Sense and Cents from property during a slowdown

Another friend asked me about my thoughts about property market. With the slowdown would it cause a bubble. Well, property bubble is mostly caused by property prices increasing continuously to unsustainable level. I am not sure if slowdown since 2013 would cause a property bubble but my take is, No. Perhaps a better question would be, since the best years to buy were way back before 2012, would it still make sense or would you be making cents from the property investment today?
Before I start telling why, I would announce that I have intention to purchase properties for rental this year. Just let me settle my new baby’s stuffs first. Haha. In the mean time, stock remain my favourite. Many undervalued stocks these days and the volatile stock market meant some stocks are totally overlooked which is fine for me.
For a buyer, it makes great sense to buy during a slowdown. The reason can be illustrated by many buyers who are today ‘delayed’ by the Iskandar slowdown. Most bought during days when everything was hot, hot and hot. I use the word ‘delayed’ and not trapped to describe those who can still manage the monthly payments while waiting for better time to come. For those who could barely afford in the first place, then these people are now trapped. Yes, it definitely would make better sense to buy during a slowdown instead of during the hot, hot and hot times. Do note that we should buy undervalued even during slowdown and not simply any property.
For buyers who believe that the best years were past, I do agree with you. Honestly the years of 2009, 2010 and even until 2012 it was crazy. Almost every friend who bought something got a huge return when they sold their properties. Come on, it was then that the condos were still being sold at RM300 per sf even within the Penang island!  So, the gains in Ringgit may be over but the gains in Cents are still here. There are still many condos which are in less popular areas which is within our budgets today. Yeah, some waiting may be necessary. In the mean time, just rent them out. Negative returns? If it is a small negative but I really like the property, I would proceed. Disagree? It’s still a decision. Just be happy with whatever we decide.
In conclusion, it definitely makes more sense and buyers should still get decent returns as long as they are focussing on undervalued properties. Just use rental as a benchmark. Please do not put future MRT 2 stations in the calculations yet. MRT 1 stations, yeah but the opportunities are lesser. I am pretty sure already way too many people are already interested in these units today. Happy making sense or cents.
written on 9 May 2015
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