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Flat for 6-9 months more. Property Malaysia.

First of all, I disagree that the Malaysian economy is doing badly. I think it is bad for some but very good for some of those who managed to grab the right opportunities that come along. One very good example, I guess the more traditional businesses such as brick-and-mortar retail are facing lots of pressure from the online based competitors. Please proceed to disagree lah but do not forget about the car sales of non-national brands. We can also say everything we want about the transaction numbers for homes but have we even compared it to those bad years or are we comparing it to those ‘crazy’ years? I was at MidValley mall today. I arrived at 1115am and it took me 45 minutes to find a car park.

Inside the mall, there are still shops which were overwhelmed even if at the same time, some shops are surely closing down in the near future (nobody inside!) and many of the more popular restaurants were full during lunch. If these people do not have a stable job which pays them more than enough to cover their rental or mortgage, would they even have extra money to have a lunch in a restaurant? It’s funny because having a lunch in a restaurant is nowhere near ‘necessity.’ So, should the property market be rosy then? As developments were planned well ahead and could not suddenly change, this has made the property market of Malaysia tougher than usual. There’s way too many units being built at prices that the majority could not afford to buy.

Here’s an article saying just that in freemalaysiatoday.com It quoted Prem Kumar, who is executive director of property consultant and real estate solution provider Jones Lang Wootton (JLW). Prem shared that the number of property transactions was currently on the decline. In fact the Malaysian property market is expected to remain flat in the next six to nine months because of an uncertain demand outlook as well as slow uptake for new launches. He said that the main reason was because many of these properties were built for people who could not afford them, specifically the B40 income level category. B40 is the base 40 in Malaysia. The B40 segment refers to the bottom 40% of households with monthly incomes of below RM3,900 per month. Here’s an earlier article: Most wealthy Malaysians – the top 40 He shared that developers believe RM400,000 to RM500,000 is considered affordable. It is not. In fact this is a major issue because the government does not even have a strict guide on what’s really affordable.

I still think RM500,000 is the maximum that the developers could go if they intend to target a wider pool of buyers. In terms of selling very faster however, perhaps a price point nearer to RM400,000 would help tremendously. The reason I say so is because most people would think of a home when they are getting married. In this case, assuming the household income is the B40 level. RM3,900. The banks would usually lend up to 40 percent of the income for the first-home. Here, RM3,900 is RM1,560. This is less than RM100 from the monthly repayment. Assuming the B40 category really could not afford this unit, it meant that the M40 would be able to. M40 would be the households earning between RM3900 to RM8,319. Now do we see why many new launches today are really usually below RM500,000 and closer to RM400,000? Of course, the sizes are smaller too but the focus perhaps would be on affordability. Happy waiting if that’s what you are thinking.

written on 29 July 2017

Next suggested article: What if everything becomes unaffordable? Affordability will find itself

 

 

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kopiandproperty.com

kopiandproperty.com is everything about property related writings and news. Enjoy reading with a latte.

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