Written by Charles Tan from kopiandproperty.com
Both negativity and opportunity usually exist at the same time. But what exactly do we mean by this statement?
Well, even though there may be difficult times with plenty of negative sentiments, there’ll still be plenty of opportunities – if one only knows how and where to look!
Take, for example, the HOC Campaign which was recently reintroduced by the government for 2020, taking effect from June.
This move made a lot of people speak of how bad the property market’s health is right now, and how they should "wait and see" whether this signified an impending housing bubble situation.
We say, why not find the silver lining in every cloud, and realise that this move would actually benefit you. Read on to find out what we mean!
What was the Home Ownership Campaign (HOC) 2019 all about?
We know that this is the campaign where the government was willing to forego stamp duty on property purchases, and which was extended till 31st December 2019.
This is despite the fact that all the properties listed under the HOC carries a minimum discount of 10% (that’s a lot of money, people).
Out of all the units sold, 88% were priced below RM300,000 and most were from PR1MA Malaysia, plus they were offered at a whopping 30% discount!
And now, what’s with the reintroduction of HOC 2020?
Ever since the COVID-19 pandemic hit Malaysian shores and brought about the Movement Control Order (MCO), the economy has taken quite the beating. The property market was no different, and sales were on a steep decline.
Now, in order to "support businesses and strengthen the nation’s economy", the Short-Term Economic Recovery Plan (PENJANA) was announced by the Prime Minister during his telecast on 5th June 2020.
In it, the HOC was reintroduced, beginning June 2020, and it had the same initiatives as its predecessor. Among them, these benefits were highlighted:
- Stamp duty exemption on the instruments of transfer and loan agreement for the purchase of residential homes priced between RM300,000 to RM2.5 million (subject to at least 10% discount provided by the developer).
- The exemption on the instrument of transfer is limited to the first RM1 million of the property price, while full stamp duty exemption is given on loan agreement effective for Sale and Purchase Agreements (SPA) signed between 1st June 2020 to 31st May 2021.
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Isn’t the discount in HOC low enough?
A 10% discount is already considered very attractive, especially if it’s for a property that’s purchased for your own stay.
Usually, when we find a home we want and we start negotiating, getting a 10% discount from the initial price will usually mean an immediate buy.
When people feel that the market is now not-so-positive, and there’s a belief that prices seem to be trending lower (according to all their friends who may not even be buying), they may just step back and wait.
No one knows how long this wait will be. This is how market perception clouds our decision making process. It’s not even whether that property is right for us or not anymore!
So, about this market perception thing…
Ever heard of the herd mentality? When stock market prices start to go up every other week and climbs ever higher, everyone starts buying.
Suddenly everyone is telling anyone who will listen how they managed to gain profits, and now everyone is buying everything that their friends are recommending!
What will generally happen to the final batch of buyers (before the stock market prices go on a sudden dive), is that the experience will usually be a negative one.
Now this is why we don’t buy when everyone else thinks it’s a ‘sure buy’. When it comes to investment, majority is usually proven wrong.
Else, there would be more overnight multi-millionaires than there are of working professionals like the most of us.
Finding the opportunity amidst the negativity
It was tough to negotiate with a property owner, back when the property market was still booming.
In the secondary market, if we dare to even try asking for a 10% discount, the owner will usually not respond and we’d have to find another unit, or accept that small token of discount (if any).
In a market where the total number of property transactions and the corresponding values have been decreasing since 2013, the opportunity for buyers has now started to reappear.
Some owners are friendlier when we negotiate. Some developers are now more flexible when it comes to extra freebies/goodies.
Even the government is willing to forego stamp duties! Seriously, would all these come when the property market is in an upswing?
Evaluate the internal and external factors
If we’re waiting for the best property deal, have we viewed and evaluated at least 10 within the last few weeks?
Without proper evaluation, it’s going to be hard to suddenly make a decision. It may even be a wrong move if we decided to buy simply because a developer created a super nice brochure.
If we believe property investment is compulsory, have we looked at how much savings we have, especially for the down payment (biggest aspect of home ownership)?
Have we tried to quickly save more these couple of months? Frankly, if we didn’t take these steps, it’s not called "waiting for the best property", it simply means that we’re doing nothing.
When we do nothing, the results would also be as such: nothing.
The early bird catches the worm?
Hopefully our readers understand that when everyone is feeling bullish and are queuing up to buy a property, the best deals will no longer happen!
In fact, the discounts would have all disappeared. The owner who was willing to discount a small token will now decide to hold out for a better offer from another prospective buyer.
The property developers would also be in the driving seat. Remember when potential buyers had to queue up just to get into a show gallery?
And once they were inside, they were given a stipulated time to choose the unit they wanted – because the queue outside was long!
If you fail to plan, you plan to fail!
Renting a property can also be a long term strategy for you; it need not necessarily be buying.
Just remember to rent something very affordable (within budget), while we save and invest the extra cash to build up our wealth.
If we’re only renting but have no other savings, and no other wealth building activities, then renting is a bad strategy.
However, buying a property will be a much easier strategy for the long-term versus renting, which means we’re trying to force ourselves not to spend the extra money on something else.
A property is usually the most expensive thing we will ever buy in our life, so we need to take the time to reallyyy, truly think about it before making a commitment!
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Charles is the Founder of kopiandproperty.com. In 2019, he spoke in 52 real estate events across 9 states in Malaysia and Singapore.
His articles and views have appeared in national newspapers, magazines, property websites, podcasts, and national TV. Charles has also conducted sales training internationally, including Hong Kong, Singapore, Thailand, Indonesia, the Philippines, and Malaysia.
Follow his Facebook here: fb.com/kopiandproperty
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