When a close friend sent me an article from freemalaysiatoday.com with this title, “Houses at half-price, anyone?” I already guessed the content with accuracy of around 68% (simply give you a number) even before I read it. After reading the article, I wrote this to her. “Sell me your [property name] at half price you bought, I sign today.”

Her response? “OK. I bought at 1.4mil. so I sell u 700k.” My reply, “As long as u show me the original SnP, sure ON!!”

Her response? “Let me find…” Yes, what she meant was that she will NOT be selling me her condo which she bought for RM700k at RM350k, even if I am her close friend.

Actual conversation below:

Yeah, I failed to buy her condo at 50% discount. Haha.

Article in freemalaysiatoday.com How low could discounts on properties go down to? KGV International Property Consultants Executive director Samuel Tan said the percentage of discount for overhang units is higher.

In early June, Chinese developer Country Garden Pacificview Sdn Bhd advertised its Danga Bay, Johor Bahru, project at 50% discount for about six weeks. Earlier buyers were angry. New buyers were delighted. A Singaporean buyer, Hassan (not his real name), who bought an apartment unit in 2015 for RM1.82 million, was shocked and upset. Overnight, his unit was worth about RM900,000. Please do read the full article for more details yeah. Article in freemalaysiatoday.com

Current Property Market?

Generally, the property market is rather stable. Many buyers who are familiar with the market are buying undervalued properties. There were 80,000 property transactions in Q1 2021. Some needed a property, so they bought. Some needed a bigger place, so they upgraded. Some bought because of some good discounts too. That’s why there were 80,000 property transactions.

Some buyers may not be familiar with the property market

Many buyers who are not familiar with the property market continue to believe some owners would soon be selling them their dream property at their dream price. By the way, when a financial crisis do strike, there is a chance for many more owners to sell their properties at a discount to the market price. However, if a financial crisis do strike, how many would dare to buy a property? Better just stay safe… right?

Due Diligence needed even if there’s heavy discount

I always tell everyone that when we buy anything at all, do not look at the discount percentage but the value of the thing you are buying. Do not buy a property simply by looking at how big the discount is. For overhang units, by selling, the property developer gets cashflow. It may be more important than holding the property and having no cash.

I would buy a shirt from the brand I love (because it made me look good) and NOT buy a shirt from an unknown brand just because it came with a huge discount. Hopefully, you realise that property is so expensive that due diligence is needed. Compare the prices to all equivalent properties. If it is undervalued, that’s a good buy even if it does not come with a huge discount. Happy deciding.

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