I saw this nice pictorial chart from MGAG. Look below. In my mind, I could think of three kinds of property buyers. First timer who’s really scared of buying because it involves a huge commitment (at the beginning, especially). Second time property buyers who is looking for an upgrade after staying in his 700 sq ft apartment for 4-5 years. (Yeah, this was me long time ago). Then, we have those who already have properties, already gained from it and is now looking to buy more below-market-value properties. (Just look at the secondary market for these attractive deals too, not just those from the new launches). Yeah, there’s also those who wants to buy but could not afford and not necessarily it’s due to the house price, it might be because they were expecting way too much; close to working place, huge in size and small in price. (Fat chance…). So, the government must set policies to help the genuine buyers and it cannot be left only to the market to sort it out themselves. Or, they can build more of these affordable homes. (HDB in Singapore builds all the flats for qualified Singaporeans).
As per MGAG’s FB page (forwarded to me by a good friend), this is the state of the Malaysian Property Market. In an ideal situation, everyone buys properties which are corresponding to their earnings. (Anyway, it has never worked this way even if more than half maybe doing this). In reality however, there are those who needs a home but could not get one and they will forever be renting from those seasoned and experienced buyers who would have purchased most of those affordable homes. Yes, there’s also that oversupply and unsold issue that is also plaguing the market currently. Earlier article about it here: Unsold units are u further 16k units. Now at 146k Anyway, this is made harder by having the 30 percent downpayment requirement from the 3rd home purchase onwards. So, a RM250,000 home would require a minimum of RM75,000. To buy two of these RM500,000 homes, one would need to have RM150,000 in cash first. Ever wondered why these seasoned owners are so engrossed in saving more down payments? Yes, they have tasted the ‘sweetness’ of having rental incomes.
For first time home buyers, it is extremely important that one has also started on this journey of at least owning one home and not starting the journey to continuous rental payments which will eventually make the owners richer and buying ever more units and leaving the tenants always poor because the rental they pay will not be going into the downpayment for the home. As for those without a down payment yet, there’s hope yet. Aim at the Rent-To-Own schemes that has been made available in the market. It is true that the monthly ‘payment’ carries a premium over rental but this will be part of the down payment for the home in the future. As for the need to rush, I would personally advise to look around the affordable homes as well as the secondary market as well as even those unsold units (negotiate for some extra rebates, renovation packages etc). The property market is not as bad as that depicted but one day in the distant future, it may be. Happy getting that first home sweet home.
written on 28 July 2018
Next suggested article: Affordability of homes getting worse, now and in the future.