Slow Property Market Has 7 Advantages for Potential Buyers
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We have to know that the property market is slow. Just look at what the recent announcement on the Economic Recovery Plan where Real Property Gains Tax (RPGT) was exempted (to encourage more people to sell and increase supply into the market), Home Ownership Campaign (HOC) is now back and the removal of the need to save like crazy for the rd property.
Now the banks could lend the borrower 90% if the borrower qualifies. If the property market is hot, then there is no need for recovery. Only need for measures to cool down the number of transactions. With a slow property market, what would be the advantages for potential buyers?
#1 – Negotiation is now possible. It’s now possible to tell the homeowner sincerely that you love the unit but you also love another unit you viewed. Could he give some discount? The homeowner will ask for a few days to think about it. They no longer reject you immediately like what happened a few years ago when the market was hot. It’s not just the owners, yeah, even the developers could throw in some sweeteners too.
#2 – Choices, lots of choices. From newly completed ones (including overhang units) to new launches, sub-sale market and even property auctions, there are now more choices than ever because the demand has slowed down. Gone are the days when developers assign you a number and assign you 5 minutes to pick a property. Gone were the days when people queue one week in advance prior to new launches and some people pay people to queue for them….
#3 – Attractive prices. Be realistic yeah. It’s attractive prices and NOT low prices. For some areas for which the demand is far higher than the available supply, prices will still be resilient. Owners do not sell unless they face financial difficulties. It’s not because of the market. Ask ourselves. If we own a home in an area we love today would we sell the home for a lower price? However, our selling price today definitely has to be close or lower than the market transacted prices.
#4 – Window of opportunity is not open forever. There’s a cycle to everything. What’s up will come down and what’s down will go up again. Some people advocate trying to time the cycle. Actually, it’s more of understanding what we need. Property investment is an investment, thus this is a lot less like buying a share on BURSA Malaysia. As for why timing is less important, please refer to the next reason.
#5 – Prices always go up. (Value may not but prices always up). The only thing about property investment is this; property prices on a longer-term will always be rising. (We should look to the advanced property markets to understand why) The prices may not even be above the inflation rate but if it follows the inflation rate, then a property will hedge against inflation. Just note that the inflation rate is based on how much we spend per year. The property price increase is on the full price and not on how much down payment we paid….
#6 – Banks need to survive. Contrary to popular belief which is banks are no longer lending actually banks love to lend. This is how they earn profits… In fact, they are now flushed with liquidity yeah. However, they prefer to lend to borrowers who look like they could pay. Good customers are now harder to secure and some banks are definitely doing more to woo customers too.
#7 – Developers have to do more for less. It’s harder for developers these days. Instead of just one-time newspaper and sell everything, they now needed to advertise more (never-ending digital marketing), build more interests and equipping their sales staffs or real estate agents with more ‘firepower’ so that the sales numbers are better. They are thus more accommodating. More willing to take lower profits. Given a chance, they would not want to build more units and sell lower. They would prefer building fewer units and selling higher and having less hassle.
There are definitely more reasons but I will stop at 7, my favourite number. If the question is, should I still buy a property today? It’s a YES. If the question is, could I simply buy and expect prices to go up, the answer is a NO. It might have been because there was a period when everything went up. As for the best question of all time, ‘When’s the best time to buy a property?’ The answer is … buy when you could afford to buy (skip that barista coffee too). Happy investing.
This article was contributed by Charles Tan. Charles is the Founder of kopiandproperty.com, a leading property blog in Malaysia. He writes from the perspective of a working professional and views property investment as a long term decision. He speaks regularly for property events and his articles and views have appeared in national newspapers and magazines. Charles is a Licensed Auctioneer and has conducted auctions for properties, banknotes and special car number plates. Feel free to connect with him. firstname.lastname@example.org