7 Advantages Of A Slow Property Market For Property Buyers
Written by Charles Tan from kopiandproperty.com
In case not everyone is aware yet, where transactions are concerned, it’s currently a slow property market.
In 2020, total residential property transactions for the whole of Malaysia reached 191,000 units. Yes, 191,000 units! However, this figure is lower than the one in 2019, 2018, and many years before that.
With a slower property market, there are advantages for property buyers who are now moving into the market to buy a home.
The Government Has To Do Something About It
As the market is slow, the government should also do something about it. For starters, let’s say that they are willing to lose some tax revenue.
For example, selling a residential property does not incur any Real Property Gains Tax (RPGT) till end of 2021. It means that even if we have profit from the property disposal, we do not need to pay RPGT.
This is perhaps one reason why people are willing to sell for a little lower too, since they do not need to include the tax into the price of the property.
Now, there’s also the Home Ownership Campaign (HOC) which is still ongoing until 31st May 2021. We will see if there’s a potential extension to help boost the sector in these trying times.
But now, without further ado, it’s time for us to take a look at the 7 advantages you can enjoy while the slow market lasts!
1) Negotiation Is Now Possible
It’s now possible to tell the home owner sincerely that you love their unit, but you also love another unit you’ve viewed. Could he/she give you a little more discount?
The home owner will now usually 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 home owners, even the developers could throw in more offers and/or freebies to "sweeten" the deal too!
2) Choices, Lots Of Choices
From newly completed ones (including overhang units) to new launches, the subsale market, and even property auctions, there are now more choices than ever for you.
This is primarily because the demand has slowed down. Gone are the days when property developers assigned you a queue number and you only had 5 minutes to pick a unit.
Gone are the days when people queued a week in advance prior to new launches, and some people even paid other people to queue for them!
3) More Attractive Prices
Be realistic: It’s attractive prices, and NOT necessarily super low prices. For some areas for which the demand is far higher than the available supply, prices will still be resilient.
Owners usually don’t sell unless they face financial difficulties or want to upgrade. It’s definitely not because of the current market that they will sell!
Ask ourselves this: If we own a home in a neighbourhood we love today, would we even think of selling it off for a lower price than what we originally paid for?
However, if we do have the intention to sell, then the selling price today would have to be close to, or lower than, the market transacted prices.
4) Window Of Opportunity Is Now Open
There’s a cycle to everything. There were years when the sellers had the upper-hand. Today, it’s definitely the buyers’ turn to be more demanding.
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.
Entering the property market is an investment, thus, this is a lot less like buying and selling shares on BURSA Malaysia.
You just need to remember that an overvalued property exists in all seasons. So, due diligence (research and fieldwork) on your part is always necessary!
5) Prices Always Go Up, But Now It’s Stagnating
Value may not be up because of inflation, but prices always move up. An important thing to know about property investment is this: Property prices on a longer term will always be rising.
For now, it is staying stagnant. With inflation, the cost of producing a property including land cost, salaries, and materials will always go up. This will inflate the property’s price in the end.
This is why property investment is always a good hedge against inflation. Of course, inflation may also depend on how much we spend every year.
6) Banks Need To Survive And They Are Looking For Borrowers
Contrary to popular belief that banks are no longer lending, in reality, banks actually love to lend. And home loans is just one of the ways they could earn profits.
In fact, banks continue to be flushed with funds because they are more conservative with their lending now.
They prefer to lend to borrowers who look like they (borrower) are able to handle the repayments. The banks are also choosing their customers and the properties more carefully too.
Good customers are now harder to secure, and some banks are definitely doing more to woo customers. Are you a good customer?
7) Developers Have To Do More For Less
It’s a harder time for developers these days. Previously, they’d just need to post an ad once or twice in a newspaper or online portal, and sell everything.
Now, they need to advertise more (never-ending marketing), build more interest, and equip their sales staffs or real estate agents with more ‘firepower’ so that the sales numbers are better.
They are thus more accommodating, and a lot more willing to take lower profits. This is the time when selling at a lower price to move the units are more important than to launch at a higher price to maximise profits.
If the question remaining 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 later, the answer is a NO.
As for the best question of all time: "When’s the best time to buy a property?", the answer to that is….buy when you can afford to buy (and skip that barista coffee and cafe food too)!
Would it be the best time to rent then? It may be a good time for that, since monthly rentals are lower than monthly mortgage repayments, but paying rental is forever and ever. So, go ahead and start viewing, you can always decide later. Happy property hunting!
Charles is the Founder of kopiandproperty.com (leading independent property blog in Malaysia). In 2019, he spoke in 52 real estate events across 9 states in Malaysia, and in Singapore.
His articles and views have appeared in national newspapers, magazines, property websites, podcasts, and national TV. He is a Licensed Auctioneer and has conducted auctions for properties, banknotes, and even special plate numbers. Charles has also conducted sales training internationally, including Hong Kong, Singapore, Thailand, Indonesia, the Philippines, and Malaysia.
Follow his Facebook here: fb.com/kopiandproperty