What is considered reasonable property price?

There are quite a lot of answers but typically, if the property price is 4-5 times of the typical annual income, then it is considered reasonable. For example, if you earn RM5,000 per month x 12 months = RM60,000. A reasonable property price to you would be RM300,000 at max. Many of my younger friends would then add that it is no longer applicable because these days, the prices of properties are way beyond the reach of middle income Malaysians. I looked at them and noticed that majority of them has yet to own a property. Perhaps it is because they are still single, still living with their parents, still saving money for the downpayment or even spent too much as everyone of them are carrying a smartphone of either iPhone or Samsung S4 or the latest craze, Note 3. If they use this for a few years, it is ok but they change the phones every year when a new model is launched. This is to ‘keep up with the rest or else I would look bad’.

If we do a search at www.propertyguru.com.my and we look for sub RM250,000 properties in Greater KL, the truth would soon show that there are still a lot of secondary properties within that price range. However, the reasons would then be given such as, ‘that location no good’, ‘aiyo, so far away’, ‘there’s no shopping malls there’ and many more never ending reasons. A close friend of mine will soon start working in KL city and asked me on the properties he can buy. My answer was simple, ‘buy an affordable one’ which is within 1 hour of driving even with jam to reach office and must be less than 10 minutes away from the future MRT stations. He found one in Kepong (not so oomph area to many), for just RM250,000 and he has seen the place and likes it. This is definitely much cheaper compared to what one can buy from his hometown, Penang.

Today, when couples get married and perhaps have a baby, they would need to look for a new bigger property. If their combined income is RM8,000,  they should buy something within the reasonable range, say Rm500,000. If you run a search in any online property websites, there are lots of choices, even landed ones. After buying and staying in the same property for a few years, you would soon notice that your purchase is a good decision and if you had waited, the prices may have risen further. Remember, while car prices continue to depreciate, property prices will continue to go up over the long term. True, crisis may come but do you seriously want to wait for the crisis to come again to buy? Think about it, do you dare to commit during such times?

written on 25th dec 2013.

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