Malaysia Property Household Income and Property Price

DEVELOPERS continue to be in denial about the current housing situation or, worse still, are only interested in serving the desires of those who are seeking a second house.

The study by Sime Darby Property in collaboration with the Faculty of Built Environment of Universiti Malaya (UM) is irrelevant to most of us as it concerns a very niche market.

It is the wish of the National House Buyers’ Association (HBA) that our intellectuals, who are employed by our tax payers, spent their time solving the problem of why prices are so high and how they may be reduced instead of doing prospecting studies which only developers would be interested in. The HBA expresses its dismay with this recent study which concluded that “homes (sic) in selected areas in the Klang Valley are still accessible to homeowners (sic) who may be looking to upgrade or to invest in a second home (sic).”

A snapshot of some of the findings from the said study by Sime Darby is reproduced below:

Question of affordability
For what it is worth, what great truths does the study uncover anyway?

The most affordable house in the Sime Darby-UM study is in Melawati and the household income required is RM9,360. This means that even the most affordable property is already beyond the reach of the majority in Kuala Lumpur, Putrajaya and even Selangor based on the Household Income Survey conducted by the Statistics Department in 2012. As the 2013 numbers are not released, we have assumed an optimistic 8% increase in household income from 2012.

Also, the property listed in Nilai requires a household income of RM9,430 which is almost twice the mean household income of Negri Sembilan and even exceeds the mean household income of Kuala Lumpur.
Hence, it can be concluded that some properties in the selected areas are beyond the reach of the majority in Kuala Lumpur, Putrajaya and Selangor. We must stress that the so-called mean household income assumes two working spouses. As such, the situation is very bleak for aspiring single house buyers – even fresh graduates. This group will never be able to buy their own homes unless more drastic measures are taken by the Government.

Homeless Generation
Malaysia is facing a “Homeless Generation” syndrome where our future leaders cannot afford their own homes. Unless drastic action is taken, Malaysia will face many social problems with far-reaching ramifications. Yet, these developers, assisted by our intellectuals, continue to market houses at sky-rocketing prices. This only accentuates the problem for first-time house buyers.
Indeed, the survey sounds like Marie Antoinette’s solution to the starving masses: “Let them eat cake if they have no bread”. If you can’t afford any house, why not buy a “second” house as soon as possible because at the rate prices are increasing, these too will be out of your reach soon.

Are the desperate Malaysian masses being told to take burdensome housing loans only to face foreclosures later for the benefit of the banks? Already, the people are struggling to balance their household budgets and are reduced to accepting handouts from the Government.

Do meaningful public research

The study, nevertheless, reveals a situation that HBA has been trying to warn the Government about for years – that is, property prices are beyond the reach of fresh graduates and single parents. More research needs to be undertaken by our intellectuals to “control prices of materials like cement, sand, steel and cost of doing business,” and find ways how utility companies like Syabas, Tenaga Nasional, Telekom and statutory GLCs do not increase tariffs but force developers to built infrastructures thus hiking up house prices. After all, the developers will continue to factor all the “costs” plus hidden ones into the sale price which will be passed down to house buyers.

Sime Darby-UM has since clarified that their study is only for upgraders and not first-time house buyers.
The clarification has been made that the study was “based on a group of 1,183 home owners in selected areas in the Klang Valley. It does not cover first-time buyers. The findings are based on the average household income of respondents who already own homes in the specified locations”.

This only begs the question: So what? Why bother at all? Was it to back our developers’ business with information based on objective studies from our leading university? Why is public money spent on research for the benefit of developers who want to market their products to second-timers?

The study is not without its merits though. We are told: “Based on the findings, the current price-to-income ratio in the Klang Valley for those who are interested in purchasing a second home or upgrading is 56 times the average monthly household”. Don’t we know that? If Klang Valley residents can afford to buy a second home, would they want to buy another one in the same congested and stressed out Klang Valley?


The Government must take concrete and proactive measures:
> Ensure steady supply of affordable houses to cater to the demands of the lower and middle class income groups;
> Protect our young from drowning in debts;
> Stem the rapid rise of property prices due to false demand and speculation; and
> Get our intellectuals to study the problem from the perspective of first-time buyers and the looming homeless generation
Young adults unable to afford a reasonable house that does not require taking out a back-breaking bank loan are moving out to faraway housing estates that involve daily mind-numbing commuting. Anyone want to do a study on first-time house buyers and affordability?

~ By The Star
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