Is Now A Good Time To Buy A Home For My Own Stay?

The short and simple answer to that: Yes, more so if you’re getting one for you and/or your loved ones. You see, the seemingly never-ending MCOs/CMCOs can be draining, but the quest to finding a home never stops!
property industry in Malaysia
If you’ve always wanted a property to call your own, chances are that you’ve already searched high and low for one that not only fits your needs, but is also within your budget.

While it used to be said that “Anytime is just as good to buy a home, as long as you have the financial capability”, we’re now facing highly uncertain times though.

What with the COVID-19 pandemic and the Movement Control Order/Conditional Movement Control Order (MCO/CMCO) in effect, it’s safe to say that the homebuyer’s sentiment (which was already decreasing) has further dropped.

You might then be wondering: Would buying a home now be a good idea, or should you adopt a wait-and-see attitude? We’re about to take a closer look, so keep reading!


Save Money To Buy A Home, Or Save Money For A Rainy Day?

People will now be focused on one thing: Surviving. Bread-and-butter issues (read: getting hold of basic necessities) have become the most important; any other form of unnecessary spending would be reduced or cut completely.

As it is, many people are already struggling with pay cuts or worse, loss of employment. With no stable income, they’ll then be forced to live hand-to-mouth.

In fact, the Malaysian Institute of Economic Research (MIER) had painted a gloomy picture: The average household income would have faced a decline of 12% in 2020.

One major factor that contributed to that sharp drop was due to 70% of SMEs in Malaysia that lost more than 50% of income during the first MCO, based on an online survey.

property industry in Malaysia

This was a significant impact, because in 2017, SMEs:

  • Made up 97% of businesses in Malaysia
  • Contributed 37% of the national GDP
  • Contributed 65% towards national employment

The SME Association of Malaysia estimated 1 million jobs lost after the first MCO, whereas the Malaysian Institute of Economic Research estimated 2.4 million jobs lost if the MCO was extended by two weeks (it was!).

The government had quickly responded by introducing many measures that were designed to assist the distressed demographics with costs of living, and hopefully, help them rebuild their savings.

These included the revised EPF voluntary contribution, monthly RM500 withdrawals from EPF Account 2, cost of living assistance payments (Bantuan Sara Hidup and Bantuan Prihatin Nasional), and Bank Negara Malaysia’s (BNM) moratorium on financing.

However, analysts (including BNM) are still positive that the property industry in Malaysia is resilient enough, and will bounce right back.

This prediction is supported by price, volume, and value movements in past recessions and viral outbreaks.

In addition, declining growth and measures that were introduced to address the residential overhang in recent years, such as the Home Ownership Campaign (HOC), may even allow the real estate market to deal with this blow.



But When Exactly Will The Property Industry In Malaysia Bounce Back?

That’s actually a very good question, and one that we’re sure has been playing on many people’s minds for a long time! Let’s first take a look at why it is that the local property industry in Malaysia is so resilient.

Homes are needs, not wants. In Maslow’s hierarchy of needs, one of the most important factors that humans cannot do without (apart from air, water, and food) is shelter. So, people are either going to need to buy or rent one.

property industry in Malaysia

The demand for homes is currently suppressed, due to the ongoing crisis period. After we’ve passed that stage though, that’s when the boom in interest will hit the market once more!

Check out some of the best deals available in the real estate market here.

Did you know that China saw its real estate sales tripling in thirty Tier 1 and Tier 2 cities back in March 2020, after their critical period of dealing with the COVID-19 outbreak was over?

So, to answer the question above: Our earliest forecast for market recovery is H2 2021. Why? Past recoveries have taken anywhere from a year to a maximum of 2 years, plus a number of vaccines are already being rolled out.

However, since COVID-19 and MCO/CMCO are both highly unprecedented events, that’s only our best guesstimate.


What Should You, As A First-Time Homebuyer, Do Right Now?

The short and simple answer to that: Now’s a good time to buy a home for your own use, especially since you’re actually getting one for you and/or your loved one to live in – provided you have the financial means to do so!

Ideally, the “best” time to purchase that property you’ve had your eye on, is when the falling asking prices are starting to go into reverse and start rising again. This is known as the ‘bottoming-out’ phase.

You see, with such a slowdown in the real estate industry, developers are actually motivated to do what they can to add value to their unsold stock (if you’re looking at a brand new unit).

Even without the HOC, they’ve already been offering attractive deals; now, they have even MORE online packages.

property industry in Malaysia

Furthermore, asking prices (if you’re looking at the subsale market) are decreasing (have been on the decline since Q4 2016), and the financing environment has become conducive for purchasers.

We’ve got the widest option of homes to select from – your dream home is waiting!

The biggest financial obligation that you’d have to deal with – the monthly instalments for the next 30 years – will now also see a reduction.

This is thanks to the forgiving level of interest rates, due to BNM’s Overnight Policy Rate (OPR) cuts: It now stands at a very low 1.75% (the lowest level on record, to be exact)!

Comparing that number to the 8%-9%, or even double digit rates in the past, it’ll cost less for you to pay every month because of the decrease in the loan’s interest rate (if you’re holding an existing home loan on a variable rate).

For the homebuyer who’s window-shopping for a new home loan, you can now enter into an initial agreement at a much lower interest rate.

It’s thus safe for us to advice a holistic home ownership approach, if you’re ever looking to purchase a property now.

Say you’re someone who has a healthy Debt Service Ratio (DSR), and ample savings for an emergency situation, you’re actually in a very favourable position!

Purchasers should not just look at whether they can afford the initial costs of home ownership, but whether they can afford to cough up the cash each month, while juggling their other necessary expenses as well.