According to a recent study by Sime Darby Property Bhd and the Faculty of Built Environment of Universiti Malaya, certain groups of buyers interested in strategic areas of Kuala Lumpur, Selangor and Nilai, Negeri Sembilan can have access to houses that are priced at 56 times their household income, and they can afford to spend up to 26% of their monthly household income to service a mortgage.
It must be pointed out that it is only a partial study while the respondents seem to belong to urban middle class families earning relatively high income. Therefore, it could only serve as a reference for certain areas instead of reflecting the whole situation in the country, as the average monthly household income of the vast majority families in the country is unable to reach the level of the survey.
Associate Professor Dr. Sr Noor Rosly Hanif, former Dean of Faculty of Built Environment, University of Malaya, said during the launching ceremony of the survey results that the surveyed familes in the 12 areas earn RM14,580 a month and the house price they can afford is RM448,000. According to the Budget 2014, however, the per capita income for this year is expected to reach RM34,126. In other words, the average monthly income should be RM2,841 and if three family members of a household work, the average household income is just RM8,523. Clearly, there is a big gap with the survey results.
Dream home has become a NIGHTMARE
The rising house prices are currently a nightmare for many urban residents. It is understood that it is almost impossible to find houses below RM250,000 in some strategic areas in Kuala Lumpur and Selangor. In Johor Bahru, a single-storey terrace house within 20km of the city centre is priced from RM200,000 to RM350,000, or even higher. The indisputable fact shows that it has become increasingly difficult for average families to buy a house in urban areas.
A noteworthy trend is, in metropolitan areas such as Selangor and Johor Bahru, private housing developers seem to have started to build less houses cost between RM200,000 to RM300,000. There are indications showing that some private developers are now more interested in building expensive houses costing between RM500,000 to RM1 million. It also means that middle income families in urban areas can only hope for more Perbadanan Perumahan Rakyat 1Malaysia (PR1MA) houses, or they would forever fail to own a house, while the government's goal to provide sufficient, comfortable, quality and affordable housing will become merely a slogan that can never be achieved.
Despite the forecast claiming a weak demand, a surge in supply and the normalisation of interest rates in the Malaysia property market this year, and the three major headwinds are going to cause house prices to fall by 5-10%, it was also anticipated that the house prices this year would remain high or even further rise by 3%.
Not clamping down hard on speculators
There are many factors causing house prices continue to rise, including the speculative property bulk buying. According to some in the property industry, some real estate investment clubs have bought the entire apartment or an entire row of residential units while housing developers are happy to offer them up to 20% of discount. Together, they created a false demand to push up prices and mutually benefit from it.
Housing, Local Government and Urban Wellbeing Minister Datuk Abdul Rahman Dahlan said that the ministry has been closely monitoring the unhealthy speculative activities and it has implemented measures to control it. However, it is still too early to say whether the new measures would be able to deter property speculative activities.
In fact, property in some metropolitan areas might face oversupply in the next two years, together with a series of measures taken by the government to cope with high prices, the domestic real estate market has actually been in worry. Meanwhile, there are different views over whether there will be another wave of bubble in the property market. In any case, we must bear in mind the lessons learned and carefully analyse before making investment to avoid ending up a slave of property! - mysinchew
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