As We Wait, Properties May Become Harder to Afford
property price
would become
and the increase
of such price will
be higher in rate
than the increase
in our salaries and
savings.
logistics, utilities and inflationary
pressure which will inevitably lead
to escalation in house prices. In
addition, the challenge to come up
with the 10% down payment, be
it for purchase from the primary
or secondary market, will be
tremendous.
Wait further to
try and match the
original price tag,
and you will find
Educated young investors at PH Expo 2014
yourself chasing
after the property
I recall reading a letter written to
forever and lose
the editor of a popular daily which
out on other opportunities.
caught my eye. The man related
the story of the advice given by
Lesson number two
his grandfather and father about
getting onto the house ownership
Be realistic in your choice of your
ladder as early as possible. He was
first home. Everybody wants to
a young man, a fresh graduate in
buy their dream home but unless
the mid-70’s with a starting salary
we are realistic and practical,
of RM900 per month. He came
this will remain a dream forever.
from a humble background and
While the young man in the story
every month he had to carefully
above is lucky enough to buy a
allocate his limited earnings to
linked house in the outskirts of
his ageing parents and younger
Petaling Jaya during that time, it
siblings as well as plan for his
is now impossible for young new
expenditure.
graduates to purchase a landed
The Employees’ Provident Fund or
EPF housing account II from the
monthly contributions will help
to a certain extent but it needs
time to grow the fund and you still
need to come up with the upfront
payment and other acquisition
costs – legal fees, stamp duties etc,
so it makes sense to start planning
and saving for your first house
purchase as early as possible in
your career, along with other plans
like car purchases, getting married
or starting a family.
With his meagre salary, he rented
a place close to his place of work
so that he did not need a car,
ate modestly at food stalls and
saved every ringgit he could. Life
was no doubt rather tough in the
beginning but he worked hard at
his job. He built up his career and
gradually moved up the corporate
ladder and by then, managed to
save enough to buy a small Datsun
(now Nissan) for RM8,000 (with
80% loan) and also put the 10%
down payment for a linked house
in the outskirts of PetalingJaya
priced at RM83,000. It was not
near his workplace but that was all
he could afford at the time.
It was a choice worth his sacrifice,
the location he chose to stay has
today boomed into a township
and the home he bought is worth
more than RM800,000. Looking
back, the man made a wise
decision to have his own financial
planning set at an early stage and
we should all learn from the young
man’s experience.
Lesson number one
Choose a property that you can
afford at that particular time when
you are ready to purchase. The
longer one waits, the higher the
three-room unit in the same area.
Whilst it may be prudent to plan
ahead for future needs and family
expansion or proximity to ageing
parents and other priorities,
we should be open to other
affordable choices – perhaps
a strata property, a studio or
one bedroom unit, or a location
further from the major urban
centres where prices are relatively
cheaper.
Eventually, when salaries have
gone up and the need for bigger
units is more evident, you can
upgrade to a more suitable
housing unit which could be
partially funded by the capital
gains from your initial unit. The
purchase of that bigger unit may
otherwise be impossible if you
wait until you have accumulated
enough savings and earn a high
enough salary!
Lesson number three
The most important lesson to
first time house buyers is to start
saving for your home purchase
early. Prices are not going to
be cheaper in the future as
development costs will continue
to increase due to price hikes in
land, building materials, labour,
Youths of today should
have greater awareness and
appreciation for the importance
of saving for their future and
investing in property at an early
age rather than constantly
changing their smart phones,
buying designer goods and
frequently hanging out at
overpriced cafés and bistros.
Buying a house definitely cannot
be an afterthought that youhave
not prepared yourself financially
for; for some who are more
fortunate, you might be able
to seek help from your family
members in planning for your first
house purchase but for those who
are not, without early and proper
planning you will find that you will
never have enough to buy a house
of your own even later in life.
Let’s take heed of the lessons
learnt from the young man’s life
story. At some point in the future
you