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More went under the hammer in 2018

The number of properties put up for auction is rising. Data collated by online auctions listings platform

AuctionGuru.com.my showed that there was a total of 32,611 properties worth RM15.56 billion that went under the hammer in 2018, an increase of 15.4% year-on-year (y-o-y) in volume and 27.6% in total value.

AuctionGuru.com.my executive director Gary Chia has observed that the number of newly completed properties put up for auction rose last year.

“These new [foreclosure] properties were handed over to owners less than three years or five years ago, some are completed units that were sold previously under the Developer’s Interest Bearing Scheme (DIBS). There were also more foreclosure properties in new developments such as in Semenyih and Ampang,” he tells EdgeProp.my.

Introduced by property developers in 2009, DIBS allowed buyers to purchase a property with almost zero entry cost, no down payment and no bank loan, until the property is built and handed over to the buyer.

The easy homeownership scheme spurred many to jump on the property investment bandwagon. It was abolished in 2014.

Among the properties which went under the hammer last year (2018), 85.5% of them were residential properties (27,877 units worth RM10 billion), according to AuctionGuru.com.my data.

About 11% or 3,663 cases were commercial properties worth RM4 billion while there were 1,071 land plots worth RM1.5 billion, making up around 3.3% of total cases.

A test of holding power

According to Chia, the past two years have been a testing period for property investors as most of the units purchased during the property boom (in 2012 and 2013) are now completed and handed over.

“For those speculative investors, who themselves are wage earners struggling to make ends meet, they will find themselves stuck in this buyers’ market where choices are many and varied,” he notes.

What’s most challenging about the current property market, Chia says, is that salary increments among wage earners have not caught up with property price growth thus hampering affordability, while banks are cutting down exposure to mortgage loans due to concerns that borrowers may have problems servicing their monthly instalments.

Difficulties in securing mortgage loans have also affected auction market transactions as Chia notes that a number of successful bidders have seen their 2% deposit forfeited as they could not obtain a loan.

“Most of the cancelled cases were foreclosure properties priced below RM500,000. We are cautious of the current trend where developers and the government are focusing on affordable housing below RM500,000; the problem is not the price, it’s the loan servicing ability of low- and middle-income buyers,” Chia reckons.

Penang

Khoo & Associates Realty business development manager Long Soo Keat has noticed that more newly completed high-end, non-landed homes went under the hammer recently, since the fourth quarter of 2018.

According to Long, the primary and secondary property markets in Penang continue to be robust due to high demand, especially on Penang Island. Houses listed on the sub-sale market normally find buyers within a relatively short time. “Only certain properties in bad shape will see no takers or be put up for auction,” he says.

“We normally only receive one or two foreclosure cases a month, or sometimes none. A majority of the properties are either low-cost housing or properties which are in bad condition.

“However, the number of foreclosure cases have increased to around three or four a month and some of the properties are high-rise residences priced around RM600,000 and above since 4Q2018,” says the auctioneer from Penang.

East Malaysia

Over in East Malaysia, Ernte Real Assets Sdn Bhd vice-president (strategy and planning) Clement Ang notes that there are no significant changes in terms of the number of foreclosure properties.

“Unlike the Klang Valley, Penang or Johor Bahru, East Malaysia seldom experiences oversupply as most property purchasers are own-stay buyers. Only a small portion of high-income earners could afford a second or third property for investment. Therefore, developers will build according to market demand,” he explains.

AuctionGuru.com.my data shows East Malaysia (Sabah and Sarawak) had 2,389 properties valued at RM550 million that went under the hammer in 2018, the second lowest among the regions.

East coast

The region that has the lowest number of foreclosure properties is the east coast region — Kelantan, Terengganu and Pahang — which registered 1,206 auction cases worth RM550 million last year.

Central region tops the list

The central region which includes Selangor, Kuala Lumpur and Putrajaya has the highest number of auction cases in 2018 — a total of 17,712 properties valued at RM9.7 billion.

The Northern region (Perlis, Kedah, Penang and Perak) is next with 6,860 auction properties worth RM1.9 billion followed by the Southern region (Johor and Melaka) with 4,444 properties valued at RM2.3 billion.

Selangor, Kuala Lumpur, Johor and Penang have the highest number of auction properties.

Selangor saw the most properties put up for auction last year with 12,742 properties worth RM6 billion while Kuala Lumpur recorded 3,177 cases valued at RM2.8 billion.

Johor has a total of 3,719 properties worth RM2.1 billion and Penang 2,599 properties valued at RM955 million.

Growing interest

The auctioneers have also noticed a growing interest in auction properties based on enquiries although this has not translated into real sales.

Ernte Real Assets’ Ang notes that he receives dozens of phone calls daily to check on auction listings. The majority of them are serious buyers who have done their price research and are keen to know the details of the property.

“But when it comes to bidding, there is no significant increase in the number of bidders and transactions. Perhaps, the interested buyers still see room for the prices to go lower,” he opines.

According to Ang, only one or two deals are concluded for each auction session which could see an average of 20 properties going under the hammer.

“Before 2018, around 25% to 30% of the auction cases could find new buyers in each session, regardless of property type,” he says.

Good deals, no takers

Chia from AuctionGuru.com.my has seen quite a number of good deals on the auction market — properties with their reserve prices at below market price but with no takers.

For instance, an auction listing on EdgeProp.my of a two-storey terraced house in Bandar Hillpark in Saujana Utama, Selangor has a reserve price of RM328,000, or around RM234.45 psf for a leasehold house with land area of 1,400 sq ft (built-up of 1,500 sq ft).

A secondary market listing on EdgeProp.my of a similar property is asking for RM430,000 or an average RM307.14 psf based on land area size. Compared with the sub-sale listing, the auction property price is 30% lower.

Despite the many negative perceptions over auction properties, auctioneers see good opportunities for buyers now to shop for properties in their desired location and within their budget.

However, many are reluctant to buy auction properties owing to concerns over hidden costs such as maintenance fees and utility fees owed by the previous owners, but Chia explains that in most cases, the financial institutions are willing to undertake these costs.

“However, there are also some cases where the banks do not undertake the cost. To find out, the bidders just need to check with the auctioneers, during or before they bid for the property,” he says.

Chia offers another tip — let the property be auctioned a few more rounds. Every time a property is up for bid, the property reserve price will drop at least 10%. The longer you wait, the higher the chance of one getting the property at far below market rate.

However, the overall auction buying process requires a lot of research. Ang opines that for own-stay first-time homebuyers, the advantage of purchasing auction property is that it is already built and one could get to know the neighbourhood before making a decision.

 

Source: Edge Property

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How effective are property makeovers?

To property owners eyeing rental income, finding a reliable tenant in a short time is important to maximise rental yield as the longer the property is left empty, the higher the holding cost such as monthly instalments and maintenance fees, for the owner.

According to Ingenious Makeover Sdn Bhd director Thormy Goh, there seems to be an increasing number of property owners who have turned to the rental market because they could not find a buyer for their properties in the secondary market. And based on his experience, well-furnished units are more appealing to tenants.

“Unlike purchasing a property where buyers are price sensitive, tenants would not mind paying a bit more for a unit as long as it meets their daily needs and desire for lifestyle living. To attract such tenants, interior design plays an important part,” says Goh.

He says a well-designed and fully-furnished unit could fetch around 20% higher rental than a bare unit or those with basic furnishing such as ceiling fan and water heater.

EdgeProp.my’s current rental listings showed that a basic furnished unit (built-ups of 1,112 sq ft to 1,202 sq ft) in Pearl Suria at Old Klang Road, Kuala Lumpur, is asking for RM2,000 to RM2,200 a month; while a partially furnished unit’s asking rental ranges between RM2,200 and RM2,600 and a fully-furnished unit is asking for a monthly rental of RM2,600 to RM2,800.

Property makeover company The Makeover Guys Sdn Bhd managing partner Vince Koh recalls his experience as an inexperienced landlord who tried to get higher rental income.

“I was once a property investor looking for short-term gain but realised that speculation was not a sustainable way of investment. Since I couldn’t find the buyer and I was quite tight on cash, I decided to renovate my apartment in Bandar Utama and hoped to rent it out with higher rental to cover my monthly instalment,” he tells EdgeProp.my.

He spent around RM12,000 to purchase the basic fittings and appliances as well as some loose furniture such as sofa, kitchen cabinet and beds.

“The unit was rented out at RM1,000, which was around market price. But I realised later that if I had spent a little more effort and money on interior design and furnishings, I might be able to get better rental,” he adds.

Koh’s business partner Gavin Liew, who is also the managing partner of The Makeover Guys, took a different approach in property investment, targeting premium tenants.

Liew had wanted to rent out his first property — a unit in Subang Perdana Apartment, Subang Jaya, at a rental of over RM1,000, which most real estate agents had told him would be an unachievable target.

But he was unperturbed. The first thing Liew did was to renovate and give the place an interior makeover.

“It took me around five months to complete the task. It was a tiring process as I handled everything myself, from the design to looking for contractors, to hunting for items such as fittings and furniture, and then to decorate the unit,” says Liew.

But all the hard work paid off. After the five months of work and an investment of around RM13,000, the unit caught several tenants’ attention almost immediately and within a month, it was rented out for a princely sum of RM1,500 a month — a record high in Subang Perdana back in 2010, according to Liew.

“Interior design is like icing on the cake, it is okay to do without but if it’s nicely done, it could have a significant impact on rental or pricing,” Liew offers.

Competing for quality tenants

Established since 2015, The Makeover Guys observed that the local rental market has seen significant changes in its tenants’ profile, but most property owners have not caught up with the change and many especially the older generation, consider those who rent as those who could not afford to buy and own their own homes, says Liew.

However, times have changed. According to Liew, nowadays, many young professionals who work in city centres are high-income earners who prefer not to be tied down by a property purchase.

“For the younger generation, they can choose to work and stay in any place or country in the world. That’s the main reason they choose not to own a property. For these young professionals, they want instant gratification, they don’t mind paying higher rental if the apartment fulfils all their requirements, both daily and lifestyle needs,” he opines.

Koh concurs, adding that traditional fully-furnished units that come with basic furniture and air-conditioning units no longer attract tenants the way they used to do due to rising affluence.

If property owners could spend more effort and investment to create a stylish-looking home, they would have more bargaining chips in getting high rental value and good quality tenants.

MIP Properties negotiator Catherine Wong says nice interior design and home furnishings raise a property’s attractiveness to tenants with deep pockets.

“People appreciate beautiful interiors that also offer everything that one needs in a home such as built-in wardrobes, cabinets, appliances, loose furniture and even cutlery!” she adds.

To landlords looking for expatriate tenants, Wong advises them to engage professionals to refurbish or design the unit’s interiors.

“Interior design is important to serve the aesthetic purpose and to improve the living quality,” says the real estate negotiator who was formerly an interior designer.

One of her clients, after heeding her suggestion to makeover a 2,020 sq ft unit at Residensi 22 condominium in Mont’Kiara, had attracted an expat tenant who was willing to pay RM8,500 a month for the tastefully designed, fully furnished and ready-to-move-in unit.

EdgeProp.my listings data show that the average asking monthly rent for units at Residensi 22 is RM7,995 a month or RM3.64 psf.

A value-add tool

Many landlords in Malaysia choose not to renovate or decorate their rental property as they assume that it requires heavy investment to hire an interior designer and to carry out the renovation or design works. Many fail to realise that a thorough makeover that involves hacking walls and renovation works is often not needed because sometimes minor touch-ups can give amazing results, says The Makeover Guys’ Koh.

In one of their early projects, the owner of a bungalow with a 5,000 sq ft built-up in Damansara Heights, Kuala Lumpur sought their help to renovate the property as it had been put up in the market for sale for some time but failed to attract buyers.

“It was a well-maintained and fully-furnished bungalow. It even has an expensive chandelier in the living room but the problem was the interior design which was rather old-fashioned, so it was difficult to attract current trendy young buyers,” says Liew.

With a budget of around RM65,000, Liew and Koh changed most of the furniture in the house, the lights as well as some slight touch-ups by creating feature walls, adding in a carpet and accessories like decorative items and plants.

Following the makeover, the property was sold at the asking price without any negotiations because the buyer liked the interior design besides the address.

“Evoking emotion [in the potential buyer or tenant] is important if you want to get a better deal,” adds Liew.

Meanwhile, MIP Properties’ Wong advises owners of old houses in established areas to consider giving their property a facelift with renovation wet works, such as repainting the entire property, changing old bathroom tiles or parquet floorings and changing the light fittings to give the house a new look.

“With the wet works done, even without new furniture, the house will still get a fresh look and be more attractive to potential tenants,” she offers.

Although location could be the fundamental factor that supports property values, maintenance and interior upgrades are just as important for owners to have better bargaining power when selling or renting out their properties.

On the other hand, one should not go overboard. Goh from Ingenious Design advises property owners to be prudent about spending on interior design in order to maximise rental yield. Owners of normal rental high-rise residences should set aside around 5% of the property price (or market price if you have bought the property decades ago) for renovations and furnishing while owner-occupiers should consider setting aside around 20% or not more than 30% of the purchase price to ensure future sales gain as renovations usually don’t count in property valuations.

 

Source: Edge Property

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Micro-housing? A good idea but more details needed

Is Malaysian housing heading towards micro-flats like in Hong Kong? The answer is NO, at least not for the foreseeable future.

There are many things which the government can still do even if buyers prefer to buy closer to their places of work instead of families which may buy into townships further away.

According to a report in TheStar recently, Kuala Lumpur City Hall (DBKL) says it will be providing single people of low income in the capital city, with micro-housing facilities this year.

It says that it is currently refurbishing an existing building along Jalan Tuanku Abdul Rahman to be turned into a capsule hotel with residential units for them.

This is what Kuala Lumpur mayor Datuk Nor Hisham Ahmad Dahlan said of the scheme which is targeted at the B40 group. “But once they are married, they will not be eligible for micro housing.”

The mayor shared that the rental would be RM100 per month and that there would be a total of 200 micro-housing units for men and women.

He said the micro-housing scheme was a way to give back to society just like the free GoKL buses. The rental fee and application method would be finalised soon.

However, more details are needed, and sooner rather than later. For instance, the issue of security is rather pressing. Will there be security measures in place for residents of these micro-homes?

What about rules and regulations? The micro-housing units are specifically for singles. So is it allowed if certain people bring company home with them? And who will enforce these rules and regulations?

If this is really aimed at the B40 group, then it’s imperative to ensure the micro-housing units are located close to public transport stations.

200 units @ RM100 = RM20,000 per month. Has the mayor found a management company that can ensure proper maintenance of these units?

It is sincerely hoped moving forward, maintenance becomes key to everything we do. Earlier article here.

This is so that there’s a future for the programme and it doesn’t become a case of just rushing into the building of these micro-housing units only to rebuild it a few years later, at an even greater expense.

It’s important that it’s sustainable.

Source: Free Malaysia Today

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House buyers to enjoy 10% discounts, stamp duty exemptions for next 6 months

The next six months may be a good time for house buyers to get their dream home, with discounts and exemptions from stamp duty being offered.

Property developers have agreed to offer at least a 10% discount on all unsold properties as part of the ongoing public-private Home Ownership Campaign (HOC) 2019.

During the six-month campaign until June this year, house buyers will also be exempted from stamp duties for residential units priced between RM300,000 and RM1 million.

Real Estate and Housing Developers’ Association (Rehda) Malaysia, in partnership with the housing and local government ministry, will be holding a property expo at the Kuala Lumpur Convention Centre (KLCC) from March 1 to 3 in conjunction with the campaign.

Properties priced between RM150,000 and RM2.5 million will be on offer.

Finance Minister Lim Guan Eng, who was present at the Rehda press conference, said the government had previously introduced several incentives in the Budget 2019 to make it easier for the bottom 40 (B40) and the middle 40 (M40) groups to own homes.

“This included initiatives such as the RM1 billion affordable housing fund launched two days ago.

“Today, we are announcing the stamp duty waiver for first-time house buyers for houses priced up to RM1 million.

“This campaign with Rehda is aimed at reducing supply overhang that is currently hampering the market, with developers unable to sell their properties.

“This discount by developers, along with the government’s stamp duty waiver, is a win-win formula.”

Present were Deputy Housing and Local Government Minister Raja Kamarul Raja Bahrin, Rehda president Soam Heng Choon and HOC organising committee chairman NK Tong.

Lim hoped developers would offer higher discounts.

“I hope it will not be just 10%, but at least 15 to 20%. That will add more oomph to the campaign.”

Stamp duty waiver

The stamp duty waiver, Lim said, is a follow-up action by the government after the sales and services tax (SST) exemption on main building materials such as bricks, cement and sand, as well as construction services.

Lim said these initiatives were aimed at reducing the price of homes.

He announced that there will be an exemption of stamp duty for the purchase of houses priced up to RM1 million by first-time buyers.

He said this exemption also reduces the rate for houses priced up to RM2.5 million.

“For the first RM1 million, stamp duty is exempted. For the balance of the price, a stamp duty of 3% will be charged.”

Previously, house buyers had to pay a stamp duty of 1% for the first RM100,000, 2% for the subsequent RM100,001 to RM500,000, and 3% for the next RM500,001 to RM1 million.

Lim said the stamp duty on loan agreements has also been exempted, as compared with the previous 0.5% rate.

Malaysia has seen an increase in the property supply overhang, which stood at 30,115 in the third quarter of last year. This is a 48% increase from the corresponding period in 2017.

“Based on data by the National Property Information Centre (Napic), this involves RM19.5 billion.

“With this campaign, the PH government hopes to reduce this supply overhang.

“This will have a positive impact on the country’s financial standing and generate healthy economic growth,” Lim said.

Government bodies such as the housing and local government ministry, developers UDA Holdings Berhad, Perbadanan PR1MA, the National Housing Company (SPNB) and equity fund Permodalan Nasional Berhad (PNB) will also take part in the HOC expo.

The expo will be officially launched on March 1 at the Kuala Lumpur Convention Centre by Prime Minister Dr Mahathir Mohamad. In tandem with this expo, similar expos are also being held throughout the country.

Source: Free Malaysia Today

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Property market: Mildly positive and ‘less painful’

At a talk entitled, “The key driver for property demand will always be affordability” during the Starproperty.my Fair 2018 in KLCC, the audience was asked about Budget 2019.

“How many of you here thinks Budget 2019 is positive for you?” No one raised their hands.

Perhaps they have yet to feel the effects of Budget 2019 since it will only start next year. Moving on, the audience was asked if they believed property prices were already too high. Most nodded their heads.

Most were owners of properties and not first-time home owners. Perhaps this explains the no-show of hands earlier, as Budget 2019 is quite focused on first-time home buyers from all the measures introduced by Finance Minister Lim Guan Eng.

In an article in NST, Henry Butcher Malaysia was quoted as describing Budget 2019 as “mildly positive”. The reason? The positive GDP growth forecasts of 4.8% and 4.9% next year and in 2020. This should provide support for a stable property market.

With regard to the continuation of the MRT Sungai Buloh-Serdang-Putrajaya and Light Rail Transit Line 3 after costs were cut, the company said the following:

“This is certainly sweet news to property developers who have purchased land along these rail lines to take advantage of the enhanced accessibility, as well as investors or house buyers who have invested in properties near the proposed stations along these lines in the hope of enjoying strong capital appreciation when these rail lines become operational.”

By the way, the MRT SSP and the LRT 3 were already part of the property market and continuation should not be considered as positive from the Budget 2019 perspective.

As for Henry Butcher Malaysia’s “mildly positive” assessment of Budget 2019, perhaps what they meant is that they are neutral on what Budget 2019 will bring but thinks that the economic growth will support the property market.

Meanwhile, a developer in the same property show said many potential buyers wanted to wait till 2019 to buy due to current uncertainties.

When asked if most were first-time home buyers, he answered, yes.

It is possible that the market needs a bit more push, and it’s not enough to only rely on first-time home buyers only.

Source: Free Malaysia Today

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Banks’ profits an important sign for property market too

When banks are earning higher profits, that’s good for all industries, right? Basically, yes.

This is because in a bad economy, businesses will not be borrowing too much for expansion. Banks will also be really selective as they do not want their Non-Performing Loans (NPLs) to go up due to some borrowers being unable to service their debts.

There’s also talk about the P2P taking businesses away from the banks.

Frankly, this is still way too early to tell. Even in advanced economies, conventional banks remain much larger than any other alternative fundings.

In an article “Banks stay on positive path after maintaining growth in 3Q18” in TheMalaysianReserve, it was reported that six of Malaysia’s eighth-largest banking groups posted higher earnings during the quarter except for Malayan Banking Bhd (Maybank).

Public Bank Bhd meanwhile recorded a higher net profit a year ago due to a one-off gain.

AmInvestment Bank Bhd analyst and senior VP of domestic equity, Kelvin Ong said, “There was a slight slowdown on topline growth, but profits are tracking within expectations. Non-interest income (NII) was affected by market activities, and the trend was seen not just at Maybank, but at other large banks as well. We were expecting NII to be weaker because of market volatility.”

Some results:

• Maybank’s net profit slipped 3.4% to RM1.96 billion in 3Q18 from RM2.03 billion last year.

• CIMB Group Holdings Bhd recorded a 4.4% rise in earnings to RM1.18 billion in 3Q18, from RM1.13 billion a year earlier.

• Public Bank’s 3Q18 earnings declined 1.4% to RM1.38 billion from RM1.4 billion a year ago.

• RHB Bank Bhd’s net profit jumped 18.4% to RM578.69 million in 3Q18 from RM488.83 million previously.

• Hong Leong Bank Bhd posted double-digit growth in net profit for 3Q18, with earnings up 10.6% to RM706.92 million from RM638.97 million previously.

• AMMB Holdings Bhd’s (AmBank) net profit climbed 5% to RM348.15 million in its second quarter ended Sept 30, 2018 (2Q19), from RM331.47 million last year.

• Alliance Bank Bhd’s earnings jumped 14.4% to RM140.52 million in its 2Q19 from RM122.8 million last year, its highest quarterly net profit in three years, on stronger net income.

• Affin Bank Bhd, the smallest of the eight players, saw net profit rise more than threefold to RM144.56 million in 3Q18 from RM39.9 million last year.

Always note the banks’ profits because it is a barometer of the country’s economic health. This is a good report card because it comes out every three months.

NPL will always be one important sign of a potential property bubble burst. Here’s that earlier article.

Remember the 1998 crisis? It was not a happy time for banks. When the economy continues to grow, the most competitive bank will earn more and well, the tide lifts all boats.

Source: Free Malaysia Today

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Stamp duty exemption for first-time house buyers from 1 January 2019

The increase of one per cent in stamp duty for the instrument of transfer for property exceeding RM1 million to RM 2.5 million is now effective July 1, 2019.

In a statement today, the Finance Ministry said the government would maintain the current stamp duty rate for six months from Jan 1 to June 30, 2019 to encourage the sustainability of activities in the real estate sector.

The government had previously during the tabling of the 2019 Budget, announced that the stamp duty would be raised from three per cent to four per cent for this category effective Jan 1, 2019.

Finance Minister Lim Guan Eng said the Pakatan Harapan government was very concerned and fair in determining a sufficient time frame for the transfer process to be undertaken in the interim before the new stamp duty becomes effective.

“As announced in the 2019 Budget, the government had agreed to grant a 100 per cent stamp duty exemption to first time house buyers for properties priced between RM300,000 to RM1 million,” he added.

He said for houses priced up to RM300,000, stamp duty is exempted on the instrument of transfer and loan agreement for the sale and purchase executed between Jan 1, 2019 to Dec 31, 2020.

“For homes priced between RM300,001 to RM500,000, the instrument of transfer and loan agreement is exempted, but limited to the first RM300,000, for the sale and purchase agreement completed between July 1, 2019 to Dec 31, 2020.

“However, the exemption is limited to the instrument of transfer for the purchase of houses priced between RM300,001 to RM1 million from any housing developer, from Jan 1, 2019 to June 30, 2019,” Lim said.

He also said the exemption of the stamp duty is aimed at continuing to encourage first time house purchases by Malaysians, improving the purchase of unsold units from developers, as well as boosting the property market,

“This is also a move towards overcoming the increasing residential property overhang,” Lim added.

Source: Penang Property Talk

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Property glut made worse by high-priced new homes, says house buyers’ body

PETALING JAYA: The number of unsold properties will continue to rise if developers keep building properties that the majority of people cannot afford, says the National House Buyers Association (HBA).

It said developers should revisit their definition of “affordable housing” by taking into consideration the actual affordability of the common man and not classify these as RM500,000 and below.

“The situation of unsold properties or ‘overhang’ is only going to get worse if those in the Real Estate and Housing Developers’ Association (Rehda) and other developers continue to build properties which are beyond the income levels of the majority of our people,” HBA secretary-general Chang Kim Loong told FMT.

He said HBA had time and again warned of the mismatch between house prices and salaries of consumers needing houses.

“It’s just not affordable,” he said in commenting on data published by the National Property Information Centre (Napic) which showed that the number of unsold units in the country increased to 30,115 units in the third quarter of this year.

Chang Kim Loong

There was an increase of 48.35% compared to 20,304 units in the same period last year.

Based on the report, the properties involved a total of RM19.54 billion.

Chang said housing developers needed to build more “really” affordable houses that cost between RM150,000 and RM300,000.

He said housing developers would either need to give “real” discounts or choose to stubbornly wait for the economy to pick up again in order to sell these unsold properties.

“Instead of giving freebies like free legal fees, free stamp duties, free furniture, free two years’ maintenance charges, extra car park, or cash back guarantees, housing developers should give actual discounts off the sales price.

“As an example, actual sales price minus 20% off. They must also build the right product at the right place with the right pricing and the right numbers.”

Veteran property expert Ernest Cheong agreed, saying the number of unsold units would continue to rise if the prices kept increasing.

Cheong predicted that 50% of developers in the country would probably go bankrupt in two years’ time if they could not sell the units and pay back the banks.

He said it was similar to the situation in 1997 and 1998 where “many” developers went bankrupt because of the same reason.

He blamed the developers for building more and more properties despite warnings from experts several years back that too many properties, especially those that ordinary people could not afford, were being planned and built.

Source: Free Malaysia Today

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10 common reasons why people don’t buy property

Not everyone loves to buy property. Some (usually the younger ones) say spending on vacations is better than buying property. The former gives a feeling of happiness. The latter merely adds debt and worry of not being able to pay on time.

Here are 10 reasons why some don’t buy that first property.

1) Paying too high rental today versus my salary. Two issues here.

One, rental of RM2,000 per month means you are likely staying in a property valued at RM500,000-600,000. (Yes, the rental market is not awesome for some owners right now).

Two, you will not want to downgrade by buying a property of your own and paying more. A RM600,000 property requires a monthly mortgage of RM2,700. We have yet to calculate the renovation and the furnishings.

2) No money left every month. Plenty of choices today. Wants versus needs is usually blurred until you write it down and categorise them accordingly. RM300 saved is enough to pay for a property which is nearly RM70,000 or higher. Crazy but true…

3) Most of my friends don’t own a property anyway. Peer pressure is working negatively here. A reminder though: Usually only the minority will be better off than the majority. That’s why there’s just one manager and hundreds of junior executives.

4) Buying that property can wait. I am still young. Frankly, this is quite true. Prices will always have to be affordable regardless of when we buy, whether it’s today, tomorrow or 10 years later.

The reason for affordability? They will use distance (build it further away) or size (build it smaller). So, think – which is better? Something BIGGER and NEARER versus in the future when it’s further and smaller?

5) I’m staying with my parents. They love you, and you don’t want to move out. It’s the best opportunity to buy a property, rent it out and still stay with your parents. Many people do not have this option. Always be grateful with what you have and make it work.

6) I need a BETTER car. Better is very subjective. For a junior executive, a Vios enables him to be perceived as much richer than his peers but there will be a time when a Vios can be bought with just the credit card. (High credit limit). However, buying that Vios versus that reliable Axia for example will really take away too much of our salary every month.

7) Nothing fits me in the market. The ones you want are too expensive. The ones you don’t want are within what you can afford.

By the way, that first property will usually not be the only property you stay in forever. Buy one, start paying and a few years down the road, upgrade to a better unit and sell the current one or rent it out. After a few years, the rental yield is usually positive.

8) I hate property. Just remember that property can be the key to everything you like. Selling a RM400,000 property which has appreciated to RM500,000 six years down the road is a vacation plus a new Vios and many more other smaller stuff.

IF you still hate property at that time, you can sell and keep that RM100,000 or more. Surely we do not hate cash?

9) The banks keep rejecting my loans. Whoa, if this is the reason, is it the fault of the bank? Actually when banks stop lending, they stop earning profits. They want to lend you money. Just try to ensure you qualify for one and everyone will be happy.

10) I actually want to buy. I am just waiting for the property bubble to burst. This is a question of when, right?

Source: Free Malaysia Today


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Housing Affordability A Key Issue In 2018

Affordability of low-cost homes remains a pressing issue, said lawyer Chris Tan Chur Pim of Chur Associates in a report by Bernama. In fact, the problem persists despite the many measures implemented by the previous administration.

“The mixed product that was offered in the market was just not sufficient and the affordable range offered by private developers was not a good match.

“We think the homes were build more for the upper B40 group or the lower M40 group because most of the B40 have no access to financing as conventional bank terms were not modelled to meet their requirement.”

B40 stands for the bottom 40 percent of income earners, while M40 means the middle 40 percent of income earners.

“However, since the Pakatan Harapan government (PH) took over, we think the government has been very open in finding alternatives in helping people own their first house and developers too are being assisted in reducing the overhang of properties,” noted Tan.

He said that the federal authorities are trying to introduce housing initiatives similar to those implemented by the state governments of Penang and Selangor. For instance, Selangor launched “Rumah Selangorku” housing scheme, which provides several funding options.

This are among the initiatives that prompted Putrajaya to be more open when it comes to the provision of funding alternatives, and among its fruits is the “FundMyHome” initiative unveiled in the 2019 Budget.

Under this initiative, home buyers only need to pay 20 percent of the down payment for a house, while the remainder will be borne by individual or institutional investors.

“This new loan model is an investment that offers an alternative to house ownership and personally we think it is a good start. However, the details of FundMyHome will only be finalised in the first quarter of 2019,” he explained.

In its 2019 Budget, the federal government also unveiled a number of measures to help the real estate industry. These include a RM25 million funding to Cagamas to provide housing loan guarantee to first-time buyers earning up to RM5,000 per month.

“Coupled with the stamp duty exemption on transfer instruments for the purchase of first houses priced between RM300,001 and RM1 million, it is indeed a step in the right direction towards encouraging people to own properties, which is an effective wealth-creating instrument,” said REHDA President Datuk Soam Heng Choon.

He is also upbeat that the government’s other measures will increase home ownership across the country. These include the stamp duty exemption for home purchases valued up to RM500,000, and funding to assist first-time buyers with monthly household wage of under RM2,300 to buy a residence priced up to RM150,000.

Moreover, he praised other measures that will continue to help groups that need housing. These include the RM1.5 billion allocation for the Syarikat Perumahan Nasional Bhd (SPNB), People’s Housing Programme, Perbadanan PR1MA Malaysia (PR1MA) and Malaysia Civil Servants Housing Programme (PPA1M).

The authorities also exempted construction materials and services from the Sales and Services Tax (SST), on top of agreeing that utility companies should construct their own amenities in a bid to bring down compliance costs for developers. This in turn could slash residential prices.

Meanwhile, Housing Minister Zuraida Kamaruddin launched three new categories of low-cost homes, namely, those priced up to RM150,000, those costing between RM150,000 to RM300,000, and those ranging from RM300,000 to RM500,000.

Furthermore, Zuraida said that all residential developments under five entities will be consolidated under one authority. These five entities comprise SPNB, PPA1M, PR1MA, UDA Holdings and the Hardcore Poor Housing Programme (PPRT).

Source: Property Guru