Looking at the number of property transactions will tell us that people are still buying properties. If we look at the median prices, I personally believe that prices for these few years will start to drop when more of the affordable homes come into the market. As long as what was promised by the Housing and Local Government Ministry comes to fruition; 100,000 units within 2019.
However, if we look at some of the unsold units, it will also reveal to us that there are already properties which are priced beyond what a normal Malaysian household could afford. Think about it, even if the household consists of two working professionals with a combined income of RM10,000 it is very likely that both are driving cars and this would have reduced the net income to below RM7,000 after petrol, toll and maintenance.
Assuming they are very disciplined, to be safe, the property they should be buying should be around RM600,000 or lower. This is why many properties which are above RM700,000 are now in the unsold category. This is also why many of the properties bought at the height of the frenzy; 2012 may now have prices which are below what the market is willing to accept too. According to the Centre for Governance and Political Studies (Cent-GPS), the real reason for Malaysians not buying a property is because the prices are simply too expensive. It’s not even due to banks’ refusal to lend.
Article in malaymail.com Cent-GPS said, “We appreciate the Finance Minister’s focus on the real issues affecting Malaysians. However, this recent suggestion may be dangerous [as] the root of the issue is not financing but the affordability of houses. Providing financing options for homes that people cannot afford in the first place does not make sense. Since 2018, Bank Negara has warned that houses in Malaysia are unaffordable by international standards.” Cent-GPS also shared that the average price of a home in Kuala Lumpur is RM773,000 as at 2018 while in Selangor it is RM497,000. Cent-GPS also said that only a quarter of all homes built in the Klang Valley since 2016 are priced below RM250,000. Thus, even middle-income Malaysians would have to really scrimp because a large portion of their income already goes into mortgage payments. Do read the full article in Article in malaymail.com
Let’s stay safe yeah Malaysian households. There is really no need to buy properties which are beyond our budget even if the banks are willing to lend. We may not be a nation full of mortgage slaves. Here’s an earlier article: Mortgage slaves in Malaysia With the right push for more affordable properties, I think even the developers are now changing the composition of their offerings. A developer I visited today told me that their earlier plans for bungalow units will have to changed totally because the market has changed. Their management do not wish to be caught in launching and then struggling to sell them. I concur. I told them that super huge homes may not be the ‘in’ thing in the future. Perhaps the huge piece of land is but that old design will not appeal to the younger buyers of today. Think ‘contemporary’ instead yeah. Happy understanding.
Article written and edited by Charles. News article summarised by Dina Batrisyia.
Next suggested article: Kuala Lumpur a smart city using A.I. by 2020