This article was first published in Ivory Living magazine July 2015 Edition.
Recently, I followed my brother and his wife for a property viewing. It was a semi-detached unit which was just a few units away from our parent’s home in Ipoh. The owner was only willing to sell at RM560,000. It was a fully renovated unit and my brother may need to just buy some new furniture and electrical goods. My mother told us that the price she paid for her current unit was RM85,000 while our neighbor who moved in a few years after us bought her unit for RM111,000. My parents bought their unit 25 years ago. My brother and I discussed and agreed that RM560,000 is considered a low enough price. Not the lowest maybe but both of us were willing to accept it and buy. Is it a perfect property? Almost, since it’s so near to my parent’s place. Thus, my brother may have found a close to perfect property at a low enough price for him to afford. This is despite the fact that long time ago, the price was many times lower.
Do you own a property today? Have you started to pay for one so that you and your loved ones have a roof over your head? Are you still waiting for the lowest price before buying your perfect property? After all, with the current negative sentiment, surely the property market should crash soon? Many of your friends who have not yet bought one have also shared many tips on when is the best time to buy. You think they share the same opinion as you and thus you feel confident not to buy for now.
Do not worry, I have no issues with anyone who would like to wait before buying a good property. Honestly, someone who chose not to buy would not fare the worst. The worst case is always someone who bought the wrong property and thus got stuck with the bad deal for a very long time or even lost a fortune for the wrong buy. Yes, this is true because majority of the time, only those who earned a lot from their property investment would tell you while those who lost money simply blame their bad luck.
However, let us discuss the ‘waiting’ period. How long should we wait? To me, we should wait until we are ready with enough to buy an affordable property. Ready with sufficient downpayment as well as some renovation and furnishing costs. Affordable in this sense means the mortgage instalment should be at most 40 percent of your income every month. Thus, the waiting period is based on our personal circumstances and not when our friends tell us to buy. Always remember that once you started to pay for that property, your investment towards your retirement has started. The earlier, the better.
Waiting for the lowest price. Let me be very honest and real. The lowest price would normally be the price that one bought from the developer. Thus far, unless the project is really in the middle of nowhere or the developer ran away, the price would never stay the same after completion. It would just go up, even if based on just the usual inflation percentage. We should however know about the area that we are buying and the price for the type of property that we are buying. From this information, we would be able to ascertain what’s a very good price level. Lowest price may also happen during a financial crisis but if you were skeptical to buy during good times, would you dare to you during bad times?
The perfect property. When we were still a single and have just a few years of working experience, the perfect property might be just a small 700sf clean and cosy apartment in a secondary area for lower than RM250,000. Saving just RM5,000 per year for 5 years would enable you to have enough downpayment for this ‘perfect’ property. When we got married, with a combined income, the ‘perfect’ property might now be a condo in a secondary area of minimum 1,000sf or higher. This is to also include the potential for 1 or 2 babies in the near future. The price can now be increased to below RM600,000. With this, choices are aplenty. Just search in the online property portals. If we are somehow ahead of everyone else, then, we should be able to afford a much higher priced ‘perfect’ property. The question that we should ask is thus, ‘what is the perfect property for me, now.’ Once we objectively answer this question, the ‘perfect’ property appears.
In conclusion, all the waiting for the perfect property at the lowest price may not work according to what we have in mind. This is especially if what we have in mind is just not what we can affordably buy. The property market is always moving and in fact when we look at some of the hotspots today, they were just the secondary areas of the earlier days. Urbanization continues to happen and the migration of people from smaller towns to bigger cities is happening all over the world. Just look at the number of Malaysian fresh graduates descending to Singapore and you would understand why the property prices in Singapore rose so much that it is already one of the highest priced in the world today.
Last but not least, if you are a guy, your future father-in-law may like you more if you already have a property even if small versus someone who told his future father-in-law that he is waiting for the perfect property at the lowest price before buying. Thus, after marriage, the couple would stay in a rented room first? Yes, my first property was just a 700sf apartment and yes, my father-in-law really did ask me that question when I asked for her daughter’s hand! Today, I am staying in a 1,743sf full facility condo and my father-in-law looks up to me a lot more than the young man he met over 15 years ago. The best time to plant a tree was 20 years ago. The second best time is now, let us take the right action today. Happy investing or waiting if your decision remains; waiting for the perfect property at the lowest price.
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