Article was originally written for and published in Malaysia’s leading Chinese medium property magazine; Real Estate Malaysia (REM) for month of May 2019. Enjoy reading.
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I get asked this question every now and then. “When is the best time to buy a property?” Seriously, the best time ever may have passed. For my parents, the best time for them should have been 1988 when they bought the semi-detached home in Ipoh for RM85,000. My brother bought a unit just behind them in 2016 for RM540,000. If only they bought a few units in 1988 instead of just one unit?
For me, the best time may have been in 2007. I bought a condo in Penang for RM247,000 (1,258 sf and 2 car parks). I sold that condo in 2014 for RM640,000. If only I bought a few units, right?
I believe the best time for everyone may have passed. However, 2019 may yet be the second best time. This is a year when transactions will continue to be slow. This is the year when the number of unsold units (usually unwanted units) will still be rising. This is also the year when everyone is unwilling to make a decision to buy.
Let’s look at the following 6 reasons briefly why we should take advantage of the second best time.
#1 – Sellers / Developers are more rational. We could now tell the owner nicely that we love their unit and give them an offer. The owner will now be willing to consider our offer. If this was in 2012, the owner would have immediately answered NO. These days, developers prefer to earn a lower profit versus not selling and having losses. Back in 2012 when the queue was long, developers are definitely much more ‘arrogant.’
#2 – Many choices to choose from. It’s not just the discounts in the primary market. It’s also the more flexible payment modes. It’s also the many more affordable new launches. It’s also the lively secondary market because some owners want to sell and buy now because that property they were eyeing is now cheaper. Even the property auction market is now pretty quiet and this represents opportunities too.
#3 – Better prices. Be realistic yeah. The property price is good but it is not necessarily rock bottom in those areas everyone loves. In mature areas, the demand is always far higher than the available supply. This is why prices will be resilient. Ask ourselves this question. If we own a home in a popular area and we are not in financial trouble, would we sell it at rock bottom prices today? The answer is very clear. We will now be selling slightly lower than the usual transacted prices but that’s the maximum we will go.
#4 – It’s just a cycle. Nothing lasts forever. If it’s now winter, then some day not too long in the future, spring will arrive and as soon as the sentiment starts turning positive, summer will be here again. There’s a cycle to everything. What’s up will come down and what’s down will go up again. What’s true about property prices is this. Just look back to the 1980s versus today and the only firm trend is that prices move up. Next look at the advanced property markets for more clues too.
#5 – Bank loans are not the problem. We often believe that the approval for loans are now so tough that no one could get their applications approved. Actually, banks need to lend. This is how they earn profits… However they will be prudent in who they lend to. Once the market adjusts itself where the property prices and the customers are aligned again, we will see loan approvals move upwards. By the way, the rates today are very attractive. Home loan rates were up to 14% in 1984 around 12% in 1998.
#6 – Economy is still resilient. Let’s face it. If the economy is in trouble, the property market will not survive. If the economy is in a crisis or when the unemployment numbers are high, that spells trouble for the property market. Without a stable job, who could buy a property? As for the potential for property bubble, current domestic signs are not pointing towards that unless the world spins into another crisis.
There are many more reasons but I think these 6 should give us a better idea that the best time for many of us has surely passed. Perhaps it is now the best time to focus on the second best time? If the question is, should I still buy a property today? It’s a YES. If the question is, could I simply buy and expect prices to go up, the answer is a NO. If we buy the wrong property, whether good times or bad times, it is still a wrong property. View, compare and evaluate carefully, then buy a good one and wait. Please do not wait and wait and later regret because we did not buy. Happy investing.
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<Featured Image is courtesy of Stock Photos from Melissa King>
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