It’s too expensive, stop buying properties.

In an article in malaymailonline.com not too long ago, there was an article about millennials having no plans to buy properties but prefers to spend ion vacations, handphones and other creature comforts instead. First of all, who are these millennials? Actually, they were once known as Gen-Y and of course still known as Gen-Y by many. As per Wikipedia.org, Strauss and Howe use 1982 as the Millennials’ starting birth year and 2004 as the last birth year. Thus, these millennials are today aged between 14 – 34 years old. Since one typically finishes his degree only at the age of 24, including 5 years of working experience and some savings, they may be ready to buy at the age of 29. True?
The article in MalayMail quoted many examples of the thoughts of these millennials. It said many within this age group is not able to afford a home due toothier lifestyle of changing handphones every few months to keep up with trends. I seriously do not think so lah. iPhone buyers changes phones only upon every new model. That’s 12 months. For the majority of the rest owning a cheaper Android models, I think they would try to use their phone as long as possible. However, I have to agree that this would also be the group who would spend RM16 just for a cup of ice-blended cappuccino. Perhaps weekly. That’s RM832 per year.
The article said that these millennials financial priorities may change once they hit their 30s. They quoted Association of Valuers, Property Managers, Estate Agents and Property Consultant (PEPS) committee member James Wong who said, “People my age, when we were in that generation, there were fewer distractions and our propensity to save was also higher but then the prices of properties were also much lower then.” Maybe true but not necessarily for all because I think I belong to the minority among those who bought my first property at the age of 26. Perhaps many really did buy a property when they reach 30.
Another reason that these millennials will not venture is because the returns are much lower than what it was 20 years ago. Seriously, I do not believe so. In terms of returns, I would definitely rank property as a must have. Else, we better be really BIG with other investments. Property is the only one where leverage is possible. Capital gains on property is also said to be low, perhaps 2 to 3 percent over the next five years. Seriously, this is a gain on top of the property price. It’s not a gain based on our savings.
So, since it’s too expensive, let’s stop buying properties? Honestly, if every millennial were to stop buying property, the prices would soften, for a little while. However, among these millennials, there are those who are much more savvier than the rest. When they see property prices dropping, they would buy and the number of these millennials who do not own a home is far higher than those who already has a home. Seriously, the advantages far outweigh the disadvantages as long as one did not buy with wrong reasons. Millennials love to follow trends. There’s only one trend for property prices; up. The only question is by how much. Happy believing.
written on 7 Mar 2016
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