Risky to buy or Risky Not to buy.

I speak for myself only yeah. Let me explain why ‘risky to buy’. Today, I seriously do believe property prices has risen much faster than the salary growth due to the periods of 2009 till 2012. There were still good condos, in decent areas and a size of 1,200sf for less than RM250,000 in 2008 in the Penang island. Today, there are none at RM550,000 and below except if you found them in auctions. Today, buyers would have to fork out nothing less than RM650,000 for a similar property in the same area. So, if buyers were to buy today, don’t you think it is very risky? Prices have gone up so much, but salary never followed. So many negative reports about middle class being squeezed and that lives are so tough that majority of these middle classes could no longer live a normal life. There has also been bubble reports, about the extremely high household debt here in Malaysia which is very dangerous. Most recently, it was reported that foreign funds sold lots of shares in the Bursa Malaysia. They are exiting. So, if you don’t think it is risky to buy, I tell you it is risky to buy, now.
How about risky not to buy? Please tell me, how fast can your money grow via another investment which is safe and steady? FD? If you are okay, then why not. However, the potential risk is, inflation may be rising faster. Unit Trusts? You need to decide on aggressive or safe. If aggressive, most of the time it’s fully equity. You may win big, 10% per year every year for the next 20 years. If you think that’s a lot, well, you also have to know what’s the principal you are starting with and the quantum it is increasing in. Assuming you save RM500 per month, then the amount at the end of 20 years is not likely to give you heart attack. Seriously, not even a condo based on today’s price. Oh yeah, the likelihood of that? Not high. Bond fund? The returns are almost similar like your FD. Buying commodity? Buying Gold? Buying a palm oil estate? Let’s stop joking, majority of these options has too little returns or high returns but also high risk. In other words, you risk being poor if you buy nothing for the next 20 years or you risk losing it all because even oil prices have ups and downs and no one knows if you can withstand the lows and take advantage of the highs. 🙂
Suddenly, buying a good property at a not too bad location does not sound so bad after all. The above is mostly applicable to only buying your first home. Secondly no matter how much you love property, never put all your investments into just property. Consider different alternatives too to diversify your risks. Note, it’s still very risky to buy, as per what I mentioned above. Okay, better make your decision yourself. No rights, no wrongs because you are the one deciding the path to take. Remember, if you do not know the direction that you are going, it does not matter which road you take. 🙂
written on 24 Sept 2014
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