Reports all over the Medias clearly mentioned property sale volume was very low, pricing was on the downward trend and developers were offering better discount to entice the buyers. Then it was natural for the “awaiting” buyers to ask – When do you think is the “right” time to buy in? Perhaps the following self-check question will help:
1) Time is Money
No offend to those who are getting on with age (by the way, I am one of them), the table below is one simple way to say, you will have less time to fund the property and need to pay higher installment for the same amount of housing loan when your loan tenure get shorter:
Loan amount Loan Tenure Loan Interest Estimate Monthly Installment
$500,000 25 years 2% $2119
$500,000 23 years 2% $2262
$500,000 20 years 2% $2529
One may argue that if the property price were to correct significantly then the same installment amount can be obtained due to lower loan quantum needed. But, we need to be mindful that the factors which influenced the property price, interest rate and affordability are not easy to predict. Hopefully the following point will further help to put things in broader perspectives.
2) Income capability – economy climate
Property price is closely correlated to economic growth and fund accessibility. In general, our income is also having the same correlation factors. When the economy was not doing well, the property price could be negatively impacted. One need to examine the vulnerability of the income source(s) when the economy was not doing well too. Something looks cheap but may not be affordable due to lack of “funding capability”. That was the time the banks were much more cautious to give out loan as well. On top of that, the interest rate could be higher too. In short, when bad times came, the buyer may not be in good shape to pick it up too.
3) Price synchronization
Some could be thinking when the property is down. They can buy into a better home by selling off their existing home which makes it easier for them to upgrade. Unless one had built up sufficient fund to grab the deal, if not when the targeted property price is down, the same situation will happen to their current home. What are the special factors of your current property will not be subjected to the overall market price pressure?
4) The right one
In the good time, the selling and buying climate was more vibrant. In the bad time, buyers were skeptics and sellers are withdrawing too. In general, the listing for sale will shrink when time is bad – finding the right one could be tough or take a longer time.
5) Objectives and real needs
These are very fundamental questions but many buyers will lose the bearing in the midst of “hunting frenzy”. While your investment needs may allow you to have longer hunting time but your family needs are something cannot be easily value with money and, time may not be on your side. Today’s property market is getting more efficient and transparent, so:
Good Location, Good Unit then Good Price (not a good price to the buyers ☺)
6) You are ever ready
If you have ready fund (deep pocket), will not be subjected to economy gyration, no worries about bank loan and no time pressure to get the home – congratulation! You are the few who can always wait for something right to come. The only question you would need to ask yourself is “Am I doing justice to my hard earned cash $?”
Quoting the CDL chief mentioned in the Business Time, 13 Aug 2011:
“Everything is overblown. That is human nature. Just like property, the higher property prices go up, the more you want to buy, I guarantee you. The lower it goes, the more scared you are”
If the big players were having difficulty to time the market then we as retail buyers may not be in better state to outsmart the market.
I am sure there were some success stories for those who gotten the “good” buy during the crisis times. That led to the next question “How financially ready are you if the crisis were to hit you?” (go back to item 2)
Towards our financially savvy journey.
Wei Teck – Property Coach
Apr 2014
Email: proplaunchsg@gmail.com
www.proplaunchsg.com
www.blissfulproperty.com
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