positives — young demographics and improved connectivity resulted from spending on mass rapid transit, light rapid transit and high-speed rail. (Ample liquidity means banks would have to lend. Else, they would start reporting lower profits soon. I just wrote about demographics a few days ago. Yes, even the new MRT Sungai Buloh – Kajang should help a bit because we now have even more choices which are connected. Let’s hope people start considering more areas okay. Else, prices will go up but only for the few usual areas only.) Full report in NST here: Property Mart Still Challenging. 

At the end of the conversation, the senior manager said that he intend to find a secondary city in Malaysia to be his retirement home. He could stretch his savings over 3 times. He also shared that he does not think of property investment as attractive because he missed buying a unit in Horizon Hills many years back when it was still slightly over RM300k. Since the property prices are now so high, the opportunity has passed. I just laughed but I think he has an advantage because he is already earning S$. Thus, assuming it is just savings, he would still be able to achieve his goal of stretching his money in one secondary city in Malaysia. He likes Ipoh and Melaka too. Penang is okay but is already too expensive. His brother-in-law told him of some seaview condos in Penang but he said he hope to buy something much cheaper. He does not need a luxurious one anyway. I wish him the best.

written on 19 July 2017

Next suggested article: The potential property bubble bursting in Malaysia, signs to look out for

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