Affordability rules
The most newsworthy result that stood out was that 95.8 per cent of the approximately 100 respondents polled during December 2012 viewed property prices in Malaysia as expensive while the remaining 4 per cent think it is average or affordable. This view is shared among professionals and business people earning above RM15,000 per month as well as young workers just entering the workforce and all those in-between. More than half of them zeroed in on affordability as the single most important improvement that they would like to see happen in the property industry in Malaysia.
This is not entirely surprising as the affordability issue has hogged the headlines for the better part of 2012 with almost everyone who has a stake in the industry giving their two cents’ worth on the issue.
Despite the government’s efforts to cool down the industry, almost three quarters of the respondents feel that property prices will rise in the first half of 2013. This could be one of the reasons why 83 per cent of those polled have plans to purchase a property in the next 12 months. Most of them are likely to feel that property is the best hedge against inflation and that before prices go up any further, they want to ensure that they lock in the properties at the current prices. This thinking runs counter to what most experts in the industry believe – that prices will in fact stay flat or decrease in 2013 due to a potential oversupply situation when many properties launched two to three years ago are due for completion.
Another reason for a flattish outlook for property prices this year is the slowing down of loan applications and approvals due to the stricter bank lending guidelines. The effect is that there are fewer property purchases now meaning prices won’t be going up and up forever.
A lot of potential buyers are now wondering whether their loan applications would be approved whereas previously, the confidence level is higher. For this poll, almost half of the respondents (46 per cent) are unsure whether their loan applications would be approved while a surprising 20.8 per cent feel that they would encounter some problems with their loan applications.
Some 42 per cent of respondents are thinking of purchasing property worth RM300K and below. Most of these are new entrants to the job market who are earning under RM3,000 per month and are seeking to buy their first homes. Bear in mind that the majority of the people polled here are residing in the Klang Valley (83.3 per cent), and hence are responding to the poll based on property prices in the Klang Valley which are among the highest in the country.
For the remaining others thinking of purchasing their properties within the next six months, about 25 per cent are thinking of spending between RM300K – RM500K while 30 per cent are thinking of forking out between RM500K and RM1 million for a property. Less than 4 per cent are interested in properties worth RM1 million and above.
Most first home purchasers are limited to high-rises (due to its relative affordability) with 42 per cent opting for apartments or condominiums, while some older respondents with higher income from RM6K onwards prefer landed property especially one, two or three-storey terrace/link houses. Among the respondents, there are a number of property investors who plan to buy such high-rise units for rental income. Many of these property investors already own at least two or three properties.
About 17 per cent expressed the intention of purchasing a semi-dee or bungalow while some 8 per cent are looking at commercial units. These respondents already own their first homes and are diversifying their portfolio. Very few of those we polled are looking to purchase overseas properties (13 per cent). Of those who do, most are looking at Europe, ASEAN, New Zealand and Canada.
Newly built preferred
Purchasers across the board prefer to buy new properties (92 per cent) instead of properties in the secondary market. This is good news for developers but almost 80 per cent prefer them built. Come 2015, if the planned Build-then-Sell (BTS) system is implemented, it would be good news for property buyers (but not developers). We will have to see how it plays out when the time comes.
Speaking of which, a number of events in the future hinge on the outcome of the general election which is just round the corner. For one, prices may be affected and even some policies. There will be winners and losers. Certainly, most people prefer to play it safe by deferring their decision to buy until after the general election (75 per cent).
In terms of renovation post-purchase, almost 60 per cent plan to do so. This is good news for contractors doing renovation work. On the flipside, it’s also an indication that properties in Malaysia are built in such similar design and configuration that most people would rather have it renovated to reflect their own individualism and lifestyle. In fact, 13 per cent of the respondents listed “Variety and design” as the single most important factor that needs improvement in the property industry in Malaysia after of affordability (51 per cent) and quality (17 per cent).
The safety issue is also of concern to some with 13 per cent listing it as an issue that requires the most improvement. The recent attempted looting/burglary of the Puncak Setiawangsa bungalows that were ‘evacuted’ is a reminder that there are always opportunists out there ready to swoop in on houses perceived to be filled with valuable items.
A surprising result of the poll is that 42 per cent indicated that they would buy properties from an auction. Contrary to the general perception that proceedings of an auction is a bit of a mystery to the ordinary man on the street, this figure perhaps is an indication that people are generally getting more open to auction properties which is likely also due to the below market price tags of these properties.
In general, most of the participants (59 per cent) obtain their information on property from online portals and forums. This is good news for the burgeoning online property portal business and is also an indication that the new generation of property buyers between the ages of 20 – 40 are generally internet-savvy and are comfortable using the internet for their property-related search. Some portals/websites are even testing the water on whether internet purchases of property can take off. The jury is still out on this one.
Finally, participants of the poll were asked which area they think would take off as the next property hotspot in Malaysia. Bearing in mind that most of the respondents are from the Klang Valley, their choices mostly centred around the sub-urban and fringe areas of KL city centre. This includes Puchong, Kajang, Bangi, Seri Kembangan, Semenyih, Nilai, Sepang, Cyberjaya, Hartamas and Bangsar Southcity. Most of these areas extend towards the southern part of the country which confirms what several property gurus have said – that the area south of Greater Kuala Lumpur would gain in prominence and popularity.
In fact, Iskandar Malaysia, which is located about 300kms south of Greater KL is predicted to lead in the property hotspot rankings on account of its many completed and soon-to-be completed catalytic projects this year as well as the influx of big Singaporean investors including Singaporean billionaire, Peter Lim.
- New Straits Times
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