When the size is just too small? Plus POLICY…

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Some time back, someone asked me about small sized homes. My view then and my view today remains the same. Buy within our affordability and buy the largest size possible for our money today. It may not yet be apparent but ‘bigger will always be further’ while ‘nearer means smaller.’ Don’t predict, just look at the future by looking at advanced property markets. Look at the suburbs in Sydney and Melbourne to understand why buying within CBD will mean high-rise and not landed homes.

Now, let’s look at a place where my good friend earning HK$38,000 (RM20,000) could not yet buy a home by herself. Article in TheStar.com.my here. Hong Konger’s interest in micro-apartments have dissipated. These units are usually less than 200 sq ft. South China Morning Post used data by Dataelements to monitor the sale of new flats in Hong Kong and it showed since 2016 that out of 976 units that were added, 461 units remain unsold as of this week. It says that the ‘love’ started in 2014. The reason was because of supply shortage and this caused home prices to spiral. In fact that gave developers reason to keep increasing prices. For example, CK Asset Holdings, the flagship company of retired tycoon Li Ka-shing, sold out its Mont Vert project in Fanling at HK$1.29 million after a 15 percent discount. The smallest unit was at 165 sq ft.

Then Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor started to ‘cool’ the market. She introduced a vacancy tax to force developers to release their units and banks began raising mortgage rates for first time in 12 years. Due to the surplus on the developer side, they began offering discounts across all property types. This week, Lam’s administration offered 2,545 subsidised housing in Cheung Sha Wan for sale, at discounts of up to 58 per cent to market price, offering the smallest 184-sq ft unit for HK$930,000. To qualify for the government’s subsidies, an applicant cannot earn more than HK$11,540 per month or own more than HK$249,000 in assets while the threshold for a couple is HK$17,600 in monthly income and combined assets of HK$338,000. Full report in TheStar.com.my here.

Under the 4Ps (People, Price, Policy and Preference), the one which has power to impact the market is POLICY. This is usually what the government does which can help to turn the direction of the property market to something more preferable or desirable. Singapore’s HDB flats are one such POLICY. It ensures most Singaporeans in need of an affordable home based on their salaries get one. We will see how our direction for affordable homes for the majority is shaped by Policy here in Malaysia. Happy understanding.

written on 22 Dec 2018

Next suggested article: Young people will stop buying cars and homes? Noted.

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