Lifestyle

3 Real Reasons Why Those So-Called "Affordable Homes" Aren't Being Considered By KL-ites

A report came into public knowledge and the media last Thursday regarding the housing situation in the Klang Valley.

The hook for this report comes in a variety of flavours, but what is so far undisputable is quote from the President of Real Estate and Housing Developers’ Association (Rehda): “Although financing is an issue, there has to be awareness that these units are widely available”.

So yes, he did acknowledge that financing is a big issue. And to a certain extent, my own brief trawl of the internet reveals to me that there are many surprised voices at the notion that there are RM200,000 homes in Klang Valley, even if they are at less “desirable” areas such as Puncak Alam or Klang.

The paper continues to state that from a survey, they discovered that first-time buyers still liked locations such as Hartamas, Damansara or the KL city centre, despite the “affordable” housing available.

Here’s the thing, to attribute public disinterest down to just “awareness” seems very premature.

I would think that many buyers are aware that there are cheaper options, just not at the center of Klang Valley. These options are just not desirable for a few reasons:

1. Can you even consider RM200k as affordable for young starters? 

Average salaries by age group in 2016 / Screenshot from Statistica.com

If the report focuses on first-time buyers, I would then go on to make my own assumptions that these would usually range from those aged 25-year-olds to 35-year-olds looking to settle down and move out of their parents’ homes. They also do say that property is a good investment.

First of all, you’ll need 10% of upfront cash for the home (if you’re a first-time buyer), which means that you’ll need to have at least RM20,000 saved up in your bank account to even consider that purchase.

You might be able to make that upfront cost with help from family or spouses, but then you’ll have to contend with other miscellaneous fees.

These include SPA fees, bank processing fees, fees for transfer ownership titles, and others that you can read more about here.

Now, you have to start considering the monthly payments. Financial analysts would suggest that you pay no more than a third of your salary into your home, which doesn’t spell great things for an RM200k home because:

Screenshot from Calculator.com.my

I’m making assumptions here on loan period and interest rates, but still. RM800 is still a lot of money to part with every month for those who might be earning RM2k–RM2.5k, especially if you have parents to pay for, kids to give a good life to, and you know, food and other similar “luxuries”.

It’s not impossible, of course, if there is a spouse helping to pay off the loans, but not all households in Malaysia earn at least two salaries.

And affordable housing programmes by the government might not be the best solution either. Based on anecdotal evidence, one source informed us that her attempt to sign up for one of them saw her being put on a 7-year waiting list—where she might as well have just bought a home on her own dime.

2. There is a reason that first-time looking at KL, Hartamas and Damansara aren’t particularly interested in these “outskirts”. 

It’s all well and good to tell us that these properties were available for purchase within a 30km radius of the KL city centre, but unless you actually work in or near these areas, then first-time buyers are still going to more significantly opt for hotspots like KL, Hartamas or Damansara.

This is because of one significant factor of life in Klang Valley: traffic.

Our government is making serious efforts towards our public transport infrastructure and many Klang Valley-ites use it every day. However, most long-distance travel is still not feasible on public transport, or significantly more expensive than driving cars back and forth.

And those who are driving are going to be crossing massively congested roads to get to work, getting tired, wasting money on oil, and having less time in the day for other activities, like spending time with their kids.

Considering all of these factors, it makes perfect sense that KL remains one of the most packed cities in Malaysia, with 17,310 people per square mile.

They might be living in a relatively smaller space, if they even own it, but it definitely beats driving in and out of KL, through the gridlocked roads and large swaths of highways every day.

Of course, there are those who would still opt for driving back and forth, perhaps preferring the lower prices of goods and services in the outskirts, or preferring bigger properties to house bigger families—but this is still an important consideration.

3. But then there’s this: Even if you do want an affordable home in the “outskirts”, will you be able to get one?

Even people who are interested are having a difficult time searching for these RM200k homes, though I only have anecdotal proof of this instead of viable statistics.

Despite searching far and wide on any platform they could find,  homes at this price point are immensely difficult to close. And if word got out, these homes are usually snapped up in a flash, with long waiting lists to boot too.

I think it’s false to equate the popularity of houses in the aforementioned areas with the lack of awareness for homes in these more “outskirts” areas, because there is certainly demand for it.

To be fair, I would think that part of the issue, as outlined, does lie in the marketing of these homes.

How is anyone going to buy them, regardless of where they lived, if they didn’t even know that these homes existed in the first place?

If these houses are getting marketed but there aren’t any buyers anyway, I’d guess that its lack of desirability has little to do with the fact that they’re in Klang or Bukit Jalil.

Instead, there are other things to consider.

Are these houses pre-owned homes in good condition?

Are they located in an area that has convenience stores and eateries at a decent distance away?

Are there schools?

Does the neighbourhood mainly have undesirable neighbours?

If I’m going to part with a little more than a third of my salary to own a home anyway, then yes, I’d be at least a little bit picky about where I’m setting up my home for my next foreseeable future.

So if these RM200,000 homes are indeed desirable despite any of these concerns or preconceptions, then I’m sure many wouldn’t say no.

Having a big data solution to generate more awareness about these “widely available” homes sound like a dream. But I also think that there are more factors to consider than just what has been outlined in the initial reports.

 

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