With the current economy going into shambles due to the COVID-19 induced recession, many might feel holding off on their property purchase is the wise choice.
Should we not? Isn’t a recession the worst time to be investing in real estate? You might not know it, but now is the best period you could possibly have to invest in properties!
Why is this so? In the thick of a recession, land demands usually taper down, which in turn causes a drop in prices. As such, the advantage is in the hands of the buyers. Negotiation for terms is in your favour, a buyer’s market. During this period, the prices for property are more affordable along with lower interest rates.
In a recession, the Bank Negara Malaysia (BNM) would usually lower interest rates to encourage spending and borrowing. With the sudden entrance of the COVID-19 outbreak, interest rates are currently on our side! You would be saving a considerable amount of cost and even your home loan’s monthly installments decrease.
You might even find some great choices in an auction market. This is due to there being more foreclosures and short sales as many real estate owners find it difficult to continue servicing their home loans with the loss of income. Moreso, you gain higher returns in the long run when you buy a property in a recession. This trying period won’t last forever and once it’s over, your returns increase with the possibility of selling high.
However, only invest if you have the funds to spare! For every rose has its thorns too. Buying a property in a recession have tighter lending from banks and a higher personal risk for you in terms of finances. For a recession affects the economy, and increases job layoffs.
So, if you have the right reason to buy, then go ahead as both price and interest rates are on your side.