Further, Smaller, Future. Same price?

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A good friend said that when there are too many units of affordable homes, the prices will not be rising. Well, as long as the overall demand continues to increase due to urbanisation of the population, the following scenario will happen. It has happened in all advanced nations of the world today and will definitely happen in the future. Look at Sydney, London and even our neighbour Singapore. The properties in prime locations (even if the design looks dated) are usually bigger in size than the newer properties built in the same area a few years later. Reason? Affordability. As the city expanded, the homes are built ever further for almost the same price as the original prices within the city centre. Thus, those homes within the city centre will then increase in price. In Singapore, HDB FLATS in good areas (bought for very affordable prices many years ago) has reached SGD 1 million… (fortunately not all units, just some).

Briefly, for Greater Kuala Lumpur and starting from the affordable homes being built nearest to the city centre. Assuming most affordable homes today are RM300k and 10 years later, it is still RM300k for the affordable homes. (we assume salaries of Malaysians do not rise by much) By then (10 years later), to still keep prices at RM300,000 the homes would have to be smaller and even built further. Thus, between bigger and nearer (but older) vs smaller and further but new ones (RM300k), many are willing to pay higher (to stay in mature areas) and this is why the affordable homes of today will increase in price. (perhaps it may follow inflation rate of increase)

Unless of course, the affordable homes being built 10 years later are somehow cheaper and nearer and bigger. So instead of it being 15km away from the city centre, these affordable homes are now within the city centre and the size is now bigger than 900 sq ft and the price is still RM300,000. 😛 😛 😛 Thoughts? I think the buyers of affordable homes today (further, smaller and same price) will ‘kill’ their government (whoever it may be) at that time… Just being logical by looking at advanced countries of today. Bigger means further. Nearer means smaller. It’s hard to run away from the Mamee fact. Almost the same price as 15 years ago but look at the size of one pack of Mamee…Happy understanding and following the issue of affordable homes in Malaysia today.

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written on 13 March 2019

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