Affordable not just focus of developers.

These days, developers whether big or small are focussing on affordable units. They are worried if they launch the more luxurious ones, it would not sell. They are right. For now, not many sane Malaysians would rush to buy anything which they think is overpriced. In fact, even retail sales is down. However, apart from developer, don’t you think that we should also focus on affordability? Yes, us, the residential unit buyers who are buying for own stay. The buyers of second properties for investment purpose. We should ALSO focus on affordability. Why do I say so? My personal term for affordable are those homes less than RM600,000 today.
Uncertainty. I have written this before. Malaysian economy is nowhere near crisis level even if Ringgit’s value is nearing the 1998 peg level. However, be reminded that Greece is expected to default soon and no one can yet predict what will happen to Europe and later the world. Property prices in many developed nations are reaching ever new highs. China has yet to really show a stable path towards strong growth. America’s growth even if encouraging remain vulnerable to many sudden shocks. Just look at how careful Federal Reserve is and you should get the idea. Thus, times are indeed uncertain and it may be prudent to buy affordable properties instead. Besides, it’s a good time to get a better bargain!
Undervalued secondary market versus primary. The differences are still there between the new properties versus the secondary and OLDER units. It does seem that buyers are ‘allergic’ to these older units and must buy new. The newly completed ones are not really increasing in prices versus those of years ago but the prices they command remain a premium when compared to the older units. So, my recommendation, just like some of my property guru friends remain to try and look at secondary market first, especially for those buying their first homes. Take a look at places which meets all your expectations in terms of conveniences but is not the current hotspots.
Calculative risk. Think really objectively. If prices were to fall, and EVERYTHING falls in price, which property would give you larger losses? The affordable ones or the luxurious ones? If you do not know, read a bit about some of the recent huge losses for sellers of the luxurious units in Singapore. The losses would numb you for a while. When the markets recover, which one would quickly grow back to the affordable levels of today? The luxurious ones? Haha. Hope you get my idea.
Oh yeah, in a recent article in a local English daily, even Hua Yang’s chief executive officer Ho Wen Yan said similar things. As a developer, Hua Yang agrees that the property market outlook is difficult but since Hua Yang had always been focussed on the affordable segment, it should do fine. He said that the middle-income and younger market segment’s demand would continue to increase due to continued economic progress and urbanisation.
If you are buying, the focus on affordability would be much more advantageous than buying more expensive ones simply because everyone tells you so. This is applicable not just during slower times but should be the correct view all the time. If majority thinks this way, even during high growth periods, the developers would not simply build ever more expensive units and telling you that the market is like that. The market is based on you and me. It should not be based on what the developers build. Many have proven that during slower times, they can build ‘cheaper’ units. Happy buying.
written on 17 June 2015
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