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For many Malaysians, buying a property is a goal that we all strive for – and it is probably the biggest financial investment we will ever make. But is it the right time to dive in and finally get that house you’ve been surveying for months?   


If you ask your friends, relatives or colleagues on whether or not to buy a house now, they would probably share differing opinions. Here’s a more rational analysis of the current property market, plus useful tips to help you buy within your means at any time, now or later.

Assess the current climate

In the last couple of years (2018 – 2020), investor sentiment has been weak with a global slowdown in the economy. Naturally, the real estate market is also rather quiet. While most people are being  conservative and withholding their investments, this can be a good time to consider purchasing a property.


Why? Because there are currently more supply than demand for properties. The overhang of unsold commercial, industrial and residential properties in the country totalled 63,063 units as of 3 October 2020*. In this environment, it is not uncommon for developers to pump up promotions to attract buyers to their properties and making it possible for buyers to negotiate a better deal. 


Additionally, due to Covid-19’s impact on the economy, Bank Negara Malaysia’s overnight policy rate (OPR) has been lowered to 1.75%, which means borrowers can enjoy lower interest rates on home loans. There are also several incentives that were presented in the Budget 2021 for home buyers, such as full stamp duty exemption for first-time home buyers and the reintroduction of the Home Ownership Campaign (HOC)**.


But despite all of the incentives and possible promotions, you should always ask yourself if you can actually afford to buy a property – and take into account costs such as your monthly commitment and property upkeep. Which brings us to our next tip…

Stick to the 3-3-5 rule

From a macro view, it may look like it is an ideal time to go property hunting. But before making your decision, always follow the 3-3-5 rule***. This rule guides you to find a property that is within your reach, with your current and future expected income.


First, you should have at least 30% of the property’s listed price in funds. Why 30%? Because that 30% has to go to the down payment and miscellaneous fees involved such as stamp duty and legal costs, all of which you must pay upfront. Even if you are fortunate enough to find a property with lower or zero down payment and waived stamp duty, you would still need the funds to purchase the things you need for the house (think furniture and move-in cost). 


Secondly, the monthly financing payment should not be more than one-third of your monthly income. You need to keep the rest of it for your expenses and savings! Leaving sufficient buffer in your monthly income will protect you against the rise in interest or profit rates, too.


The final rule is, don’t buy a property that is more than five times of your annual income. Stay within this limit and you won’t have to sell your soul to pay for an expensive property.


The prudent 3-3-5 rule is even endorsed by Singapore’s Central Provident Fund***; you’d be wise to follow!


Consider all the risks

Not all properties are built equal. Research the market for the reputation of the property developer****. Property owners are quite generous with feedback and you’ll soon learn which names to avoid building or maintenance issues. These issues could pose additional costs and devalue your property. There have also been cases of failed or discontinued projects where investors were unable to get back their principal investment let alone any return on investment. Buying from a credible and reliable developer can help to eliminate major headaches.


You should also consider the risk of your own financial future and its uncertainties. The property you buy should always be within reasonable budget of your projected future earnings. How are your industry and your company faring in the current economic climate? Is your skillset recession-proof? If the economy takes a further dip or the current lull persists for longer, will your finances hold up with the additional burden of mortgage?


Generally, if you have enough money and play by the 3-3-5 rule, it is a good time to look for property when the market is weak and interest rates are low. However, this is not the only time to buy a property. Good buys exist any time in the market, just stick to the above advice and avoid these 5 common mistakes!



This article is for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.