Is affordable housing a good investment in Penang?

is-affordable-a-good-investmentAffordable housing has been the key growth driver for Penang residential property sector in the past two years. Today there are already 17 projects under construction while at least 26 more are in the pipeline.

Aiming to stimulate the sale of affordable housing, the developers are allowed to sell 30% of the affordable housing to the open market with 10-20% price premium. That in fact has stirred up the interest in buying a second home for investment among Penangites.

Is affordable housing a good investment Penang?” continues to be one of the most common yet frequent question addressed to us at Penang Property Talk. Prior to sharing food for thoughts, it is crucial for potential investors to fully digest the fundamental facts about affordable housing in Penang.

Purpose built housing

Affordable housing is purpose built for first time home buyer. It is conclusive to quote that most of the units are cautiously planned and well sized for individuals who are at establishment period in their career stage, young marriage couples who are settling in for a new home. For upgraders envisioning for a larger spacious home, affordable housing units will emerge to be inadequate for a matured growing family.

Be mindful that your potential buyers in the future are most likely to be a first time home buyer, who has a comparable budget of around RM300K – RM400K. Selling a first time buyer house at a much higher price tag in the future is definitely a gigantic challenge.

Abundant supply

Owning a brand new home in Penang Island used to be a dream, for some. The attractively priced affordable housing has now turned some of those dreams into reality. Many opportunistic buyers instantly draw a conclusion for a need to quickly grasp this golden advantage and compelled to buy an affordable unit as their second house for investment. Nevertheless, when realization starts to kick in on the fact that there will be abundant supply of affordable housing units in near future, the interest level on affordable housing projects cools down significantly.



Indeed, an observation from Penang Property Talk is that despite the significant increase in affordable housing projects, the affordable housing project listing page has registered a consistent decline in page views over the past two years.

Impact of price control

From an investment perspective, it is a norm to typically refrain from whatsoever that has a price control in place. Of course, unless you are the one controlling the price. Obviously, there is no exception in affordable housing. The price of a house is likely to be influenced (indirectly controlled) by the affordable housing scheme that will be launching in the future.

Some individuals may have the perception that a higher selling price can be set for a unit after the 5 years cooling period. But there is no reason for someone to pay a much higher price for that unit when there is a continuous supply of affordable houses which are selling at a cheaper price. Not to mention the falling relative prices of the secondary unit as it ages.

In fact, the ceiling price for new affordable house has been lowered from RM400K to RM300K. In other words, there may be more affordable housing units in the pipeline with a cheaper price tag.

Lack of differentiation

Being able to sell a house promptly is as important as buying it cheap in the first place. In property investment, standing out from others is always an advantage when you are selling. House number, facing, floor level, layout, locations are some of the critical decision factor. Some design type may have advantage over other design types, depending on individual preference.

But in affordable housing, some of these selling points may not applicable because there may be thousands of unit of the same type in one project. You may also find the same unit and floor number in other blocks.

In a worse situation, affordable housing in secondary market may eventually become like “commodity” where pricing is the only decision factor. Property agents will simply need one classified listing per project to sell their stock since there is only one design type. In such cases, the seller will lost their bargaining power and the lowest price unit will likely to be sold first.

Food for thoughts

If you are a first time home buyer searching immensely for your dream home, affordable housing is absolutely one of the extremely beneficial options. However, do not rush to hurriedly jump to conclusions. Choose wisely within your means. A glamorous location does not necessary mean the right location for you.

* Click here for the full list of affordable housing in Penang *

For those who are buying affordable housing as an investment, comprehend and invest objectively. Affordable housing and a great financial investment are mutually exclusive. Unless you are fully equipped with a very good plan in buying affordable units, otherwise differentiation would be the key to a safe property investment in the current market situation. If you can afford, a larger yet spacious home or a development with unique offerings might be a better bet.

– Ken Lim
(Founder, PenangPropertyTalk.com)

  1. PPAP
    December 15th, 2016 at 07:49 | #1

    The motive of the points laid out in this article is to discourage “investments” in open market affordable housing. That is very obvious.

    In my opinion, properties in general, whether affordable scheme or normal private units, are not suppose to be for speculation. Houses are suppose to be built for residence, not for flipping to make quick profits. However, as long as the gov doesn’t make investments in property a punishable crime, it will always exist whether I like it or not. It can either happen in the form of short term flip, or long term investment that comes with rental income.

    I shall not go into details, but I expect some surprises from those open market affordable units, especially those located in prime area. Cheers!

  2. water fish
    December 15th, 2016 at 08:46 | #2

    as I said before only those failed math go for invest, u bought in open market 460k + 4 years contruction bank interest ( 40k ) + 5 years hold after oc ( bank interest 100k )=600k – rental for 5 years ( 60k )- 5y installment principal ( 30k ) = 510k, + maintenance fee 5y+ cukai tasifran+ insurance+ basic reno for rent out ( 30k )= 540k, how much u want to sell for earn 100k? at that time other new affordable project may be still same price or lower

  3. water fish
    December 15th, 2016 at 08:58 | #3

    at that time u still wanna compete with other unit, ur unit best view? u offer best price? take 9 years time and still gt risk may be earn nothing, so rent it forever? keep it for ur son?

  4. williamjr
    December 15th, 2016 at 09:30 | #4

    Affordable housing was never meant to be for financial investment

  5. James
    December 15th, 2016 at 09:45 | #5

    Can investor dun touch affordable house??

    Affordable house is for some people really need a house with limit affordability.

    A lot affordable house sell to investor by under table and use for investment purpose, cause younger generation unable own a house..

  6. Sg foo
    December 15th, 2016 at 11:09 | #6

    The affordable dost not affordable..

  7. banker
    December 15th, 2016 at 11:39 | #7

    hello, if you calculate like this, better no need to live lo, as living is also wasting money to buy food everyday…@water fish

  8. Affordable Investment
    December 15th, 2016 at 13:57 | #8

    In the open market, if one could only afford to invest below 500K in an apartment, affodable housing at good location is a feasible choice.

    In Tanjung Tokong, new apartments are launched at 1200 psf or more whereas affordable housing is being sold around 500 psf.

  9. water fish
    December 15th, 2016 at 15:12 | #9

    banker :
    hello, if you calculate like this, better no need to live lo, as living is also wasting money to buy food everyday…@water fish

    9 years time, investor can invest other 3 project and make 3 times profit already, buy food also same, buy wisely dont simply buy and let ppl chop, dont be water fish haha

  10. ronnie
    December 15th, 2016 at 16:21 | #10

    To me, I feel very fishy that this developer can get the plot ratio so high. so give very high plot ratio for developer to make a lot of money. Later sure will deliver poor quality condos, then the developer will laugh all the way to bank.

  11. Mainland4u
    December 16th, 2016 at 09:11 | #11

    honestly, how many condos in the open market are owned by investors and how many cant sell out? Properties in Penang these days are struggling for price increase and better purchase for own stay

  12. Kekpo
    December 16th, 2016 at 11:33 | #12

    Its true, we can see many condos OC obtained 1 or 2 years already but only 30% residents stay in including those rented units. Especially those entitled DIBS condos, investors buy as many as they can afford but now they feel the pain already

  13. Invest in Penang
    December 16th, 2016 at 12:27 | #13

    If affordable house cannot invest, then what house to invest? My budget less than 500k only.

  14. BigMoney
    December 16th, 2016 at 13:42 | #14

    @Invest in Penang

    You can invest in M-Pay. Every month you get 20% return on your investment. Dont waste your time investing in properties lar.

  15. Khor
    December 16th, 2016 at 16:15 | #15

    BigMoney :@Invest in Penang
    You can invest in M-Pay. Every month you get 20% return on your investment. Dont waste your time investing in properties lar.

    Don’t waste time on M-Pay…….JJPFR is better, bi-weekly 20% return…. double the return

  16. BigMoney
    December 16th, 2016 at 16:34 | #16


    Wahh!!…So good?!…Let’s all JJPFR!!!! Huat ah!

  17. Affordable Investment
    December 16th, 2016 at 16:34 | #17

    Buy affordable-housing apartment as 2nd home investment and then sell the 1st landed house to cash in for retirement.
    No point leaving the 1st landed house to children, better to use the cash balance for golden-age enjoyment.

  18. BigMoney
    December 16th, 2016 at 16:47 | #18

    @Affordable Investment

    Don’t be such a scrooge to your children!Later none of them turns up at your funeral!

  19. BigMoney
    December 16th, 2016 at 16:53 | #19

    @Affordable Investment

    But your’s is a good idea though. I was told for Santoniri, almost 30% of the open market units are bought by upper middle class retirees who purchase with cash.

  20. ryu
    December 16th, 2016 at 23:57 | #20

    @Affordable Investment

    Those people can own a landed house in Penang Island, they got more than enough $$ to survive for their retirement age.

  21. Ice Kacang
    December 17th, 2016 at 12:05 | #21

    This website always give me a lot of knowledge. It really benefit for everybody. Now, I know more about affordable housing. And then got comments from the public also give me learnings.

  22. SiewLaiLai
    December 17th, 2016 at 13:07 | #22

    Where n how to invest in M-Pay or JJPFR? Any contact nos? Tq

  23. Onwer_Triangle
    December 17th, 2016 at 13:36 | #23

    Khor :

    BigMoney :@Invest in Penang
    You can invest in M-Pay. Every month you get 20% return on your investment. Dont waste your time investing in properties lar.

    Don’t waste time on M-Pay…….JJPFR is better, bi-weekly 20% return…. double the return

    M-Pay and JJPFR will disappear anytime. Don’t be conned by datuk datuk datin datin for the pryramid scheme la. later eat ‘peanut’ like the Black Vellfire Lady got money but no life to live.

  24. tomyam
    February 12th, 2017 at 20:25 | #24

    @Invest in Penang

    probably some 2nd hand house

  25. blackbone
    February 13th, 2017 at 13:57 | #25

    my opinion, if want to invest better take up low density apartment with good location such as tourist area, entertainment hub, nature related place etc. This kind of place will attract those who want to escape from daily havoc. Affordable or not is second priority. If u are deep pocket then can go for luxury condo which have bigger space. if u don’t then good enough to own a small apartment with good environment. Affordable house is still a good choice.

  26. Jacqueline
    February 27th, 2017 at 22:10 | #26

    Very true. Any good location place with small unit can easily fetch RM2,500-RM5,000 per month from airbnb rental.

  27. Ryu
    February 28th, 2017 at 02:07 | #27

    In Penang, good location easily costs up to 700k above, my friend’s condo gurney seaview also hard to rent. Local can’t afford, foreigners very less.

  28. SW
    November 18th, 2017 at 09:34 | #28

    is there anyone know affordable unit at island allocated by state gvt after bought a landed property at mainland which is slightly higher price than affordable unit price, the person still eligible to proceed with affordable unit at island?

  29. NgSoonHeng
    November 18th, 2017 at 15:43 | #29

    got la SW the open market affordable apartment with higher price ma… Santorini got also maaa..
    but bekpul la.. this area so high density. stay also dono can or not like pigeon hole or somesay bird nest house.

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