Property Investment Musings

1. Is it the right time to purchase a property now? Should I delay until the price falls? Should I buy now before prices go up?
2. These are the common questions that we hear on and off. Sadly, for both the person asking and us listening, we simply just can’t see the future. If we could, well, the firm will be a very wealthy for we will be able to foresee the next 4D draw and place all funds on the winning number.
3. The questions, however, are not without answers. Let’s assume the property is for own accommodation. Then, the answer is simple. It just simply doesn’t matter when one buys.
4. Allow us to illustrate our reasoning. Let’s say a double storey house in Nusa Idaman is purchased at Rm800k for own stay. Due to persistent demand, in one year’s time, similar units are now being sold in both in the primary and secondary market at amounts in excess of Rm1m. How does this augur for the purchaser?
5. Well, for starters, there is a gain of Rm200k due to capital appreciation. The purchaser will be patting him/herself on the back for such a fantastic investment decision. Heck, he/she might even be claiming bragging rights on such foresight!
6. The glaring thing however, is that the gain is merely a paper profit where it’s only academic unless it is disposed and the value is monetised. Secretly, the purchaser may be cursing for not getting 2 units in the first place, one for dwelling and the other to flip.
7. What if the situation is reversed instead? Prices take a dive for whatever reason and the market value is now hovering at Rm700k range. What now? Did the purchaser lose RM100k?
8. Again, it’s just a paper loss. Maybe a bruised ego to boot but that’s about the damage that the buyer is going to sustain. Since he/she is occupying the house, a sale is unlikely and thus no loss will be recorded.
9. So, in the end, it really does not make sense to time the market when there is a genuine need. The only thing is the natural human behaviour of wanting a bargain where an item is procured on the lowest possible price. In essence, it’s merely to satisfy the inner ego.
10. The matter is entirely different when one purchases with the hope profiting from an anticipated price increase. Now, this is speculative and timing is of the essence. Some would call this investing but some call it time gambling.
11. If this is what one is hoping with the purchase, then, all the best as any drop in price may spell financial disaster. The final outcome will depend on one’s financial prowess and holding power.
12. To the genuine buyers out there, now is as good a time as anytime. May you find your ideal unit.