Property Investment 101: Best and Worst time to buy a property is…?
Worst and Best Time to buy a property?
History teaches us lessons only IF we really want to learn from it. This is also the reason why I always tell people that when it comes to property investment, learn from what has happened and not just hear bad news from those who bought wrong ones or negative news from the ones who has yet to buy or just hear amazing news from those who got lucky or even those who earns commission when you buy a property through them. Always need to remember, worst time and best time is very much relative.
If I am super wealthy and could hold, anytime can be a great time to buy. If I will overstretch myself to pay for the monthly mortgage, then anytime is a risky time to buy.
Malaysia property market is not as good as many other property markets
One very good example? Too many people I know have told me that Malaysia property market is NOT as good as [whichever advanced country’s] property market. Frankly, I do not even wish to debate on which is better! Always look at the property price and then look at the median salary of the people. If it’s unaffordable, then it does not matter which country yeah. For example, earning AUD80,000 per year is a lot of money but if the median property price is AUD1.2 million? It’s all relative.
Learning from being logical and calculative (and being an opportunist)
I bought into Kelana Jaya when everyone was saying that only freehold is worth buying. Kelana Jaya is leasehold they were shouting. Well, that property happened to be over 1,000 sq ft and below RM200k, buy or not buy? When I sold that property, everyone suddenly realised they should have done the same.
I bought into Sungai Ara (Penang) and many asked why not Gelugor? Well, that Sungai Ara property was close to 30% bigger in size and yet 30% cheaper than the Gelugor property. Needless to say as gelugor property increased in price, guess which side has a higher % increase? When I sold that property, they said they should have bought the same.
Maybe I just bought at the right time? Well, what’s the best and worst times then?
1998: Best Time or Worst Time?
If someone were to invest during the worst time, say the 1998 ASEAN financial crisis, this person would have gained tremendously whether she bought into the stock marke or even the unit trust. Property prices dropped double digits in 1998 versus 1997 but in 1999, it rose by double digits too. If the person held those investments till recent years, the person could have enough to retire. In 1998 for example, a typical landed property in Penang is probably RM400,000? Imagine owning just 2 of them and compare the price then to today’s price…
The LUCKY ones who bought then would have been buying during the worst time and yet it was also the best time for them.
2008 – 2013: Best Time or Worst Time?
If someone were to buy a property during the booming years and she happened to buy towards the end of the booming years, then this person may need to have the power to hold. This is because after 2013, the property prices have not been the same as the 5 years before 2013. This meant that investing during good times, does not necessarily give good returns. Okay, unless that someone managed to invest into some undervalued properties even during good times.
Actually, no matter what is the time, property investment over 20 years for example, the total number is always up. So, perhaps we can do three things instead?
Learning from history and trends from developed property markets?
The above chart would tell you that as long as one bought a good property, hold it over the years, one would profit from selling it or at the very least hedge against inflation. By the way, hedging against inflation is a super important thing because if inflation is ONLY at 4% per year, we would lose half of our wealth within just 13 years yeah. Means, if we have RM1,000,000 the value will fall to just RM500,000 in 13 years if we did not hedge against inflation. Be very scared okay.
Now, let’s look at also the price trends from that advanced property market?
It depends on individual circumstances, not best or worst time
Happy understanding that there is no worst time or best time. It’s just the right property or the wrong one versus the okay price or overpriced. Learn enough to choose the right one and forget the timing. Learn enough to choose one which is not overpriced. Cheers.
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