Buy a property during Covid-19 Pandemic in Malaysia - Yes or No

2021-09-28

It used to be said that "buying a home at any time is just as good as long as you have the financial means." While that is true, we are now living in very unpredictable times.

With the COVID-19 outbreak in full swing and all the previous Movement Control Orders (MCO), it's safe to assume that homebuyer confidence has plummeted even more.

You might be wondering if it's a smart idea to buy a residential property in Malaysia during the Covid-19 pandemic. Keep reading as we take a deeper look in this post.

It’s true that this is not the best time for people who have been impacted by the pandemic's economic consequences to purchase a property.

However, for those who have stable employment and savings, now is the best time!

Here's why.

The "ideal" time to buy that home you've had your eye on is when the dropping asking prices reverse and begin to rise again. The ‘bottoming-out period’ is what it's called in the real estate industry.

Because the real estate market is slowing, property developers in Penang and across Malaysia are encouraged to do whatever they can to add value to their unsold stock (if you're looking at a brand new unit).

Most developers in Penang were already giving great rates without the HOC, and now they have even more bundles.

The Asking Price and Overnight Policy Rate (OPR)

Furthermore, asking prices (in the sub-sale market) are falling and the financing climate is becoming more favourable to buyers.

The most significant financial responsibility you'll have to cope with - monthly instalments for the next 30 years – will now be reduced as well.

This is owing to the forgiving interest rate environment created by BNM's Overnight Policy Rate (OPR) cuts: It is presently at an all-time low of 1.75% (the lowest percentage on record).

Compared to previous rates of 8% to 9%, or even double digits, the monthly payment will be less due to the lower interest rate (if you opt for a mortgage with a variable rate).

In other words, you can now enter into an initial agreement at a considerably cheaper interest rate if you are a homebuyer who is window-shopping for a new home loan.

As a result, depending on eligibility, now is an excellent time to take up a home loan because of the present low-interest rates.

Tips and Precautions for Property Buyers

For those who are considering making a purchase but are still unsure, the following are some useful tips and precautions to take before making a move.

- Do research on the developer, the project's location, and the infrastructure supplied. For instance, fibre-optic connections, strong internet coverage, security, and more.

- Look for residential properties valued between RM200,000 and RM850,000.

- Residential properties are recommended instead of offices, retail units and small studios. Malaysia's population is expected to expand by 6-8 million people in the next 15-20 years with the number of senior citizens rising from 7 million to 14 million or more. This will translate to strong demand for residential properties in many years to come.

- For those who are considering making a purchase, the first step is to double-check their loan eligibility with the banks.

In a Nutshell

As previously stated, the current overnight policy rate is at an all-time low of 1.75%, with total cuts of 125 basis points so far this year to mitigate the economic effect of the Covid-19 pandemic.

Low bank lending rates are a significant plus for individuals wanting to get a loan to buy a home since it can translate to lower monthly repayments (as much as RM1,000 or above for bigger mortgages).

So for eligible property buyers out there, now is the time to do some research and get yourself a good bargain. Get started by checking your loan eligibility with the banks.