Cheaper properties: So, should I wait till March?

After someone read the article, “Waiting for cheaper properties, March 2019”, this question was asked: “So, does this mean I wait till March 2019 to buy?

In brief, “No”.

The reason is simple. If you have found a property you like in a mature neighbourhood which is priced 10% below the usual market price, it’s best to buy now rather than wait till March 2019.

If you have found nothing because you have not viewed anything yet and do not even know which area you’d like to buy a home in, then wait till March or beyond, because chances are, you are still not going to buy anything.

There are reasons why completed properties have still NOT been sold.

One major reason: The property may have been priced too high previously and people just could not afford it or did not think it was attractively-priced enough.

So perhaps a 10% reduction could make it cheaper.

How much cheaper? Let’s use a RM500,000 property as a benchmark. The mortgage per month as per the image above is RM2,214.

Please refer to the image above.

Now, what happens when the property price is reduced by 10%? RM500,000 will become RM450,000.

Assuming everything else stays exactly the same, then the monthly mortgage will drop to RM1,992 per month.

The difference is RM222. That’s about RM7.40 per day. What this tells us is that actually, it’s not really that substantial in terms of a price reduction.

Not drinking a Starbucks latte every day would save you much more.

Then again, any savings is welcomed because now you have an extra RM222 for over 100 cups of Kopi-O.

So, if there are properties you have identified as completed but unsold, it’s worth waiting till March.

Do note that another likely reason why a property was completed but not sold, is because people just did not like it. Perhaps it’s the design, perhaps it’s the location. Or perhaps it’s located next to a sewerage pond.

If it was not attractive previously due to some of these reasons, is a 10% reduction in price enough to make it attractive?

Well, will a RM7.40 savings per day make us like a property by March 2019 if we did not like it earlier (only if it’s RM500,000 or higher).

The decision is definitely ours to make. The answer about waiting till March or not really depends on many factors but the amount in savings is definitely not substantial if the property we are looking at is sub-RM300,000 for example.

The savings will be just slightly more than RM100.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.