Yes, it’s a renter’s market but …
In the long run, the benefits of owning a property outweighs the advantages of renting, says an expert.
Siva Shanker, the head of investment for Axis Real Estate Investment Trust (REIT) Managers Bhd, said the long term benefits of owning property would outweigh the advantages of renting.
He was reacting to remarks made by another property expert, Ernest Cheong. In a recent interview with FMT, Cheong said renting might be a more viable option than buying a house, given the currently high prices of properties and the rising cost of living.
Speaking of the apparently contradictory current situation, in which the prices of properties are high although there is an oversupply, Siva said this was the result of speculative buying a few years ago, when so-called property gurus went around telling people to buy properties and sell them later for a quick buck.
“These gurus would tell people, ‘Buy a RM600,000 property which is under construction and in two to three years, you can sell it for RM800,000,’” he said, adding that this mostly involved soho (small-office-home-office) units.
“Those who bought the properties out of speculation are realising they have been misled. And while the property market is correcting the supply and demand, it doesn’t mean that the property market is in a free fall.”
In a free fall, he told FMT, there would be numerous instances of loan defaults and properties would be repossessed. This wasn’t happening, he said.
Siva, who is the immediate past president of the Malaysian Institute of Estate Agents, said people shouldn’t be closed to the idea of buying a property.
“Naturally, we can’t predict what will happen in the next 30 years, but this doesn’t mean we shouldn’t buy property,” he said, adding that a piece of property would be the best hedge against inflation.
“Buy a home based on your needs. Buy something you know you can afford and never buy for speculative purposes.”
He said he would recommend that people adopt a “trading up mentality” when it came to buying property.
“Generally speaking, your salary will rise over the years. When you buy that first house, buy something you think you can afford to pay for over the next few years. As the years go by and you are earning more, you can sell that first property and buy a bigger property. That way, you won’t be overcommitting to several properties at one go.”
Buying a RM500,000 property? Better to rent, says expert
Stay current - Follow FMT on WhatsApp, Google news and Telegram