MANY people have asked me when is it a good time to buy properties for investment and there has been some debate as to whether this is a good year to do so, given the current economic situation.
In my opinion, there is never a good or bad time to buy property for investment and this is regardless of the state of the economy.
Let us begin by reviewing the data of the ups and downs of the property market in Malaysia over the past 20 years, the history of property market.
For every decade, there have been ups and downs but we can also see from the data that whenever the property market begins to slow, it was only a matter of time before it begins to recover.
Just like the seasons, every property bust cycle is followed by a property boom cycle and every boom cycle is followed by a bust cycle. The latest boom years were between 2010 and 2012 and for those who purchased property during 2008 and 2010, they would have enjoyed the returns on their investment.
In my opinion, we now are in downturn period that is between 2017 and 2018, which makes it a very good time to invest as I strongly believe that the market will recover in a few years, as shown by the cycles in the past.
As it is now the low season for the property market, I categorise this period as the buyers’ market. There is an oversupply of properties as everyone is beginning to sell them.
To exacerbate the situation, banks have been tightening their loan approval rates for buyers’ loans. This has made it difficult for properties to be sold compared with last year and the slowdown has resulted in low sentiments for the property market.
I would say now is the best time for buyers to acquire properties as it is easier to negotiate the best price with the sellers due to the negative market sentiments.
I buy properties to keep instead of flipping, which means that I will buy them to rent out and not for a quick re-sale.
Based on my holding strategy, I may keep these properties for up to 10 or 15 years and this means that no matter whether the market is up or down, it is always the right time for me to purchase property. With this long-term investment horizon, economic cycles and property taxes will have less effect on me.
So, for those who are looking to purchase their first property to stay, now is definitely a good time.
For those who are looking at property for investment, it is important to know whether you are buying them to keep or flip.
Ron Ong is a practising lawyer, investor and property manager who owns 19 properties worth RM17.76 million.