I was speaking to someone a few years younger than me a few weeks ago. We were discussing the limits in the prices of properties in mature neighbourhoods and also the limitations of newer but much further away neighbourhoods. She said that the area she stayed in is the best because she could get everything she wanted within minutes. Obviously she is staying in a mature neighbourhood, usually a hotspot based on the demand vs supply equation. Well, her home is over 25 years old and it was renovated not too long ago. I asked if she would buy her current home at CURRENT market price if it is at the SAME design that she bought 25 years ago and she has no budget for extensive renovation. She did not answer and changed topics. 🙂
Speaking of landed homes, I have stayed in landed homes for at least 20 over years. However, the first property I bought was an apartment of 700 sq ft in Penang. That was 15 years ago. I have been staying in high-rise homes ever since and have moved 4 times. I am 41 now. 🙂 I love my parents’ landed home in Ipoh. It’s where I grew up. It has all the memories of my happy teenage years and it’s where my friends and I play since young. It’s within an area with rows of landed homes and we could not see any high-rise units next to our home. My parents bought our Ipoh home when I was 12. So, the design then and the taste of the people of today would be different. That’s why every new owner who bought a house within the same road took the opportunity to do extensive renovations to the house. They love the area, it does not mean they should love the house design…
This is the reason why prices for landed homes, even in mature and old neighbourhoods cannot be rising until it reaches the sky and then the moon followed by the sun. The reason is because the house price is just one part when one buys into these older but mature neighbourhood. The extensive renovation is another. A RM1.2 million home would still require another RM300k renovations conservatively and yet, this very nicely redesigned and rebuilt home can be flanked by two 30-year old designed houses on its left and right. The main reason to buy into these older and more mature areas? Usually, it’s for the family. Emotional connection perhaps. Staying close to the parents is one example. My brother did the same (he wants to move back to Ipoh in the future) despite knowing that the price he paid and the rental he could get will never match one another for a very long time.
Potential buyers from outside the area who are looking for a new place to call home does not have those ‘connections’ to these mature neighbourhoods unlike those who bought much earlier and have stayed there ever since. Today, potential buyers would have choices of a modern looking home which they could just do some minor renovations instead of a very extensive one which includes even the piping and the electrical wirings. It is very true that there are so many conveniences which all these mature neighbourhoods have but the question will always be whether it’s worth the huge gulf in property prices when newer neighbourhoods have ever better community designed spaces for the elderly and the children. This is why sometimes, owners will find that the price which they wanted to sell will take a long time even for a very established mature neighbourhoods.
Of course, property prices in these mature areas will be strong and can still go up occasionally. Most owners would have finished paying for the homes too. Finding a desperate seller among these owners who is willing to sell 20 percent lower than the previously transacted price will not be easy. Finding a desperate buyer who will just buy without comparing or even negotiating is just as hard. Take a step back. Understand what we really need. The choices are usually clearer when we have the objectives. As for that friend of mine, I am very sure she will NOT pay the price she said the home is worth today if she is a new buyer looking for a place to buy today. Happy understanding and making your next buy a home sweet home, wherever it may be.
written on 7 Sep 2018
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