Posted on 04 Aug 2008
a€?A family with a combined monthly income of RM10,000 is
eligible to obtain a mortgage loan of about RM350,000 from a commercial banking
institution. But how many fall in this income bracket?,a€? asked registered and
chartered valuer C.A. Lim & Co proprietor Lim Chien Aun.
a€?From statistics collected, the average employee monthly
income is RM2,000 to RM4,000. On a joint basis, this enable the purchasers to
obtain a mortgage loan for a property valued at about RM200,000.
a€?But with the rising cost of building materials and construction,
a RM200,000 residential property will be about 30% higher if other factors
affecting the market value remain as it is today.a€?
Steel bars have gone up to RM4,100 per tonne compared with
RM3,500 in June while cement is sold at RM13.45 a bag compared with RM10.95.
Across the board, all types of commonly used construction
materials have increased by 15% to 30%.
Less than 5% of the families in
Lim said the
It also has to find ways to address the plight of house
owners in view of the current spiralling cost of living.
a€?One way is to reappraise the plot ratio. Presently the plot
ratio on the island allows the developer to build 3.5 times per sq ft.
a€?This plot ratio needs to be reappraised, taking into
consideration the additional infrastructure requirements that can be added to a
specifically identified area.
a€?Such a revision will allow a developer more space to
construct a variety of homes for different income groups,a€? he said.
Presently, developers are complaining that the existing
development guidelines on the island are too restrictive. For each acre,
developers are allowed to develop 15 units of 1,400 sq ft properties, or 30
units of 700sq ft properties.
A filepic of terraced houses in Tanjung Bungah. Rehda sees
fewer projects being launched in
With the present land and construction costs, this works out
to about RM600,000 to develop a high-rise unit of a 1,500sq ft.
This is why developers on the island are not able to price
their properties affordably.
But with a higher plot ratio, developers can spread out
their development costs and build properties with different lower price range.
Lim also urged the Penang Development Corp to work with the
private sector to create more affordable and improved housing projects, taking
into account the interest of the people, especially the working population.
a€?Otherwise, only the very rich can afford to stay in
Lim is also concerned over the impact of higher interest
rate on the property market. It is speculated that the banking authorities may
raise interest rates by 0.5% soon.
a€?This may lead to a forced selling situation for those who
cannot hold on to their properties due to higher mortgage repayments as well as
the rising living and maintenance costs.
a€?Should this happen, there will be a negative impact on
property prices and the livelihood of the general population which can affect
the economy,a€? he said.
At a press conference recently, Real Estate Housing and
Developersa€? Association (Rehda) Penang chairman Datuk Jerry Chan appealed to
the state government to allow developers to build projects with higher density
and larger built-up areas in the city.
In view of soaring energy and building prices, he said there
would be no development of new low-cost and low-medium-cost housing projects,
which were currently priced at RM42,000 and RM75,000 respectively.
a€?We are appealing to the state government to revise these
prices.
a€?Developers will resort to building only expensive homes
comprising less than 150 units per scheme, which does not require them to build
affordable housing,a€? he added.
Chan expects fewer property projects to be launched in
a€?This is reflected in the new launches lined up for exhibition
at the Malaysian Property Exhibition (Mapex) 2008 held recently.
a€?There were only three new launches this year for Mapex 2008
with a gross sales value (GSV) of RM44.5mil, compared with seven last year
which had a GSV of RM300mil,a€? Chan added.
Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat
concurred that fewer residential project launches were expected in the
immediate term due to the rising development costs, including fuel and building
materials.
Based on todaya€?s land value and the existing local
authoritya€?s planning guidelines, he said it would be difficult to supply
affordable homes in the near future unless the basic macro and micro challenges
were promptly addressed.
The mid-end of the market will also be affected but to a
lesser extent, compared with the affordable home sector.
Teoh said the high-end market would continue to attract
entrepreneura€?s attention, as it offered the highest margins.
He said recent foreign interests in
a€?This augurs well for the prospect of
