Properties Near MRT Stations Are Unaffordable For Most Malaysians?

Reblogged from Propsocial.my | Original article here

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With the rapid expansion of public transportation facilities in Malaysia these few years, and with more planned till 2020, it is common to see that an increase in the market value of properties near these transit facilities. This is mainly caused by a simple factor: these stations are an asset to potential and current residents of its surrounding neighborhood, a “transit premium”.

However, when the market value increases to a point where the potential or target income group could not even afford to purchase properties around the area, the MRT project could not meet the purpose as it is designed to connect the Middle 40 percent (M40) and the Bottom 40 percent (B40) income groups to the city.

Source: Tunehotels

In a recent study “The MRT Report: The Affordability of Homes Surrounding MRT Stations” by the Centre for Governance and Political Studies (Cent-GPS), the prices of homes neighboring the Sungai Buloh–Kajang line of the Mass Rapid Transit (MRT) are inflated beyond the financial reach of the M40 and B40 income groups.

“If we take for example a 1,000-sf serviced apartment that is being sold at RM600,000 because it is near to an MRT station, it becomes very difficult to find a buyer because the mortgage cost would be around RM2,600 per month,” Cent-GPS reported.

“People who would generally take public transportation would laugh off this mortgage cost because they could not possibly afford that sort of monthly commitment.”

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Illogically high home prices near MRT

Source: Cent GPS

“When the price per square foot for properties within 1 km of each of the 31 stations along the MRT Sungai Buloh–Kajang (SBK) line is evaluated, we find that there are no properties within reach of the B40 group,” said Zaidel Baharuddin, Cent-GPS Director of Strategy and Alliance.

As for the M40 group, he added, “Only properties in eight out of 31 stops, all headed towards the Kajang MRT, can be categorized as affordable.”

According to Cent-GPS, their research states that the most expensive properties are around the Pusat Bandar Damansara station. Homes within a distance of 1 km of the station has an average price of RM4 million, which makes these homes only affordable to 1% of the Malaysian population.

Another surprise finding by Cent-GPS is the case of Sungai Buloh and Taman Mutiara stops which are “illogically high”, according to the study, even though these areas are not considered as upscale neighborhoods.

“These stations are not considered traditional upscale neighborhoods but the new developments around the stations are Semi-D and Bungalow homes that are highly unaffordable,” said Zaidel.

Mean price per square feet for properties located 1 km radius of an MRT station. Median of RM400/sf is the affordability yardstick for the M40 group. (source: Cent-GPS)

Low ridership, high property prices

Over a year since the opening of MRT’s second phase, the SBK MRT line has been experiencing low ridership. In March 2018, the line served 140,000 passengers a day, “falling well short of a profitable target of 250,000 passengers,” according to Cent-GPS’s report.

Hence, Cent-GPS sought to obtain more information about how and if the home around the MRT stations can be available to the two main target groups (M40 and B40), given the assurance that the MRT heavily focuses on serving those two main groups.

However, aside from the high prices, the study also found that properties near MRT stations are not conducive to accommodate families.

“When you look at the size of the property that comes with the best affordable price, very few of the stations would be able to accommodate a couple with a young child. Even if we assume that a young family would require 1,000 to 1,500 sqft to live comfortable, very few stations provide the required space,” the report said.

“Alternatively, affordability benefits the single unmarried working adult who at best would be able to live in a 700 sqft apartment.”

In addition, the flagship housing project by Perumahan Rakyat 1Malaysia (PR1MA) is not located within a 1-km radius of any MRT station. “New developments it seems, who are building close to the MRT, are not building for the median income or common man. The M40 and B40 do not benefit,” Cent-GPS said.

Source: myMRT

Catering for the few?

According to the Cent-GPS report, approximately RM36 billion tax money was spent on the MRT, and therefore its success is vital to the future development of public transport in Malaysia.

“If this study can conclusively point to a failure in the MRT planning, then we can avoid casting a net of failure on public transport in Malaysia; it can simply be a case of good intent, in keeping with a world of green energy, but unfortunately struck by bad locational planning,” Cent-GPS stated.

Social mobility is a crucial factor in creating an inclusive and comparatively equal nation, the report pointed out. “The government, whether through regulations or dialogue, needs to address the overpriced properties surrounding the MRT stations. This is imperative if we are to convenience the B40 and M40 groups into taking public transport,” it added. 

“National projects can no longer be catered for the few but for the many,” Cent-GPS concluded.

(By: Elmia Kayok)

Re-blogged from Propsocial.my. Please note that the reason for re-blogging this article is for information purpose only and we are not the original authors of this article. All work above attributed to the original authors from the websites mentioned in this paragraph.

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True or False? You'll Spend More Money When You Buy a Sub-Sale Unit.

UPDATED 19 OCT 2018 – Original article BY LOANSTREET

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A question that often troubles first-time home buyers: "Should I purchase a new or a sub-sale house?".  It is important to know their pros and cons in details as both of these property types serve different purposes. Here is a ready guide to help you make the decision. 

 

What Are the Differences Between New and Sub-Sale Properties?

New Property

ADVANTAGES

DISADVANTAGES

Easier on the pocket. Due to the softening of the market and stiff competition between developers, it is common for developers to offer discounts to purchasers in the form of rebates, waiver of legal and disbursement fees, etc.  Better value appreciation. Newly launched property is often more affordable and value upon completion of construction varies depending on the quality of work, reputation of the developer as well as location and demand of the property. Warranty provided. A new property usually comes with a standard 18-month defect liability period where the homeowner will need to check for any damage, defects and poor or faulty workmanship within their unit. These include but are not limited to leakages, wall cracks, loose doors and etc. Any issues on defects need to be reported back to the developer to get them repaired free of charge.  Easy access to property information. Interested homebuyers can easily obtain all the necessary information directly from the developer’s sales gallery or office. Completely new. You get to enjoy fully or partially furnished new fittings provided for free by the developer as well as enjoy staying in a new community with new amenities.

Higher risk. Home buyers of new launches might bear the risk of the developer abandoning or delaying a project due to cash flow problems.  Additional commitment. Purchasing a newly launched property typically means that you are legally obliged to begin your loan repayment when the structural framework of the development begins. In the case of buying a high rise property, you will continue to make the same amount of loan repayment, until the development reaches your floor. Hence purchasers that bought units on the lower floors will need to begin their next stage of instalment earlier than those who bought units on the higher floors. Final product discrepancy. The quality of the final product may not turn out as per the brochure’s illustrations or from what was previously observed in the building model and show house gallery. Long waiting time. A new development usually takes about 2 years to be completed. However, sometimes the waiting time for the completion of the construction could be from 3 to 5 years. This means you will be taking higher risk than buying a sub-sale unit and it will require more work from you, as the buyer, to ensure that the development is progressing according to plan.

Sub-sale Property

ADVANTAGES

DISADVANTAGES

Immediate use when buying existing properties. Once you purchase an existing property, it usually takes 2 - 3 months for the legal paperwork to be finalised before you can move into the property. There is no risk of delay in handover like what some new properties (under construction) are facing.  Can inspect the property. You get what you pay for i.e. you will know the exact view, noise, smells, everything. In other words, the actual condition of the property you are planning to buy. This will be useful as you can roughly estimate a cost for repairs and use that to your advantage to negotiate for a better selling price. Know actual transacted prices/ market value. You will also know if the unit is selling at below or above market value. Comparative prices with nearby competitors (neighbours and other units in the area) are also backed by actual transacted data, not projections, says Property Investor, Dexter Lim who has co-authored a best-selling book: Start from 0! 3 Years to a RM10 million Property Portfolio with his mentor-cum-partner, W.T. Kam. No Forecasting Needed. According to Property Investment Coach, Director & Co-Founder at Bricksmen Group, Tony Yap, no statistical forecasting is needed when you buy a completed home as you can always check the existing property capital gain growth rate and the surrounding amenities by yourself. You can also immediately calculate your monthly rental (or Return of Investment) with the current rental market.  Choose your ideal location. You will have plenty of choices to pick the location of your home. In addition, before buying a completed home, you will be able to assess how active and mature the neighbourhood is, as well as the accessibility to your new home. Some new developments may not be located in densely populated and well-connected areas.

Higher cost to purchase. There is no flexibility in payment when you purchase a sub-sale home and you will need to settle in full for payments such as booking fee, 10% deposit, stamp duty etc. More legal work and documentation. Ready to move in properties usually require a lot of legal work and paperwork for property transfer and ownership as compared to buying an under construction property. This might become a hassle to new home buyers as they might need to make several visits to the Land Registry Office.  Quality of construction. Buying a completed home brings in a promise of higher price appreciation. However, new home buyers may have no idea about the quality of raw materials used or the strength of foundation and if the house has not been maintained properly, it will start looking old within the few years, leaving not much room for further increase in value.  Limits on modification. There is a little scope of modifications and alterations that can be done to the layout of a completed home. Although minor internal modifications can still be carried out, it would be costly for you to completely refurbish a whole house.

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Should You Buy a New or Sub-Sale Property?

Before you decide to buy a new home or a sub-sale property, you need to first understand your purpose of buying a home - whether you are an investor, an end-user or an end-user looking for a return on investment.

From an investor's perspective, investing in under-construction property is more lucrative. During the construction stage, the capital value is at its lowest but increases as construction progresses.  Meanwhile, as an end-user, you can opt for both new and sub-sale property. However, if you are looking for immediate possession, choose sub-sale property. This will help you to reduce the waiting time to move in; from 2-3 years to just a few months. 

That aside, whether you're looking for a new or sub-sale property, make sure you check if you can actually afford the loan amount and the monthly repayment via our Home Loan Eligibility & Affordability Calculator. You can also check out the Home Loan Comparison page to see which banks offer the best perks.

Reblogged from Loanstreet.com.my, Malaysia’s leading independent loan comparison website. Please note that the reason for reblogging this article is for information purpose only and we are not the original authors of this article. All work above attributed to the original authors from the websites mentioned in this paragraph.

VIP Property Advisors

We market sub-sale and new projects for top developers in Kuala Lumpur and Penang. We have freehold properties in newly launched projects that start from RM395k with down-payment as low as 1% and booking fees from RM500 to own your dream home. Completion in year 2021. Call/SMS/Whatsapp us at +6010-353 9911 

If you are a first time home-buyer, here are some entitlements, privileges and benefits you might like to check out. Click here.

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Budget 2019: 11 Highlights That WILL Affect the Property Market!

Reblogged from Loanstreet.com.my | Original post click here.

UPDATED 09 NOV 2018 – BY CAITLYN NG

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The tabling of the highly-anticipated Budget 2019 was nothing short of a Korean drama: there was plenty of laughter and cheering crowds, accompanied by the ever present boos and critiques. Our Finance Minister Lim Guan Eng was of course the star of the show, and despite all the talk of doom and gloom, the Budget 2019 isn't so bad! 

Now we’re about to take a closer look at what some of the new measures announced in the Budget 2019 will spell for the future of our property market. Without further ado, let’s begin!

1) Revised Real Property Gains Tax (RPGT) rates

The RPGT will be revised for disposal of properties or shares in property-holding companies after the fifth year as follows:

For companies, non-PR holders, and foreigners, the rate shall be increased from 5% to 10%. 

For Malaysian individuals and those with a PR, the rate shall be increased from 0% to 5%. 

However, low cost, low-medium cost, and affordable housing properties with a price tag below RM200,000 will be exempted.

RPGT is a form of tax that is imposed on the profit you earn by selling off your property (and in this case, shares in property-holding companies are included as well). The general theory is that an increase in RPGT usually won’t hurt genuine buyers since it’ll only serve to discourage property flippers.

Nevertheless, there might be delays in new property launches since property developers will no doubt worry about a slowdown in the market. In addition, sub-sale properties may see an increase in prices as the sellers will transfer the (additional) costs to the buyers. And if that’s not enough…

2) Prepare for an increase in stamp duty for properties above RM1mil

There’ll be an increase of stamp duty – from 3% to 4% – charged on the transfer of property valued at more than RM1mil.

Stamp duty is basically the tax that’s imposed on a variety of legal documents involved (for example: your home loan agreement) with selling your property. So, again, expect to see an increase in sub-sale property prices as the sellers pass on these costs to the buyers. But hey, luckily this only affects the higher-end side of the property market, right? Let's take a look at how things will look like for the other side of the spectrum…

3) Stamp duty exemption for residential properties below RM500,000

For first-time home-buyers who are purchasing residential properties that are priced up to RM500,000, you don't need to worry so much! The Government will exempt stamp duty of up to RM300,000 on the Sales & Purchase Agreement (SPA) as well as loan agreements for a period of two years until December 2020.

Now we all know how difficult it is to find an affordable property in a suitable location with the right amenities and facilities. But, with this new measure put in place, first-time homebuyers (especially those with a family or looking to start one) will be able to expand their search area for a suitable property. That's not all, keep reading for another new update that can help with your search... 

4) Affordable housing programmes to continue

The construction and completion of affordable homes will continue with an allocation of nearly RM1.5bil for programmes such as PPR (Program Perumahan Rakyat), PPAM (Perumahan Penjawat Awam Malaysia), PR1MA (Skim Perumahan Rakyat 1Malaysia) and SPNB (Syarikat Perumahan Nasional Bhd). This is great news for the low-to-mid-range income earners as there will be more affordable homes in the market!

It really shows that our new government is taking the issue of affordable housing seriously, and is willing to tackle this problem with renewed efforts. Still, all these new measures can't help you if you don't know how to secure a home loan for your new home! But don't fret, we're here to help you. You can start by using our quick and free home loan calculator to see how much financing you can be eligible for! 

However, it's not always easy to get your home loan application approved by the bank, which is why our government has decided that it's time to come to the rescue...

5) The government will provide a funding for the lower-income home-buyers

If you're one of the Malaysians who are currently earning less than RM2,300 monthly, the government has a surprise for you! The Budget 2019 includes a funding of RM1bil that will be established by Bank Negara Malaysia (BNM) to help you purchase your very own affordable home of up to RM150,000.

This fund will be made available from the 1st of January 2019 at participating banks, namely CIMB, Maybank, RHB and BSN through a reduced financing rate as low as only 3.5% per annum.

This move will significantly reduce the monthly instalments that borrowers would need to shoulder once they purchase a property, and make it that much easier for them to qualify for the required financing. The RM1bil fund is available for two years, or until the allocation has been used up.

For those earning above that mark, worry not, for you’lll have…

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6) Home loan guarantees to enable borrowers obtain higher financing from banks

For first-time homebuyers with a household income of RM5,000 or less, the government will allocate RM25mil to Cagamas Berhad to provide home loan guarantees. This move will allow borrowers to obtain higher financing from banks, including down payment support. Here's a little introduction on who Cagamas Berhad is and how they can help you:

Who is Cagamas Berhad and what do they do: Cagamas Berhad issues corporate bonds and sukuk (also known as ‘Islamic bonds’ that are issued and traded following strictly to the principles of Shariah, which is no riba or interest). They then use the funds to purchase housing loans and also issue financing at a reasonable cost to hopeful homebuyers.

These measures are expected to give between 7% and 11% cost savings to hopeful homebuyers, before taking into consideration any promotional discounts which may be offered by the property developers.

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7) Reduction in price of properties

It’s not what you’re thinking about unfortunately; Malaysia won’t be seeing a sudden drop in property prices any time soon. However, there’s still something to look forward to!

The Government has secured an agreement from REHDA (Real Estate Housing Developers Association) that there’ll be a 10% reduction in the prices of properties that aren't subjected to price control in new projects.

With the earlier announcement that construction and building materials are to be exempted from SST, hopefully we’ll be able to see more affordably priced properties available in the market from the property developers. As for the existing properties....

8) Stamp duty charges waived for excess properties

There’s an existing excess of residential properties in the market worth a WHOPPING RM22bil as of 31 March 2018. It’s an increase of 65% compared to RM13.3bil last year. No prizes for guessing why.

To address this oversupply, the Government will (for a limited time only) waive all stamp duty charges for first time purchases of homes valued between RM300,001 and RM1 million. This offer is only valid for six months, starting 1 January 2019.

This’ll be part of a National Home Ownership Campaign, where in return, developers will offer a minimum price discount of 10% for these residential properties.

9) Peer-to-peer financing frameworks now in Malaysia

The government is showing a willingness to explore new, technology-enabled and innovative mechanisms to solve current housing woes. They’ve taken the decision to approve ‘Property Crowdfunding’ platforms.

If you've never heard of them before, property crowdfunding platforms are alternative home financing for first-time homebuyers which are owned by private entities. These exchange platforms will be regulated by the Securities Commission under the peer-to-peer financing framework.

For example, if a potential buyer wants to get a property, he’ll only have to pay for 20% of the price of the property. The remaining 80% will be provided via potential investors who are willing to fund the purchase. What they’ll get in return is the potential appreciation in value of the property over a particular period of time.

In simpler terms, Ah Chong will be able to own and stay in a RM250,000 property by paying only RM50,000 of his own money without having to apply for a home loan. Ali who might only be interested in investing in a new property for its capital appreciation will fund the balance of the RM200,000 via the peer-to-peer Property Crowdfunding exchange.

This financial innovation will be the first in the world, and if successful, will transform the affordability of homes for first-time homebuyers in the country. The first exchange is expected to go live in the first quarter of 2019, after all necessary approvals are obtained from the Securities Commission.

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10) World’s first ever airport REITs to be made available

If you’ve ever wanted to own a piece of an airport runway, here’s your chance to do so! The government intends to set up the world’s first “Airport Real Estate Investment Trust (REIT)”. The private investing institutions who invest in the Airport REITs will be able to receive their dividends from the user fees collected by Malaysia Airports Holdings Bhd (MAHB).

A REIT is a form of investment in real estate, whether it’s residential or commercial. Those who decide to buy REITS (especially first-time investors) will find that it’s a good way to start building their portfolio as it allows you to own a wide mix of properties, without the burden of huge loan repayments every month.

The government hopes to be able to collect RM4bil from selling a 30% stake of the REITs to private investing institutions, while investors will gain a very valuable opportunity to invest in top quality infrastructure assets. This REIT move will only be carried out after both the new Regulated Asset Base and user fees structure have been negotiated and finalised.

11) Homestay operators get financial assistance to expand their business

The government will also make RM500mil worth of loans available via the SME Tourism Fund. This will be carried out with the SME Bank at a 2% interest subsidy. It’s targeted at the small and medium enterprises such as homestay operators to help them expand their business.

This move spells good news for those who have already been operating homestays and especially those who have been having a hard time renting their property out (due to the market slowdown). Why not try getting into the homestay business, now that the government is providing financial assistance to encourage tourism-related activities? 

Besides, if you manage your homestay business properly, it could even turn into a lucrative business like how this one RMAF (Royal Malaysian Air Force) pilot found out by turning his units into homestays and is able to earn about RM15,000 a month!

Overall, those who are in the lower and middle income group (especially first-time homebuyers) stand to benefit the most with the Budget 2019. Progressive and innovative ideas also signal the new Government's openness to keep up with the rest of the world. Now all we have to do is wait and see how the implementation of these highlights would REALLY affect the property market!

Reblogged from Loanstreet.com.my, Malaysia’s leading independent loan comparison website. Please note that the reason for reblogging this article is for information purpose only and we are not the original authors of this article. All work above attributed to the original authors from the websites mentioned in this paragraph.

VIP Property Advisors

We market sub-sale and new projects for top developers in Kuala Lumpur and Penang. We have freehold properties in newly launched projects that start from RM395k with down-payment as low as 1% and booking fees from RM500 to own your dream home. Completion in year 2021. Call/SMS/Whatsapp us at +6010-353 9911 

⚡ Pre-launch Service Apartment Right Next to MRT Station From RM360k. Click here for details! ⚡

If you are a first time home-buyer, here are some entitlements, privileges and benefits you might like to check out. Click here.

https://www.facebook.com/vippropertyadvisors/