Skyrocketing property prices causing people to rent instead

There are still affordable properties in the market today – the secondary market, the affordable homes being built and not just the new launches.

As long as one is disciplined enough, one can buy a property, even if it’s just a 700 sq ft secondary apartment unit. It is possible to do this even on a RM3,000 a month pay packet as long as you are willing to make some sacrifices along the way.

According to PropertyGuru Malaysia, there are two underlying issues why Malaysians cannot afford to buy a property – skyrocketing prices and buyers’ poor credit score.

Due to these two reasons, Malaysians prefer to rent instead. It said that low-to-middle-income earners were facing difficulties in obtaining loans and had no other option but to rent.

According to Housing and Local Government Minister Zuraida Kamaruddin in July, there were just too many high-end houses in the market. She said her ministry would study the matter to deal with the situation.

Bank Negara Malaysia said on Factwatch.my in May that houses priced between RM300,000 and RM500,000 were beyond affordable to households earning the median income in Malaysia.

The maximum affordable price of an affordable house should be RM282,000, given the 2016 median household income of RM5,228 as published in the Statistics Department’s Household Income and Expenditure Survey.

Meanwhile Rehda Institute, the training and research arm of Rehda, recently proposed the RM200,000-RM500,000 range, depending on a property’s locality, as threshold prices for affordable housing in Peninsular Malaysia.

National Housing Department director-general N Jayaselan said at the Affordable Housing Conference 2018 in July that the new national housing policy would focus on reducing house prices by lowering compliance costs.

These compliance costs include contributions for utilities like Tenaga Nasional Bhd, Syarikat Bekalan Air Selangor Sdn Bhd and Indah Water Konsortium Sdn Bhd, developer charges, land conversion premiums, infrastructure contribution, surrender of land and construction of facilities.

Developers are also likely hopeful that these compliance costs will be reduced with the re-introduction of the Sales and Service Tax.

When we really want something, we will find a way. That’s sound advice to every young potential home owner today. It’s always about choices.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.