Buy Now or After Economic Crisis Hits

If I buy now, later crisis come, then I might lose my money. If I buy later, but crisis never come, then house prices could be even more expensive.

So, buy now or wait for crisis? Let’s try this mix and match method based on the tables and questions I have created on below. Just for fun, don’t take it too seriously.

Table 1: Capital Appreciation from 5% to 25% per annum

Year	+5% p.a. (RM)	+10% p.a. (RM)	+15% p.a. (RM)	+20% p.a. (RM)	+25% p.a. (RM)
2010	300,000	300,000	300,000	300,000	300,000
2011	315,000	330,000	345,000	360,000	375,000
2012	330,750	363,000	396,750	432,000	468,750
2013	347,288	399,300	436,425	518,000	585,938
2014	364,653	439,230	480,068	622,000	732,423
2015	382,886	483,153	552,079	746,400	915,529

Step 1: Estimate the capital appreciation in percentage for the shortlisted property that you are interested to invest. 5%, 10%, 15%, 20%, 25% per annum, …? Refer Table 1. It gives you an idea of how much is your property values worth over the years.

Step 2: Answer yourself, when will the economic crisis hits Malaysia? Anytime, end of this year, 2013, 2014, 2015, …? This is to understand how long is the time frame you have for your property increase its value.

Step 3: Answer yourself, how much will property price drop after economic crisis hits? 20%, 35%, 50%, …? This is important to forecast what’s the impact of economic crisis on our property values.

Step 4: Answer yourself, how long do you think the market will take to recover from the economic crisis? 2 years, 3 years, 4 years, 5 years, …? You must understand how good is your holding power and be prepared for the worst scenario if you insist to invest in property now.

Table 2: Before Crisis (appreciate 5% p.a.) vs After Crisis (drop 20%, 35% or 50%)

Year	+5% (RM)	-20% (RM)	-35% (RM)	-50% (RM)
2010	300,000	240,000	195,000	150,000
2011	315,000	252,000	204,750	157,500
2012	330,750	264,600	214,988	165,375
2013	347,288	277,381	225,738	173,644
2014	364,653	291,723	237,025	182,327
2015	382,886	306,309	248,876	191,443

Table 3: Before Crisis (appreciate 10% p.a.) vs After Crisis (drop 20%, 35% or 50%)

Year	+10% (RM)	-20% (RM)	-35% (RM)	-50% (RM)
2010	300,000	240,000	195,000	150,000
2011	330,000	264,000	214,500	165,000
2012	363,000	290,400	235,950	181,500
2013	399,300	319,440	259,545	199,650
2014	439,230	351,384	285,500	219,615
2015	483,153	386,522	314,049	241,577

Example 1: Jane is considering to buy a house at RM363,000 this year and forecast it has potential to grow at 10% per annum, refer Table 3. Meantime, Jane believes that economic crisis will hits very soon in 2013 and forecast her property price might drop about 35% due to its not so good location. That means the property is worth only RM259,545 after depreciated 35% from RM399,300. Under this scenario, Jane should not go ahead for the deal, right?

Table 4: Before Crisis (appreciate 15% p.a.) vs After Crisis (drop 20%, 35% or 50%)

Year	+15% (RM)	-20% (RM)	-35% (RM)	-50% (RM)
2010	300,000	240,000	195,000	150,000
2011	345,000	276,000	224,250	172,500
2012	396,750	317,400	257,888	198,375
2013	436,425	349,140	283,676	218,213
2014	480,068	384,054	312,044	240,034
2015	552,079	441,663	358,851	276,040

Example 2: Peter is considering to buy a house at RM396,750 this year and forecast it has potential to grow at 15% per annum, refer Table 4. Meantime, Peter believes that economic crisis will hits in 2015 and forecast his property price will drop not more than 20% due to its good and demanding location. That means the property is still worth RM441,663 after depreciated 20% from RM552,079, which is still higher than initial purchase of RM396,750. If this is the case, Peter should go ahead and buy now, right?

Table 5: Before Crisis (appreciate 20% p.a.) vs After Crisis (drop 20%, 35% or 50%)

Year	+20% (RM)	-20% (RM)	-35% (RM)	-50% (RM)
2010	300,000	240,000	195,000	150,000
2011	360,000	288,000	234,000	180,000
2012	432,000	345,600	280,800	216,000
2013	518,000	414,400	336,700	259,000
2014	622,000	497,600	404,300	311,000
2015	746,400	597,120	485,160	373,200

Table 6: Before Crisis (appreciate 25% p.a.) vs After Crisis (drop 20%, 35% or 50%)

Year	+25% (RM)	-20% (RM)	-35% (RM)	-50% (RM)
2010	300,000	240,000	195,000	150,000
2011	375,000	300,000	243,750	187,500
2012	468,750	375,000	304,688	234,375
2013	585,938	468,750	380,860	292,969
2014	732,423	585,938	476,075	366,212
2015	915,529	732,423	595,094	457,765

“Crisis is Danger and Opportunity”

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