Control selling price?
I do not believe there is a need to control the selling price of properties, even for new launches UNLESS the property market got too hot. Example? 2008 – 2012 periods when new launches kept getting lots of buyers, never mind whether they need it or could afford it or not. The sentiment was just too positive then. Today it’s the other way around; market’s sentiment is just too negative. I think everyone realised that since 2013, the property market where transactions are concerned continued to drop until a very marginal increase in 2018 versus 2017. Read here for some latest information from JPPH for 2018 results versus 2017).
Right price, right product
These days, developers who launched right properties at the right prices (affordability) will usually still sell well. In Singapore, all new HDB flats in terms of volume and price are controlled by The Housing Development Board. However, this did not meant prices stay the same or stay affordable forever. The median income of a Singaporean household is SGD9,293 and the median property price is considered ‘severely unaffordable’ currently, at 4.6 times of the annual median income. Today there are many cases of HDB flats being sold at SGD1 million. Here’s the link to read more. Today, there are still RM450,000 landed homes in Selangor. Median income of KL households are RM9,073 and if they are willing to travel a bit, everyone could buy a landed home. RM450,000 after a 10% downpayment meant a mortgage payment of just RM2,000 per month or just 22% of the household income. The question is thus also on ‘Acceptability’ and not ‘affordability’ alone. Coming back to controlling property prices, perhaps we listen to one latest view from the Housing and Local Government Minister.
This is a long article but I think worth reading because there are a few different things within the same article. Article in edgeprop.my here KPKT Minister Zuraida Kamaruddin said that prices of affordable homes under the newly introduced National Affordable Housing Policy will be determined by taking into consideration the median income of a particular area, which could go as low as RM90,000 per unit and up to RM300,000. She said, “We are going to monitor the prices of houses according to the median income of the area. So that is one form of control. Therefore, they (property developers) cannot go more than what the affordability rate of the people in that area.” She said, “With the median price, they (property developers) will have no choice but to follow (the guideline). If they don’t accept the median price, then I won’t give them the job, simple as that.” With regards to letting the market determine the demand and supply instead, Zuraida said, “As far as the affordable homes are concerned, I don’t think it’s interference, because it is what we want to give to the people. But if [they’re] private [projects] then we are not concerned with how they price their properties.” Article in edgeprop.my here
It’s very important to note that while property prices could be controlled in the beginning, no one could control it later on. We could see that even in countries where most of the homes were built by a government agency. In the future, when the owners want to sell, the owner will have his / her negotiation power (depending on his capability or the location of the property) and buyers will choose to pay as high as they could afford in the future. Perhaps it’s much better to have more information to also guide first-time home buyers so that they look at MORE choices and not just that FEW areas and trying to outbid the others who are also looking at the same few areas. Anyway, just a thought from a fellow working professional like most Malaysians. Happy finding and buying.
written on 2 May 2019
Next suggested article: Just too far, too expensive and too soon