In one latest study released just days ago in local media, Khazanah Research Institute (KRI) said that for homes in Kuala Lumpur to be affordable, it has to be RM280,000 or lower. This is based on the median household income in Kuala Lumpur today, according to KRI managing director Datuk Charon Mokhzani. Of course, he mentioned also that Penang joins KL as two of the cities under the ‘severely unaffordable’ category. With the continuous urbanisation and a population growth of 2% per year plus households getting smaller, it meant that the current supply may not be enough and this may push prices higher. Read latest here: 2015: Birth-rate dropped to 1.9 for Malaysia
The current median multiple for Kuala Lumpur and Penang is 5.4 times and 5.2 times respectively. In other words, you take the median income per year ad you times 5.4 or 5.2 respectively. In brief, it meant you will take MUCH longer to repay in full plus the monthly mortgage is also a risk too because one may be overstretched when buying properties which are way too unaffordable even if still reachable. One way to solve this is to make sure every household earns more. Secondly, make the prices affordable. Build higher density perhaps or other assistance from the state and federal governments.
On a positive note for me personally, 72.5% of Malaysian population owned a home. Of course this number includes informal housing or ‘TOL’ (temporary occupation license). Perhaps a better indication which tells even clearer picture of the actual demand is that KL has a home ownership of 53.5%. Yes, ONLY half actually own their own home in KL. Charon also said that high housing prices are not caused by higher land and construction costs but the willingness of developers to pay ever higher land prices which translated into ever higher property prices when they launch new ones.
A picture tells a thousand words but numbers show you a million possibilities. RM280,000 is definitely not an easy goal but beyond this RM280,000 should be better build quality, maintenance as well as on-time completion. There is really no point in offering such units when the ceiling height is made shorter to accommodate more units with the same height. With the typical bad maintenance and mindset of the owners of many of the low costs units, it is likely to cause these affordable projects to lose its value in future. This will not help the owners because instead of buying and staying while waiting for price appreciation, the owner may be paying and paying and later having to sell lower! Can the developers do it? Seriously, the location may have to be further away, perhaps connected by those final few stops of the MRT lines coming up. Happy searching and buying.
written on 26 Aug 2015
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