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Average increase in house prices are between 8 to 12.3 percent per year

As per reported in newspaper, the average increase in house prices are between 8 to 12.3 percent on average per year. This is as per Valuation and Property Services Department. While it did not state the time period for this average but from what we can see thus far, from the days of the crisis to the uptrend years of 2009 to 2012 and the slowdown since 2012, 2013 and 2014, the number seems quire reflective of the situation. The highest property prices are recorded in Kuala Lumpur, at RM647,189 on average. Just take a look at the prices in KLCC area, Bangsar and you would know that even this average number is not that high, really.
Selangor’s average is RM414,224. At least for Selangor this number is quite ok. Even for popular areas such as Kelana Jaya, this price is still sufficient for a condo. Sabah’s average is RM427,087. If you think this is just Kota Kinabalu, you are wrong. majority of the new property prices in Kota Kinabalu and even Sandakan is already above this number. Of course, the average is because there are also lots of other cheaper options such as flats, terrace houses in less popular areas etc. Majority of everyone is staying in urban areas and this trend of urbanisation would continue until over 80% of all population in Malaysia are in cities instead of villages or even smaller secondary towns.
If everyone is moving to cities, what would happen to the prices? Up, up and away. Thus, the Urban Well-being, Housing and Local Government Ministry has called for a fund to acquire landbank for affordable housing in urban areas. This is to allow lower income families to be able to afford homes in the urban areas. I think main reason is also because the transportation is still not efficient currently and to own a car meant huge expenses because subsidy for petrol will be getting lesser and not more. The minister also said that the current average household income for Malaysians are at RM5,900 currently with half of all households earning less than RM4,700 per month. This meant that more homes of below RM300,000 is needed.
Yesterday evening, I was talking to the founder of penangpropertytalk.com  We were discussing on some facts about affordable properties and come to the conclusion that more needs to be done including dissemination of the right information about affordable housing. For example, You CANNOT buy them from the developer or even ‘undertable’. You needed to register and if you qualify, then you can buy. Also, cheaper units may be available with a slight reduction in profit margins and approval for slightly higher plot ratios. Anyway, will do best in the area of dissemination of information. As for house prices, do be reminded that this will most probably rise unless urbanisation stops which is unlikely.
written on 18 Sept 2014
Next suggested article: Weakening demand for luxury condos, increasing prices for cheaper condos

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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