May 23, 2011

Better to Rent or Buy a Property Now?

With the ever escalating property prices in Malaysia nowadays, a lot of genuine property buyers (especially first time buyers) must be wondering: should i buy or rent a property in view of sky high property prices? You must have read or heard a zillion arguments on why you should buy a property NOW because there's an old saying that property prices will only stagnant and not go down even during economic downturn.

To be fair, I'll try to weigh the advantages of buying and renting a property and form a conclusion at the end of the article based on my own opinion. Take these opinions with a pinch of salt and draw your own conclusion on whether buying or renting a property is more apt for you.

Here's why you should buy a property now:
  1. You can afford it: If you earn tens of thousands a month, and to fork out 3000 a month for installment payment is a breeze for you, by all means buy the property you fancy and contribute to our economic growth. Bravo to you!
  2. Refer to point 1: Yup, as i said it, with crazy property prices nowadays, there's no comprehensible reason on why we should pay half a million for a property that used to cost 300,000 a couple of years ago.
As you can see here, the only positive point on why you should buy a property now is you are loaded and can afford to pay for overpriced property. Ok, don't shoot me for sounding arrogant! Hey, I'm just pointing out a fact here!

And, here's why you should rent a propery now:
  1. Property price is beyond your reach: Ok, you poor little brother. But worry not, most of us are in your situation here. Based on the statistics by our government, the gross household income in Klang Valley area in year 2009 was estimated to be around 5,500 to 6,000. With such income, you can probably afford a 300,000 property without over-streching your finance. But, look at the newspapers or online property portals nowadays. How many properties can you find within the budget of 300,000? Not many i guess. Even if you can find, it will probably be located in some places far away.
  2. Your career is not yet stabilized: If you are just starting out in your career, you will most probably be changing jobs more often and most likely, you will move from one suburb to another along with your job. Why not rent a property first until you are settled in your career?
  3. Choose a location you like: If you purchase a property too early on, you might find the surrounding and environment not too your liking. For example, you enjoy the convenience of having transport and shopping malls in your living area but you bought a new property in a new housing estate, which rarely has any facilities in the first few years. Why not rent a property to survey for the suburb that you like? If you dont like the area, just rent other property in another suburb!
Of course, there's tons more of reasons on why you should buy or rent a property now. In summary, you should buy a property now if you can afford it or else just rent it. I do foresee a glut of properties especially apartments and condominiums in the coming years and there's already signals that the rental market is soft nowadays. That's another positive point for the would be renters.

So, if you can purchase a property now, worry not. Just work hard and on the mean time why not earn some side income to supplement your main income from your job?


Agata Renfrew said...

It makes good sense, what you said there about buying property because you have the money. So even if the economy is good and the prices are fair, if you don't have the resources, you should think twice about making the investment. Good thing there's the option to rent.

jutamind said...

I agree with you that before buying anything, you need to have the resources, and in most cases, that means $$$.

even with loads of $, that doesnt not mean you should make any purchases at random. the property(ies) that you are targeting should tick all the right boxes before you should put down your hard earned moolah.

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