By Hanniz Lam
According to the National Property Information Centre (NAPIC)’s latest property market report, for the first half of 2021, there is an increase of 21% in volume and 32.1% in value transacted compared to the same period last year.
Low interest rates, and plenty of incentives, discounts and promotions are recipes for a great investment in property. As the economy gradually reopens and recovers, the real estate market is expected to follow suit.
We are also seeing developers pivoting towards digital marketing and showcasing their property through LIVE Videos.
“There is ample liquidity in the market, and it has created a strong demand,” noted Zerin Properties CEO Previndran Singhe during EdgeProp Malaysia’s FB LIVE Webinar.
Previndran noted that the high-net-worth individuals are on the lookout for opportunities to secure good deals or consolidate their positions.
On the other hand, Malaysian Muslim Real Estate Consultants Association (PEHAM) president Ishak Ismail observed that many are still in a cautious mode.
There has been an increase in people letting go of their properties due to a shift in income brackets, this will lead to an attractive secondary market.
“Buying a property requires proper planning. Buyers need to have a steady income necessary to support the expenses. For instance, government schemes such as rent-to-owns would be a great start, especially for young graduates,” Ishak pointed out, stressing that affordable homes need to be priced within reach of their target market.
Ishak: There has been an increase in people letting go of their properties due to a shift in income brackets, this will lead to an attractive secondary market.
As announced by the government on Sept 28, as part of the 12th Malaysian Plan (12MP), ceiling prices for affordable housing will be introduced in the secondary market in order to control house prices, especially in the urban areas.
“[The government] has done it with the primary market. Focus should be on supplying affordable homes instead. It is better to let market forces dictate the housing prices as properties are often an investment tool,” Ishak argued.
There’s a lot of space between finding your dream home and deciding to make the move from renting to buying. Your finances, lifestyle, and future plans are among the many factors to consider before deciding what makes sense for you. And in the middle of the current red-hot housing market, it’s even more complicated.
So should you buy or rent? I asked a few friends of mine.
Rent. You have to be fluid enough to change accordance to the absolutely uncertain changing times. Unless you take Warren Buffett model of taking advantage of market volatility.– Elina Z
I wish there’s a tiny house movement in Malaysia where you can own a house without the need to purchase a land. Rather paying a rent to a tiny apartment it is best to buy or build it according to what you want and need n take it with you n park it to those who have land to rent out. This method allowed the person to safe money to purchase a land at the end.- Catherine J Smith
I won’t buy a house for my kids even if I can afford it because I don’t want the fixed property to influence their wings in any way. They should fly wherever they want and rent and survive there. The tenancy market in Malaysia is appalling. One year contract finds you spending 3 months of rent just to refurbish back the place foe the next tenant. Not worth it to have an empty property.- Asrul S
If you have holding capital, buy. Kalau I ada permanent job I will buy, geram tengok rumah2 yang orang nak juak below market price sekarang ni. Beli masa orang jual bukan masa semua orang beli. 2 3 tahun lagi flip lah.- Rosmaria B
For my property side, many people rather go for rental instead. Many property owners eagerly dispose their properties. However the market is rather soft, possibly due to high loan rejections. Incomes are unstable could be one of the factors too. Short lease can reduce the burden of owning it. It’s hard to determine how the economy will be for a period of time.- Stanley W
Ever since I’ve been in Malaysia it’s been a renters market. This surprised me, coming from London, where I’d dabbled in making a little money renting out my flat for a while.
It surprised me that people here were still so connected with “home ownership” when it didn’t make financial sense, likely even in the long term – but the emotional security does, I suppose.-Sangeeta M
For investments – Rental yields are low now but there is potential capital gain in 5-20 years (depends on economy as well). If you have a high deposit, then get ready to pump money in every month.
For Personal use – For those who cannot afford stock investments, other alternate investments or don’t have the know-hows, property is still a safe-haven for those looking to buy and stay-in. Just need to plan our your repayments properly and you can still gain.- Alwin Ng
Pros and Cons of Renting
The best part about renting over buying is the lack of commitment — you can move whenever you want, maintenance and repairs aren’t your responsibility, and you’re not tied down by a mortgage. However, you don’t truly have a stake in your residence.
You can’t build home equity, your monthly rent is controlled by someone else and could change at any time, and you typically can’t make any major modifications to your home. Because of this, renting is great for those who aren’t quite ready to settle down into a house long-term.
Pros and Cons of Homebuying
When you buy a house and build home equity, you have full ownership. That can be highly rewarding and provide a means to build generational wealth, but it comes with certain expenses and responsibilities that not everyone may want or be ready for.
You’ll have to take care of repairs and maintenance on your own, pay any property taxes and fees, and stay in your new house long enough to get back what you spent.
In this current environment, buying a house also means navigating the highly competitive housing market, which can be difficult, stressful, and time-consuming.
If you’re ready for the commitment and can afford the costs, homeownership can be a worthwhile investment for years to come.
If you’re still not sure if you should rent or buy a house, asking these four questions can help you decide:
1. How Long Do You Plan to Stay?
Buying a home is usually only a good idea if you’re planning to stay put for at least three years. With the value of homes only increasing by 4 to 7.5% per year, you could pay more in closing costs than you’d earn in proceeds if you sell after only a year or two. Also, you could owe capital gains tax if you sell a home you’ve owned for less than two years.
You should also think about how much space you’ll need in the future if you plan to start a family or anticipate relatives moving in with you. A one-bedroom condo might not fit your lifestyle in a few years, so thinking through your plans and timeline can help you figure out when and what to buy.
For people who aren’t sure they’ll stay in one spot for more than a few years, such as students or people who just want to try out a new neighborhood, renting makes more sense than buying.
2. Have You Saved Enough to Buy a Home?
If someone can commit to staying put for at least a few years do you have enough savings to buy a house? You should have at least 20% of the price of the home saved up for the down payment. That way it will be easier for you to prequalify for a loan and you won’t need to get mortgage insurance.
But if you don’t have that much saved up, don’t just give up. It might make sense for people to continue to rent for 6, 12, or even 18 months and work on savings and credit … because the best mortgage products go to those with the best credit scores and down payments.”
If you think it makes sense for your situation to buy before saving up for a 20% down payment, a first time homebuyer grant or program could be an option worth looking into.
3. Can You Afford All the Extra Costs of Homeownership?
For many people, monthly mortgage payments can be less than monthly rent. In places where rent is particularly expensive, “it really does make sense to at least entertain and investigate the idea of becoming a homeowner.
There are other costs associated with homeownership to consider, such as closing costs, insurance, property taxes, homeowner’s association fees, and maintenance.
If you’re able to plan for additional expenses, building equity in your own home offers long-term rewards you won’t get with renting. Every month that you’re paying rent, you’re paying someone else’s mortgage.
4. Are You Ready to Be a Homeowner?
Even if you can afford to buy, renting might be a better option based on your lifestyle and goals.
Again, if you plan to travel around and move frequently, you’re better off renting.
Renting is also a good option if you’re not interested in maintaining a home. Homeownership can be a lot of work and when something breaks, it’s on you to fix it.
However, owning a house means you can personalize it to make it a home. You can paint the walls, knock out the cupboards, and retile your shower if you want to.
So you’ll need to weigh the hassles you’ll have to deal as a homeowner against the personalized touches and upgrades you’ll be clear to do in a home you own.
And if you’re not sure, waiting and saving will only put you in a better position to buy in the future.
Bottom Line
Figuring out whether to buy or rent is a financial decision with many factors and long-term consequences. And right now, low mortgage rates, a competitive housing market, and the changing nature of work and location requirements all serve to complicate the decision further.
Thinking through how long you plan to stay in your next place and what your savings and budget for unexpected expenses look like can help you figure out whether it makes sense to rent or buy your next home.
Whether you take the plunge on buying a home or continue to rent, make sure you’re picking the option that best serves your goals and financial situation.
