BNM: Price of new launches too high versus household salary.

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Personally, I think it’s super important for people to buy a home based on what they could afford and what they think they deserve. This is the same for a new car, for a new smartphone and even a new handbag. More often that not, the car we should buy is actually not as attractive as the one we could afford (by stretching the loan repayment to 9 years for example). That smartphone we could afford with RM1,000 does not give us as much attention as the one requiring RM200 monthly repayment for the next 24 months…

This is why soon we will realise that what we earn is no longer enough to sustain what we spent it on. Anyway, my first home was just RM123,000 and it’s a 700 sq ft apartment with facilities. It’s not even in a popular area but who cares, I stayed there happily for the next 4 years until I have saved enough for an upgrade. That’s how my property investment journey actually started. Now for some actual numbers from Bank Negara Malaysia.

Article in themalaysianreserve.com Bank Negara Malaysia director of financial surveillance Qaiser Iskandar Anwarudin said, “Most Malaysians cannot afford to buy newly launched houses. Houses in Malaysia are considered as ‘seriously unaffordable’ by international standards.” He shared that the maximumum affordable house price in the country should be RM282,000 but the current average prices of new properties are already at RM417,262.

Qaiser iskandar explained that when house price is more than 3 times of annual household income, it is deemed unaffordable. He said, “There is also a mismatch between the growth in income and growth in the property prices coming into the market. However, the house prices are growing at a moderate pace now and there is a higher proportion of new launches in the affordable segment which would help address some of the issues in the property market — although it will take some time to adjust.” Article in themalaysianreserve.com

If we run a check today in major property listing portals such as iproperty.com.my or propertyguru.com.my or starproperty.my or propsocial.my we will notice that affordable homes, even those below RM400,000 continue to exist in the secondary market. The only question would be acceptability. Sometimes, the area may not be what’s in out top few choices. Sometimes, the size may be too small, the design may be too old and even the condition of the unit may need some minor repairs.

Whatever it is, what we need to know is that availability is real. In some advanced countries, even if we wanted to, there ‘s just no such choices anymore. BNM’s research is based on market condition as well as the household income. What BNM cannot tell us is how we could work around all these current numbers so that we could still buy a property we could afford versus waiting until one day when BNM says that property prices are now affordable for the household income level in Malaysia. Happy understanding yeah.

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