My attention was captured by a news entitled “The only place where housing is easily affordable” when reading The Times, a UK paper recently.

While I had expected some light on affordable housing solutions, I was surprised to find out that Copeland is the only area in England where house prices are less than three times the average annual salary of its residents.

According to the same article that quoted a research by UK Trade Union Congress (TUC), the number of “easily affordable” local authority areas across England has fallen from 72 to just one over the last 16 years. In prime areas, house prices reach as high as 32 times the average earnings of their residents.

Frances O’ Grady, the General Secretary of TUC which represents 6.2 million working people in the UK, called for an “ambitious programme” to bring the prices of homebuilding under control.

This resonates with the earlier comments made by the governor of the Bank of England (BoE) Mark Carney who said in May that the only long-term way to effectively bring down home prices is to build more homes.

In the UK, 63.8 million people lived in 26.4 million homes in 2012. This works out to about 2.4 persons per house.

There were calls for more homes even with such healthy ratio. Australia, which has a population of 21.5 million in 2013, has 9.1 million occupied houses or 2.4 persons per house.

At the recent World Class Sustainable Cities 2014 Conference, Kerry Doss from Brisbane City Council showed a slide presentation of persons per household over the past century.

As far back as 1927, Australia was already four persons per household. These made me reflect on the situation of our home country, especially since we too aspire to be a developed nation.

According to National Property Information Centre (NAPIC), we have a total of 4.7 million homes in the fourth quarter of 2013. As NAPIC does not track rural homes, we assume that only urbanites were taken into account in the survey.

This accounts for 70% of our 30 million population or 21 million people. Therefore, on average, there are 4.4 to 6.4 persons per household in our country. T

his is a poorer ratio compared with Australia in 1927. This means we need to build four million to 7.8 million more houses to match the same ratio as the UK or Australia.

While we are aware that the Government aims to build one million affordable homes over a five-year timeline since last year, we still have quite a fair bit to catch up.

This is because we have only managed to build about 73,000 residential units per year for the last three years.

Under Budget 2015, it is encouraging to note that the Government plans to build 80,000 units under PR1MA and 63,000 units under another housing programme. This will bring the total planned units to 143,000. This figure is still way too low and the Government should consider building at least 200,000 units a year to meet the vision of one million affordable homes.

There should be a constant effort to track the progress of home-building. It is important to realise the goal of housing the nation by ensuring yearly targets are met.

Some of the measures that the Government can consider were recommended in my earlier articles.

They included freeing up state land for housing, purchasing agriculture land for development, building houses in rural areas and connecting them to the cities via public transports, as well as expediting the approval process to supply more houses to the market.

In addition to supplying more affordable homes to bring down prices of homes, there are also other factors to ensure that the rakyat have a roof over their heads.

In the same-mentioned article in The Times, Frances O’ Grady commented that, “Housing affordability isn’t just about house prices; decent wages are just as important.” I think it makes good sense and generates more food for thought for our nation.

>> FIABCI Asia-Pacific regional secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties.

Source: StarProperty.my

Kagan: ‘They are looking at Malaysia because of its legal and physical infrastructure, geographical location, capability to undertake research and development activities and skilled workforce.

Malaysia is now the choice location for US companies that want to diversify in Asia.

Deputy chief of mission of the US Embassy in Kuala Lumpur Edgard D. Kagan toldStarBiz that there were also companies in China that wanted another location in Asia to set up a platform.

“They are looking at Malaysia because of its legal and physical infrastructure, geographical location, capability to undertake research and development (R&D) activities and skilled workforce,” he said.

Also present at the interview were commercial officer Paul V Oliva, economic affairs counselor Andrew R Herrup and public affairs counselor Frank Whitaker.

Kagan said Malaysia, specifically Penang, was now being seen as a choice location for R&D activities.

“We can see an increasing number of US companies that have chosen Penang as a destination for their knowledge-based content here, taking advantage of the skilled workforce and infrastructure,” Kagan added.

Kagan said over the past few years, there has also been a trend of Asian companies looking to the United States to invest rather than just as a place to sell.

“They have found that doing business in the United States can be very cost-effective due to the structural benefits and the market size, especially when the cost of doing business in Asia has risen over the years,” he said.

Meanwhile, Oliva said there were currently some 34 Malaysian companies in the United States negotiating to purchase rights to distribute American films and television programmes and talking to production companies to co-produce films. Oliva said the United States was Malaysia’s fourth-largest trading partner after Singapore, China and Japan.

“Malaysia is the United States’ 22nd largest trading partner,” he said.

Oliva said the top US products to Malaysia included integrated circuits, aircraft and parts, telephone equipment, semiconductors and light-emitting diodes, and scientific equipment.

In 2013, the value of bilateral trade between Malaysia and the United States was at US$44.2bil (RM147.98bil).

The sale of US goods and services to Malaysia was at US$15.5bil, while the export of Malaysian goods and services to the United States was at US$28.7bil.

Source: StarProperty.my

Bank Negara is expected to keep the Overnight Policy Rate (OPR) unchanged at 3.25% in light of the risks and uncertainties surrounding the global economy.

Bank Negara’s Monetary Policy Committee (MPC), which is meeting for the sixth and last time for this year, will decide on the OPR today.

Of the 22 economists polled by Bloomberg, 21 expected the MPC meeting to conclude with a “no hike” decision. Only one economist expected a hike of 25 basis points (bps) in the country’s benchmark interest rate to 3.5%.

“Given the lack of sustained growth momentum externally, the outlook for Malaysia’s export performance also hangs in the balance,” said RAM Ratings Sdn Bhd head of research Kristina Fong.

“Considering the degree of openness of the country’s economy, this will ultimately contribute to some downside risk to domestic GDP (gross domestic product) growth prospects,” she explained.

Fong noted that leaving the OPR at the current accommodative level would be conducive for Malaysia’s growth resilience, which was an important consideration, given the impending implementation of new policies and regulations, such as the Goods and Services Tax.

Source: StarProperty.my

After the successful sales of Pegasus Residence, Pegasus Homes Sdn. Bhd. is launching phase two of their residential development, known as Pegasus Garden CityHone. This development is adjacent to Taman Kerjasama in Bukit Tengah, Penang.

This is a gated and guarded development, comprising 88 unit of 3-storey 1+1 townhouse.  Upper unit type has a built-up area of 1,650 sq.ft. whereas the lower unit type has a built-up area of 1,500 sq.ft. Both types come with two car parking space.

Property Project : Pegasus Garden CityHome
Location : Bukit Tengah, Penang
Property Type : 3-Storey Town House
Tenure : Freehold
Built-up Area: 1,500 sq.ft. (lower type), 1,650 sq.ft. (upper type)
Total Units : 88
Developer : Pegasus Homes Sdn. Bhd.

by Ken Lim

Recently I met up with a friend who is a retiree, owning a semi-detached home in the vibrant neighbourhood of Island Glades. His house could easily fetched more than two million ringgit in today’s secondary market. His daughter now is contemplating to purchase a new property while harbouring plans to get married within two to three years.

He decided to seek my view on what are the possible steps the government could undertake to exert a certain degree of control on the property price. My message to him is very simple – If all house owners would find time to collaborate and reach the consensus to sell their house at the same price as the initial purchased price then the property price will remain stagnant. Therefore I initiate an offer to purchase his semi-detached abode at the original developer’s price with the understanding that one of the units of my condominium at Tanjung Tokong will be released to her daughter based on the original transacted price.

Understandably, he has rejected my offer without even blinking his eyes.

So, let us take a moment to ponder.

Would you like to even contemplate about the possibility of housing prices dropping?

If you are a first time buyer and you have purchase your condominium at four hundred thousand ringgit, would you be exhilarated if the next phase is selling at a much lower price with respect to the unit you purchased two years earlier?

In 2005, a 1,300sq.ft. unit at Bayswater Resort Condominium would easily fetch a price of three hundred and twenty thousand ringgit only. If it is still selling at that price currently, I’m very certain that everyone will be extremely excited and would not hesitate to grab one now.

However there are two possibilities for the price to stay at three hundred and twenty thousand ringgit after nine years:

1. Growth has stagnated in Penang and everything remains at status quo. Property price is unchanged at every nook and corner of Penang. However property developer continues to build condominium and still sells it to the public at the same price.
2. The condo is so bad in terms of its design and construction that no one would be keen enough to purchase with the purpose of staying . That’s why its price does not appreciate at all.

So, would you be excited with the three hundred and twenty thousand price tag?

It is plausible to conclude that everyone who owns a property, be it for own stay or investment, will be very excited and exhilarated to find their property value gain a measurable appreciation.

The reality is such that whenever we wish to purchase a property we would have hoped that the price at the time of purchase would be so far below prevailing market price yet when we have a property of our own, we would harbour the hope that the price of the property will hit the roof.

This article is not meant to lend credence to the act of speculation however the most likely scenario is that property prices will continue to be on an upward trend.

– Ken Lim
(Founder and Principal Reviewer, PenangPropertyTalk.com)