This might be a tricky question. Should we think higher income makes homes more affordable? Or property affordability drives property demand? In other words, this is like a chicken and egg question. Home prices should come down first so that people can buy or people should earn a higher salary first in order for them to buy?
What’s your perfect property? One which is very affordable and meets all that you want plus needs? Perhaps just a SOHO unit with security and is a Transit Oriented Development (TOD) which you can go to the ground floor and walk to the MRT station directly?
If you are a working professional and you do NOT believe in property investment, perhaps you are the reason why many people also believe the same. Sorry to add that when we put property investment towards the last thing we invest in, then we must make sure all our other non-property investments would give us a return which will be able to cover what we will miss without having a property to our name when the time our income stops arrive.
For many years, every time anyone told me that their salary is not enough or that their employer underpaid them, I will ask them to think of ways to get a second income or to get another job which could pay them better. Most of the time, the answer is that they are too busy or that they could not find another job which could pay them higher plus doing the same work as what they do today.
No matter who the person is, if the person tells you that buying this property is sure success because it’s near the MRT, please think again. The reason is because if there’s such a thing, everyone would already know and everyone would have been faster than us. In other words, when we learnt about it and we wanted to buy, the price has already moved upwards.
I had a great conversation with someone who loves hold investment and could speak easily on the topic for hours. However, he kept saying that property investment is not good because… he bought a landed property somewhere in Klang Valley and it has not appreciated much for the past 5 years and yet the rental is very bad and could not cover the monthly mortgage payment.
If you are also waiting to buy a property just like me, then here are some homework that you would have to do first. I am also doing all these steps too. Else, I cannot say that I am waiting to buy a property. If I did not do the below, then I have to say I am dreaming about buying a property. In order to wait for the right property to buy, I need to do the following. Perhaps you can also take a look and follow the steps which are relevant to you?
A learned friend once told me that when everyone is buying property without thinking much, the property prices should be rising. Makes sense! Meanwhile if everyone starts to say bad things about the property market, then should the prices start dropping then? I ask myself as an owner. If someone were to badmouth about the property market and then come to me and ask me to sell my property at a lower price, what would I do? I will politely ask the person to go fly kite or in Hokkien, wait long long lah…
I like to ask everyone, when someone says luxury property, what’s the price point which we are talking about? RM800,000? RM900,000? RM1 million? Erm… I think these days, RM1 million property may just be sub-luxury. A typical double-storey terrace home in a properly planned township would already be close to RM1 million if not higher. The location is not even within any mature neighborhood. Else, it will be even higher than RM1 million.
Do you know that when home prices become totally unaffordable, the government of the day will feel the pressure because if people could afford a property, they will be happy but if they could not find anything which they could afford, then the tension will start to simmer. Not a great news for any government of the day. This is why the Singapore government is taking steps to ensure the warm to hot public housing transactions are cooled down before it gets too hot to handle.
My advice when it comes to buying a property is a simple one. Buy something you need and can afford comfortably. Else, it’s perfectly find to keep renting a property you feel comfortable with and you could afford the rental comfortably. It would be foolish to buy a property and struggle to pay the monthly mortgage but it would be super foolish to rent a home which we are struggling to pay the rental every month!
Do you have any emergency fund which is ready and could be utilized anytime needed? Nope, emergency fund is not our credit card. The interest is far too high for it to become an emergency fund and it will just cause the whole situation to become worse. Usually. people say at minimum, 3 months of salary amount should be kept in the bank as our emergency fund. Some however declared that 6 months would be a better number since 3 months may not be enough to find a new job.