Push for affordable housing

JOHN, 25, is a new lawyer with a Kuala Lumpur-based legal firm and earns RM3,200 per month. He plans to get married next year, and has been looking for a “nice tiny apartment” to settle down.

After spending many weekends looking around, John says he and his wife-to-be “fell in love with a cozy little place” in Seri Kembangan – a three-bedroom apartment starting from RM460,000.

All looked set for the couple, until his loan was rejected. He had recently obtained a loan for a new car – as travelling to different states for court hearings was the norm at his firm.

This is compounded by the fact that his fiancé was recently retrenched – so it’s no surprise that money has been tight for the couple.

John says he has the resources for a 10% down payment for the apartment, but his bank is only offering an 80% loan facility.

“Because of our salaries, we were not able to come up with the remaining 10%,” he laments.

John’s situation is familiar – many first-time home buyers are struggling to purchase a home given the high cost of living.

“What would be great is the banks are able to provide a higher financing margin, like 90%,” says John.

The budding lawyer had many discussions with his partner on possible alternatives for the remaining 10% – from borrowing from friends, family or ah long.

Out of reach: The oversupply of properties costing RM1mil and above has forced developers to change their strategies.

 

Developers to ‘bridge’ the gap

For John, the recent announcement by Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar that eligible housing developers could apply for moneylender licences and provide loans of up to 100% to property buyers seem like light at the end of the tunnel.

For someone like John, it could also be light from an oncoming train as the interest rates will be very high, compared with commercial banks housing loan at about 4.5% to 5.5%.

The minister said developers can gain from property sales and profit from end-financing as well, while the country’s pool of potential homeowners will be widened.

The licences will be issued by the ministry under the Moneylenders Act 1951 (Amendment) 2011.

The announcement was met with mixed responses. The National House Buyers Association and some developers likened the situation to a licensed ah long, suggesting that this could lead to developers pricing their products at unsustainable prices, thus accelerating a housing bubble.

At a media briefing on Wednesday on its Property Industry Survey for the first half of 2016, the Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri FD Iskandar sought for caution as the move comes with risks.

“There are risks involved as not all developers can do this. There’s no such thing as developers who can finance 100%. Not all developers even have the balance sheet to do the 10% to 15% ‘bridge’.”

He emphasised that there is an urgent need to assist buyers, especially those within the middle-income group - like John.

The problem is that buyers get between 75% and 80% of financing. “That’s the average, we’ve checked. But someone has to come in to provide that remaining 10% to 15%, or bridging financing,” FD Iskandar says.

The Rehda survey was conducted in the first half of this year to assess market performance.

Rejection by banks for end-financing affects properties priced between RM250,000 and RM2.5mil, particularly for properties priced between RM500,000 and RM700,000 (24%). Six per cent of properties RM250,000 and below were affected and for properties RM2.5mil and above, 7%.

Because of the high loan rejection rate, FD Iskandar says lending by developers should be capped at properties below RM500,000 to assist first-time homebuyers and genuine upgraders.

Limiting it at the RM500,000-mark would also mean that the move would not see the entry of speculators which will only result in prices spiking – leaving cash-strapped end-users such as John unable to purchase property.

Following a Cabinet meeting on Wednesday, Noh said in a statement that his ministry had been asked to study the effectiveness of the developers’ money lending policy.

One industry observer says young individuals, like John, tend to look for properties that are beyond their pay-grade and should in fact go for something more affordable.

“Instead of looking for a place that they can afford, they go for something that they can’t. So they’ll end up saving and waiting for that property they’ve had their eye on.

“And by the time they can afford it, the price of that unit would have gone up even more and they still can’t afford to buy it!”

One option is to purchase a low-cost apartment or house, he says.

According to Rehda’s Property Industry Survey, a total of 1,022 units of low-cost units with a built-up area of 650 sq ft priced between RM35,000 and RM42,000 were launched in the first half of this year. None of them were sold. A year ago, 650 units were launched, of which 450 units were sold.

This does not necessarily mean that conditions are so bad that people are just not buying properties, says FD Iskandar.

“People don’t live in low-cost homes because the don’t want to be associated with them. If they can afford it, they would prefer to purchase something bigger,” he says.

Confidence factor

According to Rehda’s survey, property sales performance experienced a significant decrease to 39% in the first half of 2016 compared with 52% a year ago.

A total of 7,172 units were launched in the first half of 2016 compared with 10,829 units a year ago. A total of 2,829 units were sold in the first six months of this year compared with 4,371 units in the previous corresponding period.

Half of the residential units launched were priced below RM500,000. Serviced apartments showed a year-on-year increase in sales, rising to 267 units in the first half of 2016 compared with 100 units in the previous corresponding period.

Sales of bungalows and garden villas also recorded a significant increase, with 194 units sold in the first half of 2016 compared with just nine units in the first half of 2015.

The first half of this year also saw significantly more launches of bungalows and garden villas at 361 units compared with just 24 units in the previous corresponding period.

All states were retaining their prices except for Malacca, FD Iskandar says. The “unsold” situation was still manageable despite the decreased in sales performance.

Two- to three-storey landed units have taken over apartments in terms of launches. He says while condominiums and apartments are still available, their take-up rates have dropped.

“The days where people used to queue up are over. That’s not to say that those times will not happen again. The property sector is cyclical. The confidence level is not there.”

FD Iskandar says consumer confidence is influenced by what people see or don’t see. The sight of cranes and workers at construction gives confidence that the sector is doing well.

“What we don’t see, we don’t feel. (The scene of) construction cranes is an indicator that the economy is thriving. But because we don’t see this, it affects confidence.”

With confidence affected and potential buyers such as John having financing problems, Rehda reveals that first time buyers had dropped by 13% during their period surveyed.

First time buyers accounted for 34% of the buyers’ profile compared with 47% in the second half of 2015.

The number of upgraders however increased to 45% from 39%, while the level of investors grew to 18% from 13%. Buyers comprising companies meanwhile grew marginally to 4% from 1%.

Not all gloom and doom

This does not mean people don’t have money, says FD Iskandar.

“If you look at our gross domestic product (GDP), at 4% in the second quarter, it’s still healthy,” he says.

Malaysia’s economic growth had slowed to its slowest in seven years at 4% during the April-June quarter of 2016 from 4.2% in the preceding quarter.

According to Bank Negara, GDP growth in the second quarter was weighed down by the continued decline in net exports and a significant drawdown in stocks. Stronger expansion in domestic consumption growth was the only saving grace for the country’s economy.

FD Iskandar says people are just not spending, especially on houses which are big-ticket items.

But all is not doom and gloom, he says. Sales of properties below RM200,000 grew nearly 2½ times in the first half of 2016, accounting for 14% of total sales compared with just 6% in the previous corresponding period.

A members survey shows that 21% is optimistic about the sectorial outlook for the first half of 2017 while 11% are optimistic about the second half of this year.

“There is a lot of hope that the property market and economy will be better next year,” says FD Iskandar, adding that many developers are using various measures to boost sales.

“These include creative marketing strategies comprising freebies, aggressive participation in exhibitions, review of selling prices and easier financing or payment schemes.”

At the Asian Strategy and Leadership Institute summit in early September, Sunway REIT Management Sdn Bhd’s chief executive officer Datuk Jeffrey Ng Tiong Lip says the current slow market was short-term pain but long-term gain as prices consolidate. 

He expects a recovery in the 2017/2018 period.

“We have to look at national and global macro economy,” he says. Property consultants Savills Malaysia managing director Allan Soo expects a 2019 recovery while Jones Lang Wootton executive director Malathi Thevendren prefers not to put a time line to it. 

Whatever state the sector may be in, FD Iskandar says that there will be demand for housing as Greater Kuala Lumpur population expands from the current seven million to 10 million. There will be a need for an average of 200,000 new units from this year through 2020. “We need about 200,000 new houses per year. Last year, there were only 80,000 units,” he says.

source:  http://www.thestar.com.my/business/business-news/2016/09/17/push-for-affordable-housing/

Property Real Estate price in 2015

So what is the out look on the real estate property market? 
here are is a good read to educate yourself

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THE Penang property sector is expected to see some challenges going forward. Real Estate and Housing Developers’ Association (Rehda, Penang) chairman Datuk Jerry Chan expects another 30% decline in property transactions in 2015 from the 30% drop recorded in 2014. 

Chan says: “We expect to see little or no appreciation for high-end condominiums going forward. The mid-range high-rise properties with price tags of RM400,000 to RM500,000 are likely to see appreciation. We also expect to see lower demand for landed residential properties priced between RM3.5mil and RM5mil.” 

Another indicator of the bumpy road ahead is the high rejection rate for housing loans, which according to Rehda Penang deputy chief Datuk Toh Chin Leong is 50% for some projects. “You don’t see this three years ago, but it has been happening for the last 18 months,” Toh says.

Notwithstanding the challenges predicted by the association, there are at least 10 residential addresses in Penang where prices have appreciated substantially since 2009, unaffected by the economic uncertainties. 

Raine & Horne director Michael Geh says these addresses are not in the premier category, but are sought after because of their pricing, location and facilities.

“They have benefited from the new infrastructure, malls and other amenities that have mushroomed around them. Owners are not speculators and would not give them up unless the offer is good. This is another reason why these properties have appreciated rapidly,” Geh says.

On the island, the five addresses are Springfield Condominium in Sungai Ara, Krystal Suria in Bukit Jambul, Leisure Bay in Tanjung Tokong, Marina Tower in Relau.

In the south-west district, where the Penang International Airport is located, prices of Springfield Condominium, Krystal Suria, and Marina Tower have appreciated between 164% and 233% (see table)

In the north-east district, prices of Leisure Bayand Midlands Condo have appreciated by about 200%.

The second bridge project, announced in 2006, the construction of the Subterranean Penang International Convention and Exhibition Centre in Bayan Baru and the Penang Waterfront Convention Centre next to the Penang Bridge, have helped to boost prices. Both convention centres will be ready this year and 2017 respectively.

On the mainland in central Seberang Prai, the popular addresses are Taman Pauh in Permatang Pauh, Taman Sejahtera in Alma, Putra Bertam in Bertam, and Juru Indah in Juru. In North Seberang Prai, it is Taman Dahlia in Jalan Raja Uda.

Landed terraces in Taman Pauh, Taman Sejahtera, Putra Bertam and Juru Indah have risen between 43% and 60% since 2009.

The second bridge project linking Batu Kawan in South Seberang Prai and Batu Maung in the southern part of the island has driven up property prices located at both ends of the bridge.

Using 2006 as a benchmark, Geh says the price of vacant land has increased to between RM250 per sq ft (psf) and RM300 psf in Batu Maung from RM50 to RM60 psf. “Pricing depends on whether the land has been zoned for agriculture, commercial or residential use,” he says.

Prices for new two to three-storey terraces south of the island start from RM1.2mil, compared with about RM450,000 prior to 2006.

“New condominiums in similar locations are now priced at between RM700,000 and RM800,000, compared with between RM250,000 and RM300,000 prior to 2006, when the bridge was first announced,” he says.

Properties located in the prime locations of central Seberang Prai and south Seberang Prai have also increased significantly.

Henry Butcher Seberang Prai’s associate director Fook Tone Huat says vacant land in the area, especially those in south Seberang Prai where the second bridge is located, are between RM42 and RM60 psf, a huge jump from 2006’s RM8-RM9 psf.

Land prices in central and north Seberang Prai were then between RM20 and RM40 psf, compared with today’s range of between RM50 and RM120 psf. The increase in land prices has translated into higher property prices.

 

“New landed properties such as double-storey terraced units in south Seberang Prai are now priced between RM360,000 and RM450,000 compared with between RM150,000 and RM200,000 prior to 2006,” Fook says.

Double-storey terraces in prime locations in central and northern Seberang Prai have doubled, from RM200,000-RM270,000 to RM400,000-RM630,000.

“We are also seeing a number of life-style condominium projects being planned in Bukit Mertajam this year with prices between RM300 and RM350 psf,” Fook says.

As for the secondary or sub-sales market, double-storey terraces, depending on location, are priced between RM300,000 and RM600,000.

Aspen Group Holdings Sdn Bhd and PE Land Sdn Bhd’s plans to develop an Ikea store and the RM1bil Penang Designer Village, which also includes a RM200mil premium outlet respectively, will drive up prices further in Seberang Prai, especially those located near the second bridge.

Moving forward, Geh says south-west district properties will benefit from the state government’s plans to transform the Bayan Baru township into an international business process outsourcing (BPO) area. Two multi-storey blocks will replace the current Penang Development Corp headquarters. The 29 and 25-storey blocks will house retail and recreational facilities.

“In the north-east district, the opening of the Gurney Plaza and Gurney Paragon shopping malls respectively in 2001 and 2013 and the increase in food and beverage outlets in the Pulau Tikus and Tanjung Tokong neighbourhoods have boosted prices.

source

With the new released budget 2015: What about affording your first home now?

Hey guys,

 

Budget 2014 just passed and i'm sure now everyone is wondering whether if an average person is able to buy a "home sweet home" right?

Well this article that I found shares a great deal of light into this matter 

This is an especially good read for first home buyers, first property purchasers, people keen on taking up a bank loan or mortgage loan or maybe thinking of refinancing?  

 

Hop on and lets get reading! 

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Budget 2015: Can You Afford Your First Home Now?

By Fiona Ho . 16 October 2014 . Budget 2015, GST, Home Loan, Home Loan Refinancing, Interest Rate, Properties

 

Among the biggest problems faced by Malaysians in recent years is the exorbitant property prices that has rendered many buyers, especially those residing in the Klang Valley, unable to afford their first home.

Nowadays, a condominium unit in prime locations such as Subang Jaya or Petaling Jaya can easily cost over RM600,000. With 4.45% interest over a 35-year loan tenure, buyers will need to fork out at least RM2,802 every month (not forgetting the 10% down payment) for the most basic unit.
Given that the mean monthly household income in Malaysia is about RM5,000, according to the 2012 findings by the Household Income Survey (HIS), it is no wonder that owning a home has become an elusive dream for many.

Statistically, property prices in the Klang Valley has been rising annually between 15% and 18% per annum. Once GST is implemented, property prices are expected to go up even more.
Infrastructure investments such as the new Light Train Transit (LRT) and Mass Rapid Transit (MRT) lines will also have an impact on property prices.

Last week, Prime Minister, Datuk Seri Najib Tun Razak tabled the 2015 Budget with aims to address the rising cost of living. Let us examine some of the measures announced and their implications on the property market at large.

Home sweet home for young couples

Married young couples between 25 and 40 years with a household income not exceeding RM10,000, can now look forward to owning their first property with the Youth Housing Scheme (YHS).
YHS, a partnership between the Government, Bank Simpanan Nasional, Employees Provident Fund (EPF) and Cagamas, offers RM200 financial assistance every month for the first two years and also 100% home loan financing, including cost of mortgage insurance (with 10% loan guarantee from the Government)

However, the property must not exceed RM500,000 and is also limited to the first 20,000 units.
Under YHS, the Government will give a 50% stamp duty exemption on the instrument of transfer agreements and loan agreements. The maximum loan period is 35 years.

This is how much you can save under YHS for a RM500,000 property:



If you are one of those who are lucky enough to secure a property under RM500,000, with 4.45% interest, over a 35-year tenure, your home loan monthly repayment will come up to RM2,116. However, you will need to fork out RM50,000 for the down payment, as without the YHS, you will only be eligible for 90% margin of finance.

With YHS, qualified applicant will get 100% financing and RM200 financial assistance from the Government for the first two years. This translates to RM2,151 monthly home loan repayment (or about 43% of an average monthly household income of RM5,000) and results in RM4,800 savings in two years, excluding the amount you save from the down payment.

Without having to fork out that RM50,000 in cash for down payment, property ownership becomes much more feasible for people who qualify. However, with a RM500,000 loan amount, you will be incurring RM46,300 additional interest. This may not seem like a good idea for those with cash for down payment, but for those who are having difficulties saving the cash. It will also come in handy if you want to keep the cash you have for renovation or other miscellaneous costs.

However, the number of 20,000 units allocated under the scheme is hardly sufficient to meet the housing demands of the people. There is an estimated 1.6 million people living in Kuala Lumpur alone.
Needless to say, singletons will have to work harder, both in finding a property they can afford to buy and a significant other.

How GST impacts home prices

Although housing is exempted from GST, the construction costs involved are not. Once GST is implemented beginning April 1, 2015, 6% GST will be imposed on various aspects of property development such as land cost, material cost (concrete, steel, roof tiles, bricks), labour cost and so forth.

Due to this, the final selling price of residential properties, as well as non-residential properties will no doubt, increase accordingly.
Experts predict that the margin of increase will be about 3% for residential properties following the implementation of GST.

Experience from other countries such as Australia had witness trends in anticipation of future-cost drive inflation of asset prices. Already, Malaysian buyers have been rushing to snap up property in the two quarters prior to April 2015, while developers are rushing to complete their projects pre-GST.
Post-GST, property demand is expected to taper off due to the rush in buying the year before. The increases in prices could also price-out many buyers.

There is speculation that there will likely be a one-off increase in property prices across the board. The secondary home market should also see a knock-on effect in prices.
In the long term, the property market will likely adjust to GST and property activities should return to normal, given that demand and supply move accordingly upon changes in things like interest rate and loan-to-value (LTV) ratio.

The Government is doing its part in addressing issues of affordable home ownership by mobilising its housing agencies such as the 1Malaysia People’s Housing Programme (PR1MA) Corporation (80,000 units), the National Housing Department (26,000 units) and Syarikat Perumahan Negara Berhad (37,000 units) to fulfil the needs of the low and middle income class.

Extensions of the LRT and MRT

The Government will build a third light rail transit (LRT3) line linking Shah Alam, Bandar Utama and Klang to improve connectivity. This line will complement the network that is currently undergoing expansion to connect the existing Kelana Jaya line to one that runs to Putra Heights. The cost of development for LRT3 is budgeted at RM9 billion and is due to be completed in 2016.

The Government will also start work on the second line of the Klang Valley Mass Rapid Transit (KVMRT) to run from Selayang to Putrajaya at an estimated RM23 billion cost. Construction has already begun on the first line running from Sungai Buloh to Kajang.

Currently, travelling to the northern reaches of the city such as Klang and Shah Alam can be a challenge due to limited public transport options. The KTM Commuter Line running from Sentul to Port Klang is currently the only track that connects Klang and Shah Alam residents to the centre and west of Kuala Lumpur. Unfortunately, KTM is notorious for its poor service and delays, which could drag on as long as 20 to 30 minutes. Meanwhile, Putrajaya is accessible via the Express Rail Link (ERL) from KL Central.
Elsewhere, although Kajang is accessible through networks of highways, which include the North-South Expressway through Kuala Lumpur-Seremban Expressway or through the Cheras-Kajang Highway, congestion is a perennial problem for residents. Motorists can spend hours in the traffic crawl to and fro work on a daily basis.

There are currently about 500 housing estates under the Kajang Municipal Council’s (MPKJ) jurisdiction, some 200 located along the Cheras-Kajang Highway. The rapid development, along with the construction of the Sungai Buloh-Kajang MRT line, which started in 2012, has caused the situation to get from bad to worse.

The new LRT and MRT extensions will definitely be a boon for real estate located in surrounding areas. Paired with the increasing cost of living and decreasing fuel subsidies, property in locations that are easily connected via public transportation will no doubt see an increase in demand among buyers. This could potentially contribute to higher property prices.

Some industry players opine that the measures announced for Budget 2015 are too small to have any real impact on the property market.

While more can be done to reduce transactions and curb speculation in the property market, the Government is certainly taking a step in the right direction with the YHS for first-time buyers and PR1MA to help the lower and middle income group cope with soaring house prices, as well as the upcoming GST.

The upgrade in public transport system also allows urban-dwellers to cut down on fuel and travelling time on their daily commute.

Some experts believe that the escalating cost of living, removal of subsidies and GST will translate to income levels growth. However, how the property market will pan out and whether Malaysians will be able to cope successfully with the post-GST era still remains to be seen.

source

RE: Water shortage puts private projects in jeopardy

So, we have been hearing about the recent news which is quite worrisome - that there will be a season of drought coming soon

While Penang has been blessed with Rain this August, else where in Malaysia there has been some scarcity of rain, thus water levels at containment area are seen to be dropping past "Safe" levels very quickly and the effects are truly devastating.

How does water affect real estate project development?

Water shortage puts private projects in jeopardy

PETALING JAYA, Aug 15 — More than 800 development projects in the Klang Valley are being jeopardised by the water issue in Selangor, National Water Services Commission (SPAN) revealed yesterday.

Sungai Selangor dam – Picture by Zuraneeza Zulkifli

Its executive director, Mohd Ridhuan Ismail, said these private sector projects were being reviewed by a special committee comprising the state government and the water companies.

The housing, factory and commercial projects would be individually reviewed by the committee with special attention given to smaller projects that had been given prior approval.

“The projects suffered delays or failed to get approval due to the water shortage. The reason why the developments were not approved was because it was just impossible to do so. At present, there is no water for the reserve margin required for every project,” he said.

Asked if this meant the state’s current water supply could deplete if all the projects are carried out, Mohd Ridhuan said “yes”.

However, he could not provide the total value of the projects affected.
Cloud-seeding operations are being conducted over the water catchment areas across Selangor every day to raise the water levels at the dams.

Meteorological Department (MET) deputy director-general Alui Bahari said a team comprising officers from the department and members of the Royal Malaysian Air Force would begin the day with a briefing session before heading out to fly over the dams.

“Within two to three hours, the plane would have flown over two or three areas, and the operation will be complete,” he said.

Alui said the department would then, through the use of radar technology, monitor cloud formation activity to gauge their success rate as well as for analysis purposes.

“When we are very successful, a lot of rain will fall on the catchment areas,” he said.

The department has forecast isolated storms and rain throughout the weekend in the Klang Valley, which Alui attributed to the monsoon season.

As of 8am yesterday, the water level at the Sungai Selangor dam remained at 32.10 per cent and recorded a total of 19.01mm rainfall from the day before.

- The Malay Mail

RE: How much do you need to make in Malaysia to buy / purchase a new house?

How much does one really need to make to buy a house in Malaysia?

This article that i recent read really sheds a good amount of light on this subject:

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The high income groups can afford to buy a property, the lower income groups can get help from the government. Where does that leave the middle income groups?

Image via: sunwayproperty.com

According To The Government's Skim Rumah Pertamaku (SRP), An "Affordable" House Is Priced At A Maximum Of RM400,000

(Credits: Last updated by judithyeoh 3 months ago)

• 
  Just 4-5 years ago (Date of writing: Feb 2014), it was actually possible to own a decent-sized and decent quality condominium unit in urban centers like KL / Petaling Jaya / Johor Baru / Penang for RM200,000. From 2010 up till 2012, the government had considered the price bracket of RM220,000 to be within the “affordable” housing range. This was evident when they first launched the My First Home / Skim Rumah Pertamaku (SRP) for houses up to RM220,000.
  
  loanstreet.com.my
• 
  However, towards the tail end of 2012, it was becoming increasingly evident that houses for that price were becoming more of a rarity. Genuine first time house buyers were gradually finding themselves priced out of the market. Recognizing the changing property price landscape, the government in 2013 bumped the maximum price range for qualifying for SRP up to RM400,000.
  
  loanstreet.com.my

For Lower Income Groups, RM400,000 Is Too High To Be Considered "Affordable" While Those Living In The City Can Hardly Find An Acceptable Standard Of Housing At That Price

(Last updated by meimeichu 3 months ago)

• 
  The move garnered ridicule from both sides of the spectrum for different reasons. On one end, lower income groups found it laughable that a price tag of RM400,000 for a house could even be considered “affordable” as it was far beyond their reach. On the other hand, the younger and more urbane groups who were striving towards their first home derided the ceiling price of RM400,000 as being out of touch. Their contention was that prices for an acceptable standard of housing was already priced beyond RM400,000.
  
• 
  Most new housing units are now priced well above RM400,000, rendering it unattainable to all those in the middle income group. New launches now are often priced at RM400,000 and above. In hotspots like Penang and Kuala Lumpur, the “cheapest” could be a minimum of RM500,000 per unit. So, what is the reason behind these escalating prices?
  

"While Lower Income Groups Can Apply For Government Housing Schemes And Subsidies, The Middle Income Groups Are Trapped"

(Last updated by meimeichu 3 months ago)

• 
  This is the group that is stuck in the middle income trap, they do not qualify for low cost housing and yet, they could not afford the supposed “medium cost” residential projects. This group will only be able to afford housing priced at RM200,000 per unit and above but sadly, there are not many such properties in the market.
  
  nst.com.my
• 
  For the lower income group, they can apply for the government’s public housing, low cost and low medium cost housing projects. These projects are only meant for the lower income but what about those who are not eligible for these projects?
  
  nst.com.my

The Three Main Things To Consider When Determining Your Housing Affordability Are: 

1. Available Cash, 
2. Loan Affordability, 
3. Monthly Income

To determine an affordable price point for your first property, there are a few things you need to consider. Some of these considerations include, your monthly income, cash amount you have available, and how much you can borrow.

Your loan amount depends on a number of things, including the market value or purchase price of your house, the type of property (e.g. residential or commercial), the location of the property, and your profile (i.e. age and income level).

1. AVAILABLE CASH: The Largest Upfront Costs Of Buying A Home Is The 10% Down Payment

Last updated by judithyeoh 3 months ago

• 
  Downpayment: 10% of the total purchase price OR the difference between the loan amount and the purchase price.
  
  loanstreet.com.my

Besides The Downpayment, Homebuyers Must Also Set Aside 10% Of Their House Price To Pay For Ancillary Costs

(Last updated by meimeichu 3 months ago)

• 
  The National House Buyers Association: Additionally, we have always stressed that homebuyers must set aside up to 10% of the house price to pay for ancillary costs such as legal fees and stamp duty, and do not expect them to be burdened by these things as it is part and parcel of buying a house.
  
• 
  1) Stamp duty for transfer of ownership title (also known as memorandum of transfer or MOT)
  2) Sale & Purchase Agreement (SPA) legal fees
  3) Stamping for SPA – Less than a hundred Ringgit
  4) SPA legal disbursement fee – A few hundred Ringgit
  5) Loan facility agreement legal fees
  6) Stamp duty for loan – 0.5% of loan amount
  7) Legal disbursement fee for Loan Facility Agreement – A few hundred Ringgit
  8) Fee for transfer of ownership title – A few hundred Ringgit
  9) Mortgage Reducing Term Insurance – Think of it as a life insurance for your home loan. It can come up to RM1,000 or more, but this may be optional with some banks.
  10) Government Tax on Agreements – 6% of total lawyer fees
  11) Bank processing fee for loan – RM200
  *Actual figures may differ.
  

In The Scenario Of A RM400,000 House Purchase, The Initial Entry Costs That A Homebuyer Must Pay Upfront Is RM55,020

Last updated by meimeichu 3 months ago



Firstly, are the entry costs of purchasing a house. The table above illustrates the kind of up-front cash one must have to purchase a house in a given price range. There is the standard 10% down payment, along with the rest of the Legal Fees and Stamp Duties which follows a scheduled fee structure.

2. LOAN AFFORDABILITY: If A RM400,000 House Is Financed At 90% Loan, The Monthly Instalment Needed To Pay Over 30 Years Is RM1,824

Your loan amount depends on a number of things, including the market value or purchase price of your house, the type of property (e.g. residential or commercial), the location of the property, and your profile (i.e. age and income level).



The table above indicates the estimated minimum level of household income one must have to qualify for a loan of the given amount in the year 2014. It also shows clearly the estimated monthly installments one must pay. These calculations have not even taken into consideration any other commitments that you may have!

Most Banks Stipulate That Borrowers Repay Their Home Loans In Full Before They Are 65 - 70 Years Old

Last updated by meimeichu 3 months ago

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  Most banks stipulate that borrowers repay their home loans in full before they are 65 or 70 years old.
  

3. MONTHLY INCOME: How Much Do You Need To Earn A Month? The Total Monthly Instalment After Factoring In Your Existing Bills SHOULD NOT EXCEED 70% Of Your Net Income

(Last updated by judithyeoh 3 months ago )

To gauge the maximum property price you can afford, it is always best to ensure that the total monthly installments on all your outstanding loans, and your prospective home loan do not exceed 70% of your net income. Net income refers to your income after deductibles, such as income tax and EPF.

According To This Profile, A Homebuyer Looking To Purchase A House At RM400,000 Should Earn A Net Monthly Salary Of RM3,500

 (Last updated by meimeichu 3 months ago)

Based on the example profile, the purchaser is eligible for the maximum home loan tenure at 35 years. For borrowers above 30 years of age, the maximum tenure is tied to a borrower’s age. Most banks stipulate that borrowers repay their home loans in full before they are 65 or 70 years old.
imoney.my

From the calculation above, the monthly installment and other debt commitments do not amount to more than 70% of monthly net income. Hence, with a net monthly salary of RM3,500, you are most likely able to afford a RM400,000 property.

According To A Survey By Sime Darby Property Bhd, The Average Monthly Household Income Needed To Own A House In The Klang Valley Is RM14,580
(Last updated by judithyeoh 3 months ago)

You must have an average household income of RM14,580 a month to afford a home in the Klang Valley, according to a recent study. The study – spearheaded by Sime Darby Property Bhd in collaboration with the Faculty of Built Environment of Universiti Malaya – takes into account the current household spending trend, price of homes and mortgage rates.
thestar.com.my

It found that certain groups of buyers interested in strategic areas can have access to houses that are priced at 56 times their household income.

The study also found that this same group can afford to spend up to 26% of their monthly household income to service a mortgage.

thestar.com.my

The Good News Is First Time Homebuyers Could Be Eligible For These Incentives:
(Last updated by meimeichu 3 months ago)

1.If you are a first time buyer, there are certain schemes and methods that you can take advantage of to ease your burden of saving up enough cash. These include:

1. A 50% Stamp Duty Discount on Sale and Purchase Agreement for properties up to RM400,000
2. Skim Rumah Pertamaku, which allows you to take a 100% loan for properties up to RM400,000, negating the need to pay the initial 10% down payment
3. KWSP’s scheme that allows you to withdraw money from your EPF Account II to help pay for the down payment of the house. 

The Government Has Recently Launched The Skim MyHome 2014 To Provide A RM30,000 Subsidy For Eligible Homebuyers

(Last updated by meimeichu 3 months ago)

Belum Miliki Rumah Pertama Anda? Anda Mungkin Layak Memohon Skim MyHome 2014

Satu lagi usaha kerajaan dalam membendung ledakan kenaikan harga rumah telah diperkenalkan bagi meringankan beban rakyat dalam memiliki rumah pertama.

says.com

source

RE: Boot tenants out or face court action, Penang tells low-cost homeowners

I remember a friend of mine telling me its easy to be a property tycoon! Just get a form for one of those low cost (LC) house units at Komtar level 3 and then you are on the way to rent out your place to gain some income!

Simple right?

Well, to those have done that..the Penang government is taking action and they are serious 

Check this article out:
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Boot tenants out or face court action, Penang tells low-cost homeowners

By Opalyn MokApril 8, 2014

The Penang government believes there are thousands of low cost home owners who rent out their units. ― Picture by K.E. Ooi
GEORGE TOWN, April 8 ― Low-cost homeowners must evict their tenants and move into the units themselves within the month or face possible jail time, the Penang government warned today.
Housing development state executive councillor Jagdeep Singh Deo told the owners that renting out the homes is a breach of their low-cost housing contracts.

“So, this Friday, at the state exco meeting, I will have the state legal advisor go through the legal notices that we will be sending to all LC owners to evict their tenants in 30 days time,” he told a press conference this morning.

Under the sale and purchase contracts signed by LC purchasers with the state government, owners are prohibited from renting out their units and must live in it themselves.

The contract also states that if they fail to do so, the state reserves the right to repossess the homes and charge them in court for cheating, under section 420 of the Penal Code, which stipulates a jail term of not more than a year and not less than 10 years or whipping or fine upon conviction.

“If the LC owners fail to fulfil the contract conditions and refuse to comply with the legal notices we send to them, we may have to initiate criminal proceedings against them,” Jagdeep said.

He said the homeowners should not complain as when applying for the units, they had claimed they needed the homes for themselves.

Jagdeep added that the state has been receiving many complaints on social problems due to a high number of foreign workers are renting LC units in residential areas in the state.
“We are looking at thousands of LC units in the state being rented out, many are to foreign workers,” he said, adding that he does not have any exact figures.

Jagdeep said the state is currently keeping vigilance over a block of flats with 226 units that it believes have been rented out to foreign workers.
He said once legal notices have been sent out, these foreign workers will be evicted and they will have no where to go.

“This is a two-pronged problem, if we get the LC owners to evict them, our next problem will be there is no place for them to go which is why it is time the state look into setting up designated foreign workers hostels,” he added.
Jagdeep said he will push for a foreign workers hostel at the next state legislative sitting, modelled after the one in Singapore.

“If we look at the foreign workers hostel in Singapore, it is a very nicely planned space covering 10 acres complete with in-house shops facilities, sports facilities and security which are better than the deplorable conditions of some of these places that the foreign workers are living in now,” he said.
He said the state will have to work out a mechanism to set up such a hostel, either through public private partnership or for developers to build and then rent.

source

RE: Most expensive states to rent in M’sia

What is happening with the real estate market today?

Because of the downtrend of our Ringgit performance (as vs against the USD) and also the economic inflation that is happening, allot of young people have come to a stage where owning through buying/ purchasing a property is not really much of an option anymore.

Because of that, many who are not from the main cities opt to work and relocate to bigger cities where prospect opportunities are high and jobs are plentiful.

But then, that brings about the issue of cost of living, and many are forced to rent properties. Now, lets take a look at this very informative article on this issue:

Most expensive states to rent in M’sia
March 27, 2014
By Michelle Brohier



For many Malaysians who can’t afford the downpayment on a new home; renting is the only option (unless they have option and are keen to live with their parents til death do them part). We previously covered some of the cheapest places in Malaysia to rent but where is the most expensive?

Selangor
With many thriving cities within Selangor such as Petaling Jaya and Damansara, it’s no wonder the prices of rental here are pretty expensive and they vary in different areas as well. In Ara Damansara, renting a townhouse costs RM11,000 a month which is fully furnished and has 5 bedrooms and 7 bathrooms. A 3-storey terraced house in Selayang is being rented out at RM9,200 a month where it has 7 bedrooms and 5 bathrooms. Another expensive rental area to look out for would be Sungai Buloh where a 2-storey terraced house with 6 bedrooms and 6 bathrooms is being rented out for RM9000 a month.

That’s not to say you can’t find cheaper rentals (in the region of RM2,000) – it’s just that they wouldn’t be in areas such as Petaling Jaya, Damansara or the heart of Kuala Lumpur. Some time back, particular local newspapers ran headlines about how the Klang Valley is still affordable. These figures beg to differ. Or perhaps the definition of ‘affordable’ has changed.

Penang

Batu Ferringhi and even Georgetown can definitely be an expensive place when it comes to rental. On average, you can get a terraced house around these areas for around RM12,000-RM15,000 a month, with various stages of furnishing and with mostly 4-5 bedrooms and bathrooms. There are even other rather expensive areas such as Tanjung Tokong where a partially furnished house cost up to RM9,500 a month, and it comes with 5 bedrooms and 6 bathrooms.

Again, cheaper rentals are possible but not that much more so. Of course, be ready to stay in tiny flats either in ill-repair or overlooking cemeteries.

Johor

It’s possibly a little surprising to see Johor in this list, but there are properties there that are being rented out at RM18,000 a month which is even more than the current listing in Kuala Lumpur! This one is in Jalan Pelita and it’s a 3-storey house with 4 bedrooms and 4 bathrooms. A 2-storey terraced house costs up to RM15,000 a month in Skudai and it actually has 5 bedrooms and 5 bathrooms, with even more land than the other so in the end, the location plays a part when it comes to Johor. There are other areas such as Taman East Ledang where the rental price for a 2-storey terraced house costs between RM11,000-RM13,500.

This could be because of many Singaporeans or Malaysians working in Singapore choosing to live in JB and commute to the island. Singapore property prices are known to be ludicrous so the amounts above are likely a ‘steal’ in comparison.

Kuala Lumpur



While Johor is still pretty expensive, Kuala Lumpur still has the most number of expensive rentals which shouldn’t be sneezed at as well, especially with units such as a 3-storey terraced houses. One 3-storey terraced house in Casaman, Desa ParkCity in Kepong can cost up to RM15,000 a month for a 5 bedroom, 4 bathroom house in a unit that is gated and guarded as well. Another is located in Ampang with a rental price of RM13,000 a month, also with 5 bedrooms and 4 bathrooms.

If you’ve guessed the most expensive states in the right order, then you must be just as aware of how expensive rentals can be. While it’s still possible to find rent in these states that are affordable for flats, landed property will definitely cost a lot more. Again, it’s not impossible to rent but you may find yourself in less ‘attractive’ parts of the city.

source

BNM: One template for housing loans of RM500,000 and below from Jan 1

So I was wondering what is happening in the banking sector on the handling of real estate/ properties of Malaysia under the value of RM 500,000 in the year 2014? 

This is what I found out:

KUALA LUMPUR: All commercial banks must have a standardised documentation for conventional housing loan and home financing agreements involving a principal sum of RM500,000 and below.

Bank Negara Malaysia (BNM) said on Friday this would take effect from Jan 1, 2013.

“The primary objective of this initiative is to enhance borrowers’ understanding and comparability of the key terms and conditions of the loan agreements, including the responsibilities and obligations of borrowers and financiers under such agreements,” said the central bank

BNM said banking institutions would have to adopt this template for all conventional housing loan and home financing agreements offered to individuals for the financing of residential properties valued at principal sum of RM500,000 and below.

It explained the principal sum referred to only the loan amount for the purchase price of the residential property.

It added the loan or financing could however extend to cover renovation costs, mortgage reducing term assurance (MRTA) or such other insurance premium as may be permitted by the banking institution and legal fees incurred in connection to the purchase of the property.

BNM said this initiative was a collaboration between the central bank, PEMUDAH and the financial industry to enhance the efficiency of business processes and improve the quality of service delivery in the financial services sector.

- Malaysia Real Estate News
The Star

Welcome to the property / real estate blog

Hello there,

Welcome to the friendly new property blog where we would be discussing about Properties/ Real Estate in Malaysia, especially Penang Island! 

This is a blog where we will re-post news articles, flashbacks, interesting pointers and even expert/ professional views and takes on the property market. 

We also love to post up random stuff that is related to tourism and also potential market growth information. 

I hope that our posting will be beneficial to you and will help you make right decision when considering property/ real estate matters. 

Thanks and looking forward to more posts!~