Your thoughts please. Do you believe the many recent studies telling us that Gen-Y (also known millennials) do not like to own anything, preferring instead to pay per use? From GRAB to renting a place and moving out when they have found a new and better place and even renting branded clothing and handbags instead of paying crazy money to own one? Well, More than half of Gen-Y owns a property in Australia Ernts & Young defines them as those born between 1981 – 1996. In other words, if you are between the ages of 22 to 37 as at 2018, then you are one. I am not. 🙂 As someone a generation before, let me share some reasons why property must be something Gen-Y loves. We shall not talk about how hard it is to start. You can read it here instead.
Advantage of Malaysia. As a Gen-Y staying in Malaysia, you have a great opportunity as the median age for Malaysia is less than 30. What this tells us in general is that the property that you bought today would have continuous demand and when you sell it in the future, you can upgrade to a bigger unit. Better still, buy another unit and rent out this first unit that you bought. All the toddlers you see today will most probably graduate and get a job and needs a place to rent or their PARENTS would assist them in buying a home. The question is, DO YOU HAVE A HOME that can be sold or rented out in the future?
Advantage of age. You are still young. You can still stretch your loan to its limits, except for those who are already 36 years old currently. When you become 41 like me, well, it’s harder to stretch already. Until of course Malaysian banks are willing to lend you until you are 80 years old. 🙂 Not too far stretched since many people in advanced countries already have to work beyond 70 today anyway. This is what wiki says: “The average of statutory retirement age in the 34 countries of the Organisation for Economic Co-operation and Development (OECD) in 2014 was males 65 years and females 63.5 years, but the tendency all over the world is to increase the retirement age.”
Advantage of leverage. After paying the 10 percent downpayment, your capital appreciation is based on 100 percent of the home price and not the 10 percent you paid. If you buy RM10,000 worth of stocks and it goes up by 5% after one year, you earn 5% returns. If you put RM10,000 into the Fixed Deposit and it pays 4 percent per annum, your return is 4 percent per year. Well, if you put RM10,000 as downpayment into a RM100,000 home and the property appreciates by just 5 percent per year, your return on investment is RM5,000 divided by RM10,000 and that’s a staggering 50 percent. NOTE: There is NO GUARANTEE that your home price will increase every year.
Advantage of asset. A car is an asset even if this ásset’ will keep depreciating. An old banknote from the time before World War II is an asset. Please keep it well and away from the sun and moisture yeah. Money is also an asset, if you have A LOT of it. If you have some money however, then money becomes an enabler. Use it well, it appreciates in value. Use it badly and it becomes an expense which will disappear after consumption. The right property however has been proven to be an asset for a very long time. Looking at advanced markets would reveal the same. Question is, do you own one and wait or waiting to own one.
There are a lot more other advantages but I think the four above is already very valuable for Gen-Y not to miss it. Time is of essence. Just a few days ago, an executive director in a property developer based in Penang told me that he is a good example of why a working professional can continue to upgrade themselves where property is concerned. His first property was only a small terraced home which he bought together with his wise, he upgraded to a bigger terraced home many years later and he is currently staying in a semi-detached home which he bought a few years ago. Recently, with the market slowdown, he saw the opportunity to look for a good priced bungalow too. For working professionals, it’s very important to grab the opportunities that come along, especially for Gen-Ys. The YES generation. 🙂 Happy investing in your future.
written on 24 Jan 2018
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