Post date: Aug 06, 2010 10:22:19 PM
Saturday July 31, 2010
THE rising cost of living, especially for city dwellers, mean they now have lower disposable income and may need to watch their spending even more closely.
Most Malaysians are trying their best to make ends meet. It is not uncommon these days to find folks juggling multiple jobs to feed their family.
But despite the trying times, more houses and other consumer products are being sold. Strong domestic consumption is a good thing as it can contribute towards a more resilient economy.
Prices of homes have escalated in the past one to 1½ years, and many people who have yet to buy their dream home are now in a quandary as they have to cough up at least 15% to 20% more due to the rise in house prices.
Serious home buyers say it is becoming increasingly difficult to buy landed property in a relatively decent location that is priced between RM300,000 and RM500,000 – which is what the average buyer can afford.
Buyers are somewhat bewildered that property prices have “gone through the roof” within such a relatively short time after the world’s worst financial crisis.
Comments like the following are common, “Unless it is in a really secluded area, nothing is less than RM500,000 these days, even for a double-storey terrace house of just about 20 ft by 70 ft.” Even projects in the suburban and “further away” areas have shot up in prices.
Good landed residential products, especially in mature neighbourhoods with readily available amenities and facilities, are hard to come by these days.
Instead of building more high-rise residences that are already facing an over supply situation, developers should tweak their products wherever possible and offer more landed housing projects.
This will be a good time for developers with sizeable land bank to move forward their project launches. Having the right product type is important as there are various needs to cater to.
Instead of just offering houses that are of one standard size, developers should consider offering a wider range of built-up space to meet the different affordability levels of buyers.
Inflationary pressure could be one of the reasons for the rise in property prices. Of course, market forces play an important role and the latest price hike shows that demand far surpasses supply.
The appetite for house purchases can be attributed to growing confidence among buyers and investors that property is a tangible investment instrument that has proven to be more reliable than other forms of investments.
The relatively sluggish equity market and low bank savings interest rates have also made property investment one of the more viable investment alternatives for Malaysians.
While there are rich Malaysians who will not even bat their eyes over a RM1mil or higher price tag for a typical intermediate terrace house, more than half of the Malaysian population are not “in that league” yet.
They have to turn to bank loans to finance their purchases and have to be prudent about their financial commitments.
After all, buying a property is a big ticket item, more so with the appreciated prices.
While it may sound good to belong to an exclusive residential community, such as a gated and guarded project in a sought after address, buyers have to be prudent and ensure they do not over commit themselves.
The norm is to keep the maximum monthly loan repayment to about a third of one’s take home pay.
·Deputy news editor Angie Ng hopes developers will offer more “tailor made” housing products instead of the typical barrack-style houses that are being offered today.