Everytime anyone asked me about buying condo, my advice has always been, if you buy for your own stay, buy one which you like, even if it slightly premium compared to another one which is further and meeting 90% of your expectations. However, if you are buying for investment, strive for rental first instead of thinking about the capital appreciation of few years ago. It is not likely to happen again. Not impossible but not likely. There’s too many restrictions in the market today which is good, keeps the market healthier instead of speculative all the time.
In The Star, dated 9th July, it was reported that there may be a ‘price war’ for rental because of the completion of new units of luxury condos. This was the view of the Malaysia Institute of Estate Agents (MIEA) president Siva Shanker. According to CH Williams Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen, these units which ranges from RM1,000psf to RM1,500 psf will be coming into the market within 6-9 months more and is likely to cause a ‘frightening’ time.
I always think that RM1,000 psf is considered high, irregardless of area because the truth is, there are still so many plots of lands which developers can build. Plus, for a typical family of 4 with two breadwinners, they need a 1,200sf condo to be comfortable but to pay RM1,200,000 for it, plus the usual RM100,000 renovation, this family is likely to be cutting down a lot of their other expenses if they are to afford such a new condo. For those who are single, I think the likelihood that they are willing to pay over RM500,000 for a 500sf unit is going to be small. At least I personally think it’s really a waste of money. Why not just buy a cheaper and bigger condo and rent out one or two rooms instead?
Anyway, I am not any developer or real estate agency owner, thus my view remain to be a very tiny little opinion of a small time property investor. I will not be buying anything above RM1,000 psf anytime soon because I do not believe this market is robust enough currently to withstand any prolonged slowdown. Ok, the real reason, I could not afford such units, happy? My focus remain for a much longer term continuous rental and slow appreciation of capital. I think this should be a safe view until I retire.
written on 9 July 2014
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0 Responses
It seems the implemented cooling from Government is taken effect now, hoping 20% -30% in price appreciation like for past few years is over. the market has started slow down and more buyers are prudent for new purchase especially new launching project as the price is very expensive.
Not sure if it is cooling from government or not. Mostly because house price is above the earning average. If you can’t get loan, you can’t buy the house. So if the price is expensive for condo, no one can buy, the only way it can be sold is that the price is lowered. I always believe 500psf is the one that most Malaysian can afford. So I agree with Chia. Anything above RM500psf (not including luxury) condo will fail. If you bought RM1000psf condo that is not in KLCC area, prepare for your condo price to drop to RM500psf in near future. You will have negative equity.
it certainly a serious of cooling measure have had implemented, especially the recent RPGT 30% of disposing the property within 3 years, DIBS revoked, loan application is evaluated based on net income, increase of minimum cab for foreigner (1 million) and etc.
In fact, it is considered good for market but bad for speculator, the market need some time to cool it off, the market has been up trending since 2009, it need some time to readjust and should align with business activity with demand.