When my parents bought our Ipoh semi-detached home in the 90s, it was just RM85,000. Today that same property is RM350,000 or higher. My parents are still staying there and I would most probably be staying there in the future as well. When we really calculate over the period of years versus the actual price appreciation, the gain in percentage is pretty low. However, the RM350,000 property if sold today would still be worth RM1,450 per month for the next 20 years. This, coupled with their EPF and other savings over the years would meant that they would do okay easily for the next 20 years. Imagine if they did NOT buy the said property previously. Do you think they would have been able to save RM350,000 in 20 years? A saving of RM1450 per month today may be easier but 20 years ago, to save RM1,450 per month?
‘Yesterday’ property purchased with the price then would enable you to be able to sell at today’s property price. Today’s property prices would also be much higher when you want to sell in the future. Looking at just a secondary city like Ipoh would already tell you what the potential would be in bigger cities like Penang or Kuala Lumpur or even the one right next to Singapore, Johor Bahru. The percentage growth in property price is indeed very little and may only be slightly higher than inflation rate. However, that little percentage would be based on the TOTAL house price and soon enough you can see that the amount is significant by the time you have settled it.
‘Yesterday,’ not only is the demand for property much smaller than today but even the supply is small. Number of developers are fewer and the project size is also nowhere near today’s grand scale. Choices in terms of design, types etc are also not many. Clearly, there was little to look for. Today, even if the size is the same, the design may be totally different and the prices too. Number of developers and the total demand is now much higher. In fact, unless Malaysia stops growing economically, the demand would continue and the prices of properties can only continue going up after a few years of slowing down. No, I am not talking about investment as in buying more than one unit. I am talking only for everyone to have one unit they can call their own. In the future, this home may be a huge chunk of cash when you need it. Happy celebrating yesterday’s decisions today. Happy looking forward to future’s property price with your purchase today.
written on 16 Mar 2015
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