When will property buying stops? When it’s unaffordable, right?

When will property buying stops? When it’s unaffordable, right?

What does unaffordable property mean?

If this question is for the common people, then the answer is very simple. If our current income could not support us in buying a property, then the property is unaffordable to us. Could we make it affordable? Yes, we could if we are in Malaysia. We may not be able to do so in some countries. In Malaysia, if we like to buy a cheaper property, we buy a smaller unit, we can choose a high-rise versus a landed, we can choose to buy further versus a population neighborhood or we could also choose to buy a lower end type of property.

Instead of condo, maybe an apartment or instead of an apartment, maybe a flat. Maybe with these actions, we can make property affordable again. Just need to keep earning more salary so that we can afford to upgrade in the future too. When family grows, so must the home. When we move to another city, so much the home too.

Grateful as a Malaysian as I could still take actions to make property more affordable

So, as a Malaysian, I am very grateful that I think even when it comes to the time for my children to buy a property, they should be able to get one like 65km away from the city centre and they may not mind because maybe it’s flexible working at that time. Now, I mentioned about the cities where even if you want, you just could not find the options and you just have to earn more money in order to be able to buy a property. A lot more. Here is the list. Sorry if you want to find Kuala Lumpur inside this list yeah.

Beyond the city, if we look at the country as a whole, here are the top 10 least affordable countries where property is concerned.

What is 18.8 median multiple?

This means that someone earning a median pay who saves every cent of his salary every year will need around 18.8 years to buy a typically priced property in this market. Explained in another way, it means super hard to afford a property unless with Pa Ma bank or Pa Ma help. Sydney is 13.3 times. In other words, even if AUD is amazingly great when they spend in Malaysia, it’s actually quite small when compared to their property price. They would have to earn more than the median income earners or else the property price is likely to be expensive even if their earnings could be much higher than us here in Malaysia.

Londoners would be another group where they would find everything cheap in Malaysia except when they want to buy a property in the own property market. Not an easy life yeah.

Will it become totally unaffordable some day?

Actually, when no one could buy a property, no transactions can happen. At the moment, our total transactions every year for residential properties alone is around 260,000. In other words, it’s lively and happening. At that time, if the home owner is desperate for buyers, then they will lower their selling price. That’s how we start to see property transactions moving the price downwards. However, if the homeowner has no issues in waiting, then they could continue to rent out their unit while they wait for the price they want.

Take a look at the average house price below. The average meant that there are more expensive but there are also cheaper properties too. It does seem affordable actually…

Government could also help too, look at Singapore?

Alternatively, the government can enter the market and build, build, build and maybe more people could then own a property too. In Singapore, the government builds and houses 80 percent of the population. That’s a good thing I guess. However, just do not expect the price to drop even if the government is the one building because when these owners sell their unit, they will sell them higher. So, prices will still move upwards.

Here’s what will happen when property prices become totally unaffordable. Read here.

Happy understanding facts and figures and take the necessary actions.

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