When considering any new property, whether for your own living or investment, the first thing you should do is check the median price for that particular area or project.
Not to be mistaken with “average price”, “median price” refers to the price that is right in the middle of all transactions performed. It is different from the current value of properties in the area as it is based on transacted prices.
Whether you are selling or buying a home, it is useful to understand the median price trend of the area or development.
If the median price is trending down, it takes longer to sell a home and buyers may have more bargaining power. If it is trending up, the market may be “hot” and homes will likely be selling more quickly, giving sellers the advantage.
Property Advisor analysed residential transactions carried out last year and identified the top areas with the highest increase in median prices compared with 2019.
Here are three areas in the Klang Valley that are in demand despite the pandemic.
1. Bukit Tunku
Formerly known as Bukit Kenny or Kenny Hills, this upper-class residential area was later renamed after Malaysia’s first prime minister, Tunku Abdul Rahman, as his house was located here. It boasts a number of luxury condominiums and villas among its many housing projects.
Last year, Bukit Tunku witnessed a small dip of 12.5% in transactions compared with the previous year. However, median prices went up by a whopping 144.13%, going from RM1,573,750 in 2019 to RM3,842,000.
Only 5% of Bukit Tunku transactions last year were carried out by first home buyers (FHB). In comparison, the breakdown for FHB and investor transactions in 2019 was more balanced at 49% and 51%, respectively.
Bukit Tunku proves to be highly valued for those investing or looking for a second home. The median transacted price from this segment skyrocketed by 202.51%, in contrast with FHB transactions, which decreased by 49.39%.
2. Damansara
Damansara is a common name in the Klang Valley, often causing confusion as many townships have Damansara in their name.
In this analysis, Damansara refers to the areas from Sri Damansara, Bukit Damansara and Kota Damansara.
Property transactions here dropped by 44.06% last year compared with the year before, yet the median price of these transactions increased by 77.38%, from RM840,000 in 2019 to RM1,490,000 in 2020.
When broken down into FHB and investor transactions, the increase was driven by investor demand for properties in this area.
The median price of properties purchased by this segment surged by 64.82%, compared with a relatively smaller increase of 13.11% for FHB transactions.
3. Port Klang
Port Klang is known as an industrial area since it serves as Klang Valley’s principal port. Due to the number of people working in this area, there is a huge demand in the rental market, making it an ideal choice for investors looking to earn returns through rental.
This area saw the largest drop in transactions, nosediving by 82.21%. Meanwhile, the median price increased by 69.23% to RM110,000 compared with RM69,500 the previous year.
Not surprisingly, Port Klang transactions last year were largely made by investors, making up 83.78% of total transactions. Even so, this was a 75.78% decrease in investor transactions compared with 2019.
Advice for investors
When deciding on an area or development to invest in, do some research into property demand, potential capital gains, and property types to meet your investment goals.
If you have found a good deal but do not want to spend all your savings on the down payment, consider cash-out refinancing, where you replace your old mortgage for a new one with a larger amount based on the equity you’ve built in and withdraw the difference between the two mortgages in cash.
The extra amount withdrawn offers you access to capital to purchase an investment property.
There are pros and cons to refinancing but it makes sense if you can get a lower interest rate than your existing mortgage, and have a solid plan for the money that will yield higher returns.
Talk to your financial advisor to decide if it is the right choice for you. In the meantime, try out Property Advisor’s Refinance Calculator to find out the current estimate of your home value and the maximum amount you can cash out.
This article was written by Adlene Hanna of PropertyAdvisor.my, Malaysia’s most comprehensive source of property data, property analytics and insights.