When’s best to buy property? The answers may surprise you

For those who have not bought a property, the best time is perhaps yet to come. For some, it will be someday soon. For others, it may be a long way off.

A senior manager of a top developer company in Malaysia once said the best time to buy properties was 20 years ago. The second-best time may just be today.

Seasoned property investors know the best time to buy is when they have a distressed seller selling below the market value.

It may also be an auctioned property at 20% below market price, and with no other bidders.

Property investors with experience will often keep their eyes and ears open for any potential opportunity.

Worst time to buy

For first-time home buyers, the worst time to buy may be during a crisis soon after buying their first property.

During a crisis, the prevailing sentiment is negative and first-time home buyers may find that the property they paid RM400,000 for just a few months ago is now in the market for only RM360,000.

When this happens, the best thing to do is ignore the market and keep paying. Recovery will come soon enough.

Past crises have shown that recovery is a certainty in Malaysia. From the 1980s to the 1997 US subprime mortgage crisis, nothing bothered our property market for more than a few years.

For seasoned investors, the worst time is when they could have bought but did not.

For example, a 1,000 sq ft condominium in Kelana Jaya was selling for less than RM200,000 in 2007. A few years later, the very same property was selling for RM400,000. Imagine the profit if the investor had bought more than one unit back in 2007.

Some time

People often say they will buy a property “some time” in the future. When asked when exactly, the answer is often vague, and the “some time” never turns into the first time.

The fact remains that without a property to your name when you retire, times will be tough because property may be your ticket out of poverty – it’s true in many countries.

Take Silicon Valley for example. The monthly salary of a security officer there is US$2,400 (RM9,774). But this security officer would have to struggle every month because the typical rental for a one-room home there is US$2,400.

He could share a room with others but what would happen to him when he retires? Or when he has a family to look after?

Remember, upon retiring, your income stops, and it is going to be hard to pay for rental every month.

However, if that “some-time” was turned into “first time” years and years ago, the property would have been completely paid for in 30 years.

Even if the value of a RM200,000 property increased by only 2%, that would mean it would have increased in value to RM500,000 at the end of 30 years.

It’s true inflation would have eaten a lot of the RM300,000 increase in value but not many Malaysians would have saved RM500,000 by the time they retired.

Be ready

The best time to buy is when we are ready to buy. The worst time is when we have spent everything we have every month, and then find a property we’d love to buy but have to abandon the idea because we just cannot afford it.

Focus on making that first-time property purchase a success.

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.