First home scheme: Making it work for all

Young Malaysians, especially those in the cities, are whining about the unavailability of houses below RM220,000 that they could purchase under the My First Home Scheme.

Back home, their parents and parents-in-law heave a sigh of relief as their children and grandchildren will no longer have to stay in rented houses, apartments or flats.

Besides seeing their children graduate from universities, most parents dream of seeing their children start their own families and have their own homes.

The newly-launched scheme, which comes with 100 per cent financing as the 10 per cent deposit is guaranteed by Cagamas Bhd, is aimed at helping those aged below 35 to own their first house sooner.

Contrary to what some people think, the scheme could prevent a property bubble as it actually dampens speculative activities.

This is because the scheme encourages developers to build residential units costing between RM100,000 and RM220,000.

Given Malaysians aged between 20 and 35 make up about a third of the country's population, and considering the thousands of new job market entrants annually, demand for houses within that range is massive.

So, besides helping first-time house buyers, the scheme also signals developers to build certain types of houses within a certain price range.

In prime areas in the Klang Valley, Penang and Johor, affordable homes may not be available, so the young first-time buyers with a monthly salary of RM3,000 and below have to settle for houses outside the cities.

But think long term. The first homes may be away from urban centres, yet now is the opportunity to buy a house without downpayment, with attractive interest rates and repayment period.

Unless there is severe econo-mic recession or property bubble, the value of houses always goes up.

What one earns now may seem like peanuts. However, five to 10 years down the road, one is likely to move up the career ladder and receive a fatter paycheck.

With a combined income of the spouse and sufficient savings and returns from other investments, one can sell or rent the first home and buy a bigger house in prime areas.

Also remember that the earlier one owns a property, the better it is, as a property is like a hedge against inflation, while the money for rental is channelled for home repayment.

In the meantime, it helps to manage one's finances wisely. Avoid the credit card debt trap and differentiate between "needs" and "wants".

It is perfectly normal if one does not own the latest iPhone or iPad, and the baby need not be dressed in designer clothes.

Statistics from the Credit Counselling and Debt Management Agency (AKPK) shows that majority of Malaysians who are in debt are those between 20 and 40 years old, male, married and those with an annual income of RM24,000.

The government, meanwhile, should do more to improve accessibility as affordable homes are away from the city centres.

The high-income economy may not be fully realised by 2020 if the future generation is stuck servicing home and car loans, spending hours on the road to reach homes situated kilometres away from the workplace, and exhausting their hard-earned money on petrol and car repairs. This is against the backdrop of rising food prices and utility costs.

With efficient and affordable public transportation like train network and feeder buses, the issue of young families staying far from city centres can be addressed.

Property developers can attract more buyers for houses built outside urban centres by incorporating entertainment and recreational facilities targeting young families and Generation Y (Gen Y), those born after 1980.

Developers also need to stop whining about the house price under the scheme as the large group of people aged 35 and below provides a ready market for medium-cost residential units. Besides, developers may have been enjoying handsome margins from high-end residential projects, which are sold like hot cakes to speculative buyers.

In fact, Gen Y, currently the darlings of advertisers, may become developers' blue-eyed buyers.




By : Hamisah Hamid



Source : Business Times



Date Published : 14 March 2011

Property to remain buoyant in 2011

The property market in Malaysia is expected to remain buoyant next year, seeing a moderate uptrend in prices, in line with economic growth and growing interest among foreigners.

Speakers at a press conference on the Fourth Malaysian Property Summit 2011 here today said, no property bubble is expected in the foreseeable future, due to pent up demand for certain upmarket condo launches.

The Malaysian Property Summit is scheduled to be held on Jan 18, 2011 at the Sime Darby Convention Centre in Kuala Lumpur.

More than 200 participants, including developers, property owners, investors, bankers, financial analysts, economists, and property consultants are expected to attend.

Property consultant and valuer, James Wong said, the sharp increase in prices, is only to be seen in certain landed properties in choice locations with a huge demand for it in Kuala Lumpur and Penang.

James Wong is also the managing director of VPC Alliance (Malaysia) Sdn Bhd and regional chairman of VPC Asia Pacific Limited, a regional grouping of property consultants operating in eight countries.

"With escalating prices of property, one of the challenges for the government is to boost income, and move the country towards a high income economy," he said.

"This can be achieved by providing clear guidelines under the Economic Transformation Programme (ETP), especially on Private Finance Initiatives (PFI), as a majority of the funding under it comes from private initiatives," he told a press conference.

The president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS), Choy Yue Kwong said in 2011, property prices would improve but the office market will remain soft.

"The property market currently is still very buoyant. Market prices are at record new highs. Interest rate is still relatively low," Choy said during the same press conference.

Choy emphasised that the high Asian savings will also cushion against a property bubble.

"It is challenging to own a house with a salary of just only RM4,000 a month. In 1975, a house in the Klang Valley was around RM30,000 and graduates earned about RM700 a month.

"Today, a graduate earns about RM2,000 but a house in the Klang Valley could easily cost RM400,000," he elaborated. Thus, Choy said, owning a house is only possible if the government made an effort to uplift income.

Eric Ooi, managing director of Knight Frank Malaysia, a global residential and commercial property consultancy, said this problem is prevalent in Asian countries.

"Funds and investment money is moving into Asia as the United States and the European economies are still struggling to come out of the doldrums.

"There is a lot of interest from buyers from China who are agressively buying into properties in Australia and Singapore. If these buyers start buying into Malaysian properties, then prices will further escalate," he said.

According to Ooi, there is a lot of interest at present from Singaporean and Hong Kong buyers, for Malaysian properties.

He highlighted that foreigners are looking at the yield in making decisions on property purchases.

"Currently, the Kuala Lumpur property market has a positive yield. Investors also like stability in the country and election results will have an impact on their investment mood," he explained.

He also said another factor to affect the property market is any increase in interest rates as it will impact the repayment of loans.

"However, there are expectations that the interest rate will not increase susbstantially," Choy added.




Source : Bernama



Date Published : 17 December 2010

Developers be warned, China's a tough market

KUALA LUMPUR: More developers are venturing into China's property market but their investments may be at risk because of red tape and fears of overheating, analysts say.

A MIDF Research analyst said the China market is a tough one to conquer without good connections with local authorities and partners who can deal with changing rules.

He said this could be the reason why the big boys such as Sunrise Bhd, TA Enterprise Bhd, SP Setia Bhd, Berjaya Land Bhd, Selangor Dredging Bhd, Ireka Corp Bhd and PJ Development Holdings Bhd are investing in Canada, Australia, the UK, Singapore and Japan as risk is less.

LBS Bina Group Bhd recently said it aims to launch its maiden property project in Zhuhai, worth RM7.5 billion, in 2012.

The project was mooted more than five years ago and according to a property industry observer, LBS is still having issues with the government.

"Bureaucracy in China is extremely complex, while expansion in the Chinese market represents a significant investment as foreign developers are required to put a 50 per cent deposit on the value of their project with the government.

"And since developers cannot sell their houses until upon completion, they have to fork out money to settle the high interest rates and for keeping stock in the event of unsold properties," said an analyst at OSK Research who is not authorised to speak to the media.

Developers such as Golden Plus Holding Bhd (GPlus) have lost money in China. GPlus' 3 billion yuan housing project in Shanghai, The Royal Garden, had incurred cost and time overruns in the last few years.

The project, which was slated for completion much earlier, now requires two to three more years.

Some other developers who have yet to launch projects planned few years ago include IJM Land Bhd and Sunway Group.

IJM Land has been in talks with various parties for mixed property developments in China's second-tier cities in the last four to five years.

In 2008, IJM Land managing director Datuk Soam Heng Choon said it was planning a RM500 million mixed property project in Changchun.

When contacted recently, Soam told Business Times that IJM Land is aiming to launch the project in 2012, pending approvals.

As for Sunway, it signed in April 2010 a collaboration agreement with Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd to develop a RM5 billion mixed development in Tianjin. The project has not started.



By : Sharen Kaur



Source : Business Times



Date Published : 25 July 2011

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Impact Of Inflation On Kuala Lumpur Real Estates

Oil Has Indeed Falls Below US$135 Today. I expect oil and commodities prices to fall continuously. As mentioned yesterday, oil may stage a rebound To US$160/barrel after falling to US$118/barrel. This is the economic cycle where bond & stocks will also be drag down due to inflation worries.

Inflation will prevail, causing economic downturn. Jobs loss will increase. Due to high margin of financing given by banks during the last fews years and considering property value has not appreciate much, bankers will panic to execute forecloser for residential properties for location out of the 20km radius from KL, especially for those pricing below RM300k.

As spare production capacity is high and income of the average or poor are greatly reduced, both office space, industrial and retailing outlet will also be affected not with standing where these are located .

As most of the residential properties sold during the last 4 years are mainly for own-use, prices for residential within the 20km city radius will hold or soften slightly, with some forecloser by banks giving great bargains. It will be a scenario where property price won't drop much in this location, but with occassional good bargains from banks' auctions. However, properties below RM300k will be slow to dispose (if no good bargains is offered), especially financing from bank will be tightened with buyer having to cough high initial deposit. As for high-end properties within this location, selling will be easier with lots of good bargains as buyer in this category remains afordable.

Developers will face challenging times. They really need innovative building designs plus value-for-money package to capture buyers' hearts. And this policy is good only with branded developers, as fear of non-delivery by less known developer will rings in the minds of buyer.

If the economic down turn is a long one, it may change permanently the lifestlye of the mass population. This means also change in the way we live and work. This dictates changes in housing design, community concept, etc that may result in the house currently we stay being out of date and hence drop in demand and value by the time recession is over.

So What Now? Hold Or Sell Or Buy?