Property prices nearing ‘not affordable’ level

KUALA LUMPUR: Malaysians believe current property prices are close to being “not affordable at all”.

In a survey, the “Asia Property Market Sentiment Survey 2H 2014” conducted by iProperty Group, the respondents gave an average rating of 7.29 (one being very affordable and 10 being not affordable at all) to their views on current property prices in Malaysia.

The new rating is a slight improvement from the average rating of 7.5 given in the previous survey for the first half of 2014 (1H14), said the online property portal.

Understandably, respondents said affordability and rising house prices remain the top concerns of the property market, followed by stringent home financing and high interest rates.

iProperty’s latest survey, its sixth iteration since it was first conducted, serves as a forecast of consumer sentiment for 2H14.

It polled over 5,000 Malaysians, 76% of whom were aged between 20 and 40, while 70% had an annual household income between RM30,001 and RM180,000.

Respondents considered location the main consideration when purchasing a property, followed by price and security, which is slightly different from the 1H14 survey which saw them choosing properties based on location, price and size.

“The change from size to security resulted in a 70% preference for private condominiums and serviced apartments in 2H compared with 62% in 1H14,” iProperty chief executive Georg Chimel told a news conference yesterday.

The survey also found that 47% of respondents believe transactions in the property market for the next six months will remain the same, while 37% believe the market will pick up.

Petaling Jaya, Ara Damansara and Puchong in Selangor, Iskandar Malaysia and Nusajaya in Johor, George Town in Penang as well as Melaka and Nilai, Negeri Sembilan are among the places Malaysians see as hotspots for property purchases, the survey showed.

However, Chimel said 27% of respondents feel properties in Iskandar Malaysia are too expensive, while 40% view Iskandar as a safe and good investment, but will wait a few years before purchasing.

In addition, 74% of respondents feel that foreign buyers are driving up house prices, despite the RM1 million floor price for foreign home ownership that has been enforced in Kuala Lumpur, Labuan and Putrajaya on March 1, followed by Johor on May 1.

“The floor price increase automatically requires foreigners to purchase more expensive properties, which, in the mind of the public, increases the average property prices that have been transacted,” said Chimel.

Meanwhile, 85% of respondents feel that the imminent goods and services tax will make properties more expensive, while 55% think it will affect their decision to purchase.


This article first appeared in The Edge Financial Daily, on September 4, 2014.


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