Whenever the subject of property is brought up in a conversation, inevitably one of the discussion topics would be whether this is a good time to buy property. The answers we get are as varied as day and night and everything in between.
What about now?
There are many naysayers who point out that it is not a good time to invest in properties. Others are saying that the market is on the way down and had not reached the bottom yet. Still others are saying that we should be saving our money for a rainy day.
However, in order to make money, we need to be contrarian thinkers. It is at times such as these that we are able to buy properties at a huge discount and disposing them later when prices recover. We had often heard of people lamenting that they should have bought an investment property during the economic crisis of 1997/1998. Well, today’s market situation is not very different from the economic situation then.
If we speak to real estate agents today, we will hear that there are not many property purchase activities. Many real estate agents are relying on commission mainly from the rental of properties instead of the selling of properties.
Data is suggesting that the percentage of housing loan application approval by the financial sector had fallen as well. Therefore, it should not come as a surprise that there is not much property buying activities in the market. Or to be specific, there are people who want to buy properties but they are not able to close the deal due to their inability to secure financing.
Due to this phenomenon, it has become a buyer’s market. This means that in a price negotiation, all the cards (aka power) reside with the buyer. Depending on the seller’s situation, the buyer is able to dictate the selling price and even the condition of the sale.
In a hot property market, however, it would be a seller’s market where, in the negotiation process, the seller holds the power.
As in any market, there will always be people who really need to dispose their property for a number of reasons. It could be due to the need for cash for their business purposes or it could be because the owner had bought another property to upgrade or downgrade and they desperately need to dispose off the property.
It could also be because the owner is migrating to another part of the country or even to another country. Or it could be some unfortunate events such as divorce or death. Due to the current market condition, it is even more difficult for these property owners to sell their property. As such, if your negotiation skills are finely honed, you would be able to buy the property at a huge discount.
If you are intending to buy new properties instead, there is no better time than now to do it. In the heyday of the early 2010s, it was so tough to buy properties, even from property developers. Some had to queue overnight in their sleeping bags outside of the offices of property developers in the hope of buying a property of their choice. Some had to go through a balloting process just to buy a property costing hundreds of thousands of ringgit.
The situation today however is rather different. Today, we see many property developers offering some form of discount or even giving free electrical appliances such air conditioners, televisions, etc. Some developers are offering free kitchen cabinets. It is not often that we are faced with such a fantastic opportunity to buy new properties.
The other plus point in buying new properties now is that property developers would only be handing the property to you in 36 months (strata-titled property) or 24 months (landed property). Surely, the economy would have recovered by then and you will be in for a handsome profit if you decide to sell when you get the keys to your new property.
However, if you insist on buying a ready built, new property right now, there are property developers who have some leftover units. Most of these units are available for sale now because the earlier purchasers were not able to close the sale due to the rejection of their loan application. Or it could be units that were originally reserved for Bumiputra only.
Another huge opportunity in today’s market lies in property auction or foreclosure sales. Due to the current unfavourable market condition, many are having issues servicing their housing loan. As a result, their property had to be auctioned off.
There is also another sector of the market where new properties are being foreclosed. Not too long ago, it was not uncommon to see people going to the property developers’ office and placing a booking for three to five new properties at one go.
This was because developers were offering very attractive financing scheme where the buyer would only need to place a booking fee of 5% to 10%, and they would not need to pay a single sen until they get the keys to the property. This is known as Developer Interest Bearing Scheme, or DIBS in short, which was later banned in 2014.
What to do now?
Get your financial report card in order. One of the key reasons why many housing loan applications are rejected is really within our control. The main ‘financial report card’ refers to the CCRIS (Central Credit Reference Information System). In this report, which is collated by Bank Negara Malaysia, you can see all your financial activities in terms of car loans, other housing loans, personal loans and even credit cards. Do refer to it and take steps to clear all the “black” marks in the report.
It would be good if you could start approaching friendly bankers who could give you an idea on how much money you can borrow from the bank. That way, you are able to focus your search for an investment property within a predetermined band of prices.
Start learning how to invest in properties. Discover your property investing profile and what kind of investment strategy is suitable for that profile. Learn how to evaluate a property. Most important of all, learn how to negotiate well so that you can buy a property at the prices and terms that you like.
This is the time to research the kind of investment property you are comfortable with, including locations. Once you have identified the types of properties you like and where they are located, identify real estate agents and property developers who are active in that location.
If you want to buy new properties directly from the property developer, you can either gather a group of buyers and approach the developer for a group discount, or join a property investor group to do the same.
While there is such thing as an optimal time when we are able to acquire properties at a low price, the truth is, we should be buying properties all the time. This is because even in good times, when properties prices are flying through the roof, we can still buy properties at below market prices if we have great negotiation skills.
The coming year is working out to be a great time to buy property. Start the process now and stop putting off this very important decision. Happy investing.