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Housing affordability getting worst: 2014

Between 2009 and 2014, the housing affordability has worsened. From 3.4 times of annual gross household income in 2009, it has risen to 3.6 times in 2014. This is as per a survey by Rahim & Co Chartered Surveyors Sdn Bhd.  As usual, this is just an average and it is based on the price of a terrace house. If you work in KL and you would like to buy a terrace house, it has risen to 5.6 times of your annual household income. In Sabah it is 6.2 times while in Penang it is 5.9 times. Yes, this is HOUSEHOLD income. If you happen to be a single, it will be much harder. Do not worry, if you are okay with high-rise apartments or condos, it should still be lower than what the survey has indicated.
Now, the question is, what do you think of the housing affordability in Malaysia? Has it gotten worst enough for you, yet? Personally I think the affordability has gotten worst but beginning 2013, the prices has not moved a lot due to the many cooling measures implemented. Next question is, do you expect it to be better with the coming years? Well, if we look at all the usual and major property markets in the world today, the answer is no. It will only get worse. What about Malaysia? Perhaps we may be able to ‘force’ the affordability to be better? Well, some have said that PR1MA may be able to address some of this. Not so much on reduction of property prices but more on ensuring prices do not rise so much. This would meant that after a few years the affordability should be better because every year the income would be increasing.
Personally, I think when more people are in the market and the wants for a certain hotspot is spread over a much larger area, the pressure for property prices increase would lessened. Today, there is only one reason why property prices in certain areas are already RM1,000 psf but just less than few minutes away, it’s less than RM500 psf. When everyone only wanted to buy that few certain areas, how can it not continuously move up every time a unit changes hand? The housing affordability is not likely to get better unless the people / buyers become more objective instead of driving prices up all the time. Government actions can help, of course but until to date, no government actions in any of the major property markets in the world can be considered so successful that is worth following. Sorry, not even in places like Singapore where the majority of property new units can be said to be a controlled matter by the government. Happy waiting or deciding.
written on 2 Feb 2015
Next suggested article: Affordability, Availability, GST and More Money (new income tax rate)

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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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  1. No doubt that the property prices has risen since 2009 for both primary & secondary market, however, there are still many affordable secondary properties that located at a mature area which is still affordable between RM200k – RM300k.
    I would say that those are complaining couldn’t get an ‘affordable’ house mostly are those seeking new properties by developer and / or those have not spend enough hardwork in the secondary market.

    1. JC, Yes, agree. In fact, if you extend that a bit to up to RM400,000 your choices suddenly expand even more. Yes, this is both in Penang or even Klang Valley today. Affordability? Why not include secondary?

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