KUCHING: Purchasing residential properties remain a challenging, if not hard-to-reach, dream for many who would like to either have a place they can truly call home.
The process from start to finish includes arduous tasks: from searching for a good location to buy to finding your options in that area, gauging a price in your budget range, evaluating the facilities that come with it and the process of purhasing and maintaining afterwards – indeed, owning a house is perhaps a long-term responsibility that requires a certain amount of determination.
And in an economic climate as testy as Malaysia’s now, it comes as no surprise that less and less homeowners are buying properties.
According to PropertyGuru Malaysia (PropertyGuru) country manager Sheldon Fernandez, the residential property market to date has seen a decline in transaction volumes in tandem with the market slowdown.
“It is typically a buyers’ market as buyers have more choices now, taking their time to find the best deals,” Fernandez observed in an exclusive interview with BizHive Weekly.
“That being said, the residential property market is also mired by unresolved issues of unaffordability in home pricing, the high rejection of loan applications and other macro-economic issues such as rising living costs and lack of growth in incomes.”
He noted that homes priced between the RM500,001 to RM700,000 range are likely to see most number of loan rejections and thus slower sales.
As for whether there is a right time to invest in residential properties, Fernandez believed that it would depend very heavily on one’s own goals.
“To purchase a residential property for the purpose of your own stay, then one would need to calculate to see whether one is able to afford the monthly repayment, in lieu of other expenses such as (household expenses, car loan repayment, etc).
“However, if one were to purchase for the purpose of investment, then one would have to see if the rental would cover the repayment, and location has to be attractive enough, to ensure a consistent rental income,” he said.
“Whether it is a buyers market or not, there is one thing that is certain: first time home purchasers will need to familiarise themselves with the steps that need to be taken prior to buying a property.”
Learning from other experiences
On that note, PropertyGuru held a ‘My Home, My Story’ contest this year which showcased the experiences readers had when purchasing their properties.
For some, the purchases had unsuccessful endings while others did not have too much trouble in that regard.
“Buying a property is one of the most important decisions in our life that will have impact on one’s financial stability, if one is not careful,” Fernandez said.
“Horror stories on buying first home properties occur because many are not aware of the steps one should take or check before purchasing a home.”
These included checking one’s financial records or health, to see what is the range that one can afford, checking out various bank loans to see which is the one that suits best, as well as being knowledgeable in the laws that govern house purchasing.
Fernandez stressed that before embarking on the property purchase decision, buyers should be clear on the following to avoid ‘horror stories’:
1. Maximum budget including additional cost for legal fees, stamp duty, lawyer’s fees and others
2. Location of the home
3. Reading reviews / obtaining feedback from other buyers who have bought into a particular location or project
4. Doing due diligence on the developer
5. Knowing your credit status
6. Keeping up to date with changes in the regulations or policies on housing.
“A lot of the above can be done simply by researching online via channels such as PropertyGuru which can provide you with comprehensive and reliable information,” he said.
BizHive Weekly takes a look at the winner and a few finalists’ stories, all of whom share their experience while also giving essential advice to those who want to take that big step in buying their first homes.
Finalist: Daniel Hii Jun Chung, 35
Second-hand units are common in the scene, but as finalist Hii discovered, things can go wrong just as easily.
“My first home was a second-hand unit. It was very colourful so I thought I was about to consider buying a childcare centre.
“The owner was always away during the daytime so I had to view the home at nights. This was one of the biggest mistakes I ever made,” he explained.
“At night, any stain — be it water marks or uneven paint colouring and wall tiles expansion — are very hard to notice. Furthermore, with artificial lighting, there are shadows everywhere so many imperfections were hidden.
“Therefore, I truly believe that you should only inspect the homes during the daytime when sufficient natural lighting is available. The best timing is around 2pm to 4pm on a clear day when the sun angle can penetrate deepest into the home where it will not be too dark.”
Apart from knowing your tolerance during the hottest period of the day, Hii said you can see the things indoor clearly during the day.
“The other reason is sun drying of clothes if you grow up in the generation where you need the smell of the sun on your clothes. Do find out whether the sun angle is sufficient to dry your clothes or if you need to invest in a dryer or visit dhobis in the future.
“The angle does shift from the start/end of the year to the middle of the year as the sun belt moves southwards and northwards respectively. If you are fine with compressors drying your clothes, then this is not your concern.
“I also feel that you must be as thick skinned as possible to flip the entire unit upside down if furnishing is included in the deal. My biggest regret was not to check the furniture and electrical appliances in detail when the owner was around.
“They may tell you that you are free to check the entire house but you will feel reluctant to open people’s wardrobe, drawers, and view under the bed.
“I ended up having a wardrobe with uneven doors while sliding, a king-sized bed with a broken leg, a washing machine that was very stained in the interior and many defects for the given items. I ended up giving away for recycling about 90 per cent of the items.
“Check every light, switch, socket, wiring, furniture, and appliances included in the home. Check the tap condition, water supply, outlets, basins, toilet bowls and piping for any trace of leaking or water retention. Open the windows and doors to check whether the connections are fine. A few of my windows had very stained glass, were so tough to open and had broken handles that I needed to replace them afterwards.
“Find out if you need forever to apply for the telephone land line or the mobile coverage is sufficient at your unit. I recall I needed the skills of Spiderman to climb out of my balcony in my previous rented house just to receive enough reception to answer a phone call.
“I almost invested in a solid gold bar on my phone antenna to boost coverage.
“Finally, check the outdoor facilities if applicable whether they are in good condition. For example, the gym had almost 50 per cent of its equipment not working.
“If I knew there were so many negative aspects earlier, I could have bargained for a better price to justify the true value because of the defects.
“The facing of noise sources exposure is also crucial from the sports courts downstairs, especially the irritating basketball bouncing to traffic noise from highways.
“I believe we need to be more observant when we view homes to purchase, including new developments.
“Write down every single detail you can pick up before keys are given to you.
“This is to protect yourself from suffering from all sorts of problems and disturbances as you are going to live there every day.”
BizHive Weekly asks:
Q: What are your thoughts on the residential property market now?-
A:The general economy is on the downturn now, which means there are more sellers than buyers.
When there are more supplies than demands, it means it is the buyers market now so buyers have more power to bargain.
The emergence of foreign developers, for example in Johor Bahru, further increases the diversity and choices available. More competition is good for buyers.
Q: Is there ever a right time to invest in residential properties?-
A: Investment is always for the sake of earning profits. Everyone knows you should buy low and sell high for bigger margins.
The right time is when there is an oversupply like in Johor Bahru now or during a downturn when there are more sellers than buyers. Prices should be attractive when these two factors are combined.
I was told next year’s economy should be worse than this year’s so bargain hunters should standby.
—
Finalist: Asma Abdul Muhaimin, age 28
Sweltering on a hot afternoon in her small plywood-walled enclosure; Asma decided that she had had enough.
“I was sweating all the way through my thin mattress, rotting on the floor. Everything smelt dank, as was my mood. I huffed and turned to my side,” she said in her story.
“At work, my colleague suggested for me to look at studios; but how much do studio apartments cost in Malaysia? Are there any in my area? Barely 2.13333 seconds later, thank Google, PropertyGuru pops up with the answer.
“This was, in 28 years, the first time I considered purchasing property. I had no idea where to start, but I did know what I wanted. I discovered that as in many other matters in life, it is important to know what you want first; then you can work out the feasibility of what you want.”
Asma then decided to call one of the agents.
“Again, I had no real knowledge of buying property; just one sticky, sweaty, icky girl desperate to find more amiable living conditions. At times, it felt like each answer just led to more questions.
“For starters, how do I know what my budget is? Again, I return to the mighty Google, and to find things like “home loan calculator”, and various A to Z articles on buying property. My agent was very patient, and worked with me to find what I wanted.”
Coming to Asma’s aid were her friends who furnished her with ideas, advice, and little bits of encouragement. It was their motivation that kept Asma going.
“One colleague went with me from home to home, just so that I wouldn’t have to do it all alone. Even the agent was surprised I had such a good friend to keep me company in this emotionally challenging endeavour.
“Surprisingly, choosing a unit wasn’t as much of a nightmare as I thought. I saw a unit, and went back yammering to my colleague over how the unit was just like a hotel room, and that my luggage bag would stick out if I put it at the corner, and my dry cleaning would barely fit the large built-in closet.
“He looked at me and said “Well for someone who says she hates the place, you seem to be planning on moving in already!” That stuck to me. That really stuck to me.
“Next thing I knew, I arranged a second viewing. Now it was up to the agent to find an owner willing to sell me a unit at a price I could afford.
“We all know the trials and tribulations of financing a house, so I’ll spare you that. What I can say is that not only do I have a happy non-sticky home to come back to each day, but also I have found my soulmate in the process! He was hiding behind the luggage bag all along.”
BizHive Weekly asks:
Q: What are your thoughts on the residential property market now?
A: Where is far more supply than demand, I think. Look at the abundant housing development projects as well as pre-owned houses up for sale, versus the number of people who are house-hunting. Buyers certainly have plenty of choices; but as in any property concerns go, it’s location, location, location.
Q: Is there ever a right time to invest in residential properties?
A: Generally speaking, not really. If you have the resources, and choose your property wisely, it would potentially be a profitable long-term investment. Of course, as an individual, we all know that resources are hard to come by, which means that the question of “right time” really depends on whether you are able to finance the said investment for the expected turnover period.
—
Winner: Ong Wey Chyuan, 26
BizHive Weekly asks:
Q: What are your thoughts on the residential property market now?
The current property market is getting more and more interesting and the market option had expanded wider than before.
For own-self dwelling property buyers, there are more and more options to pick in the market but the price definitely had increased based on market supply and demand.
Meanwhile for investors, the property market had turned to be a long term game plan. It is unlikely that there will be a flipping game again like 2008-2012 in this short term unless there are some packages provided by developer or they could find undervalued property. In short, I would say, “If you had money, this is the time to purchase. But, be cautious and do not expect to earn overnight”.
Q: Is there ever a right time to invest in residential properties?
A: This is one of the most famous question all time for property investors and buyers. Some would say “now is not the right time” some would say “now is the right time” and some would say “the price would drop and we can buy when it drop”.
There is actually no right time to purchase, because if you had the ability and you planned your game well then anytime is a good time. You probably won’t expect if one day the market turns bullish and you had no capital to invest in property? Do not worry, as anytime is good time because living under a roof is a requirement to keep safe and as a protection for human being.
Q; What is your advice to newcomers to the property market?
A: As a first time homebuyer, I followed these rules to successfully purchase my first home:
1. Self check: Determine the type of property you could afford by calculating your net disposable income and debt service ratio (DSR).
2. Setting the objective: Decide whether you want to stay, rent, or resell the property.
3. Search for the property: Target where you would like to invest or purchase to meet your objectives.
4. Survey and research: Visit the location to view the actual neighbourhood and use online media to research properties; Propertyguru.com could provide reliable information.
5. Set appointments: View a few properties and remember to check thoroughly as every defect will be hidden from your sight.
6. Strategic negotiations: Negotiate with agents or owners for better deals.
7. Solicitor appointments: Lawyers will handle the documentation but remember to check with the lawyer to confirm specific terms and conditions.
8. Seal the deal: Make a deposit of earnest money to the appointed agent or lawyer as the middleman to book the unit.
9. Seek a mortgage officer: Not all bankers could process loan effectively, look for more experienced bankers to process your loan.
10. Signing the Sales and Purchase Agreement (SPA): Proceed with signing the SPA once the loan is approved and never ever sign the SPA before loan approval.
11. Secure the property: House insurance is a must to secure the property, look for a reliable insurance agency.
12. Make up your mind: The ultimate weapon, it is either ‘yes’ for easy property investment or ‘no’ to many months of roti and Milo for youngsters. Please appreciate your hard earned money if you decide it’s a “yes”.
13. Surprise your parents: There’s no fun if you can’t celebrate your success with your family members.
His Story:
Ong did not have an easy life growing up and never actually had a proper place to stay throughout his life. However, against all odds, he managed to purchase his very own residential property and today, has bought his second property.
“I stayed in a few rented houses for 14 years together with my parents and siblings,” he enthused in his story. “We rented a house in an isolated rural area nearby a cemetery. There was a time when the rented house was infested with pigeons and some of the dead pigeons left a stench for months.
“Coming from a poverty-stricken background, I was determined to be optimistic and learned to be independent.
“It was in the year 2014, the first year after my graduation, I decided to travel to another state to look for a job. I rented a bed, where I had to share the room with six people. Then, I started looking for a property to buy.”
A few months later, Ong managed to purchase a semi-detached house at the expense of his health. “Imagine eating three pieces of roti canai and instant noodles for the first three months after,” he said. “It was a nightmare!
“However, buying my first property was definitely a huge relief for me who had no proper place to stay throughout my life.”
“Today, I’ve already bought my second property and am looking forward to purchasing my third property by next year. Every person I’ve met taught me different things.”
Finalist: Pung Chen Choon, age 64
Things were not easier when it came to purchasing a house in the late 70s. The year 1979 saw Pung attempting to purchase his very own house, something he had always dreamt of doing.
“I was working as a Sabah-based reporter for a Brunei newspaper in 1979. My first child was three years old then and we were staying in a company-rented single-storey terrace house in the suburbs of Kota Kinabalu,” he said.
“Owning my own house was always a dream of mine, but with the meagre salary I was earning, I had trouble even paying the RM1,000 deposit! So when I came across a new housing project – Fairview Park – up for sale, I had help from my mother. That was the easy part!”
With the project still not off the drawing board, Pung said he had time to save up for the 30 per cent down payment.
“I was told I had three years to do it. The double-story terrace house I was eyeing cost RM130,000. I learned later that the developer was an ex-bank manager from Sarawak. I thought he was reliable.
“I saved, borrowed and took up a part-time work as a newspaper translator and a copy-writer. I paid RM10,000 in the first year. That was the biggest chunk of money I have ever handled. I went to the building site and saw my dream home taking shape. After another year or so, I paid the next RM10,000.
“I kept track of the construction work. The construction reached the first floor, with visible roof trusses. I was motivated to save, and my mother encouraged and helped when I ran short.
“It was the due to pay my third instalment of RM10,000. I visited the site to discover that the roof trusses had disappeared. The developers’ office said the contractor did not follow the building specifications and there was a slight delay.
“Not suspecting anything, and worried that the money I had may be spent if I held on to it, I decided to pay. With the help of the developer’s office, I submitted an application for a bank loan to finance the rest of my purchase.
“Weeks turned to months. By the time I next visited the site, I discovered to my horror that the house had been torn down along with the rest of the structures in the same row!”
Upon inquiry, Pung discovered that the houses in the vicinity were sinking as he was later told that the engineers and architects somehow failed to detect a subterranean stream that, when disturbed by piling, began to suck in anything built upon it.
The buyers banded together to form an action group trying to find answers and seek compensation. However, at that time when the housing development laws were inadequate in protecting buyers, the developer disappeared and along went out hard-earned money.
“After several years, I received a letter from the Housing Controller (an officer in the Ministry of Local Government and Housing) to collect a cheque amounting less than RM2,000. That was what was left of my RM30,000 deposit.
“The ‘refund’ came from a bond which the developer paid to the ministry to secure his developer permit. Looking back, I thought I acted dangerously alone. I never consulted my family members or any professionals. I paid blindly when I was asked to. I didn’t know my rights. However, housing laws in Sabah have since been tightened.
“My only regret is that, while many of the housing projects abandoned during my trying times were subsequently revived, the land on which once sat Fairview Park was somehow taken over by another developer and new houses were built. This clearly showed that the ‘subterranean stream’ and the ‘sinking houses’ were untrue and was said to deceive the buyers!
“I smelled a rat, but what could a lone victim do? I counted myself lucky for not having weighed down by a housing loan unlike many other victims who have a loan instead of a house. The area, now known as Jalan Bundusan, is a thriving residential area. My RM130,000 house could have easily commanded RM600,000 today.”
Abandoned housing is quite rare in Sabah because the laws are much better now, the officials are more alert and the buyers are more prudent. The industry is more competitive with many developers coming onto the scene, Pung said.
“My mother never understood how I could have paid for something and never got it. Victims of unscrupulous property developers are everywhere.
“The shocking thing is one rarely reads about a developer being taken to court for the breach of a contract. Big businesses always win, don’t they?”
BizHive Weekly asks:
Q: What are your thoughts on the residential property market now?
A: It is way too expensive relative to the income of most people in Sabah. Strangely the property developers and the government authorities have not been able to agree on what contributed to the expensive homes.
Therefore, I don’t see any solution soon. Meanwhile, those who have the means and are already owners of many properties will continue to profit while most of the population dream of owning their own home.
The Sabah Economic Planning Unit (EPU) recommended a RM1 million minimum price for foreign ownership of properties in Sabah. Sabah developers want it set at RM650,000. considering the fact that some terrace houses in Sabah are selling for RM650,000 and more, the EPU’s ceiling should be raised especially with the ringgit’s weak value now and the foreseeable future.
Q: Is there ever a right time to invest in residential properties?
A: I read somewhere that any time us the right time to buy residential properties especially if you are buying your first home. I think it makes sense because house prices are known to only go up and never come down.
I’d advise young people to buy the first house they can afford when they can. Never sit around and wait for the so-called ‘dream home’ because the likelihood is that they will not be able to afford it when the home of their desire comes around.