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Analysis Dining Finance Food Lifestyle Malaysian Public Transport Urban

Cheap prices don’t last forever

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More than a year has passed since the abolishment of Goods and Services Tax (GST) in June 2018 and the reintroduction of Sales and Services Tax (SST) three months later.

From the very first day of its implementation, GST has been accused as the culprit in driving prices up, especially essential consumer items like food and non-alcoholic beverages.

So, most Malaysians expected prices would at least be stabilized after GST was no longer enforced.

Yes, the prices on a great number of products were cheaper when the GST rate was set to zero from June to August 2018 though the same situation was virtually nonexistent for services.

But, good things don’t last forever, especially when it comes to cheap prices.

The usual suspects

That was evident in the Consumer Price Index (CPI) Malaysia November 2019 report released by the Department of Statistics, Malaysia on 20 December 2019.

CPI (read: inflation) has increased by 0.9% within a span of one year from November 2018 (121.0) to November 2019 (122.1).

prices

Well, the usual suspects in driving the overall index up were Miscellaneous Goods & Services (2.5%), Housing, Water, Electricity, Gas & Other Fuels (1.7%), Education (1.6%), Food & Non-Alcoholic Beverages (1.5%), Communication (1.5%), and Furnishings, Household Equipment & Routine Household Maintenance (1.5%).

Besides, the CPI has also increased slightly by 0.1% within a month since October 2019.

The spike was contributed by the increase in the index of Housing, Water, Electricity, Gas & Other Fuels by 0.4%, Miscellaneous Goods & Services (0.4%), and Health (0.2%).

In the same manner, the first 11 months of 2019 witnessed an increase in price index at the rate of 0.7% compared to the same period a year before.

For Food & Non-Alcoholic Beverages, the index has increased by 1.5% in November 2019 in comparison with November 2018.

To be more specific, the hike was caused by the food sub-group of Vegetables (2.0%), Food Products not elsewhere classified (1.6%), Milk & Eggs (1.4%), Fish & Seafood (1.3%), and Fruits (1.1%).

Costs more to eat out

Since prices of food items are generally up, the cost of eating out was a bit higher in November 2019 when compared to the same month in 2018.

The increase of the price index of this sub-group was caused by the rise in the prices of Rice with Side Dishes, Food Made from Noodles, and Fried Chicken.

prices

Absolutely, cooking at home will always be the cheaper alternative for those who are not willing to fork out extra money for dining out.

The expensive states

Meanwhile, two federal territories and two states had CPI higher than the national rate of 0.9% in November 2019 and the winners were Kuala Lumpur (1.4%), Selangor & Putrajaya (1.3&), and Pulau Pinang (1.1%).

While all 14 states experienced an increase in the index of Food & Non-Alcoholic Beverages, six states and two federal territories registered rates higher than the national index for that category in November 2019.

The highest rate was recorded in Selangor and Putrajaya (2.0%), trailed by Kuala Lumpur and Pulau Pinang (1.9%), Perak and Johor (1.8%), and Kedah and Perlis (1.6%).

Core index

For core index, the rate climbed by 1.4% from November 2018 to November 2019 and three groups which contributed significantly to the increase were Miscellaneous Goods & Services (2.5%), Housing, Water, Electricity, Gas & Other Fuels (2.1%) and Food & Non-Alcoholic Beverages (1.8%).

Please take note that the Department of Statistics, Malaysia excludes the most volatile items of fresh food and administered prices of goods and services from the calculation of core index.

prices
Up, down, or stay the same?

What lies await for us in 2020? Will the first year of the new decade see the utopian dream of zero inflation rate finally come true?

With the introduction of sugar tax last year and digital tax this month, let us all pray the dream won’t turn to a nightmare.

Don’t miss reading these articles:

Slow climb out of the housing property market doldrums in 2020

Condominium Near Train Stations

Categories
Analysis Finance House Lifestyle Malaysian Mortgage Property

Slow climb out of the housing property market doldrums in 2020

An article published in Star Property recently discussed some interesting points of view by experts on, among others, the outlook of Malaysia’s residential property market in 2020.

Despite the downward trend in this market segment, all of them agreed that there will be some slow and significant improvement during the next 12 months.

Property overhang
Photo: Pexels

Knight Frank Malaysia Managing Director, Sarkunan Subramaniam believed that pricing is the only cause for property overhang in this country right now.

He mentioned several other contributing factors such as mismatch of products, expected yield, unfavorable location in regards to accessibility, distance, lack of amenities and product type.

Photo: Greater Kuala Lumpur Development Facebook Page

On a different note, Sarkunan viewed that several areas like Desa Park City, Taman Tun Dr. Ismail, and Damansara Heights are capable of luring the upper-income group, high-net-worth people, and foreigners.

Besides, the spillover effect of Tun Razak Exchange is expected to benefit the Imbi and Pudu area once the financial district is open for business.

Secondary property market

For 2019, Sarkunan explained that the secondary property market experienced a higher level of productivity in 2018 due to the shift of the base year for real property gain tax from 1 January 2000 to 1 January 2013.

He added, among other factors that stimulated that market are the improved processing procedure for the Malaysia My Second Home application and the revision of price threshold for foreign buyers for unsold high-rise properties in urban areas.

Steady demand
Statistics provided by NAPIC as of the second quarter of 2019.

Meanwhile, Royal Institution of Surveyors Malaysia Deputy Chairman, Aziah Mohd Yusoff said, reasonable price and good location are among the factors which will ensure the steady demand for residential properties especially terraced units and condominiums.

She also believed the secondary property market, mostly in the residential segment, is experiencing a correction period due to poor market sentiment and strict lending rules imposed by Bank Negara Malaysia and the impact would likely to continue next year.

Affordable houses

Malaysian Institute of Estate Agents President, Lim Boon Ping forecasted, the residential property market will continue to be driven by affordable houses, mainly units sold under RM400,000.

For the past few years, he said, more than 60% of the total transactions were made up of residential properties.

Laissez-fare approach
Photo: Pexels

Finally, the Association for Abandoned Building Owners Malaysia Chairman, Dr. Mohamed Rafick Khan implied that the government should take a laissez-fare approach toward the residential property market.

He believed, the housing market must be free from the hands of the government because market forces will correct itself.

What the government should focus on, then? Mohamed Rafick said the government can spend more time on town planning and public transport systems which in turn will stimulate the demand for property.

He also forecasted the property market will not see an oversupply in affordable homes for the next three to five years despite the government has been consistently pushing developers to build more houses in that category.

Lower profit margins and risk are said to be the reasons behind developers’ indifferent response to that call.

Mohamed Rafick concluded prices for new properties will be expected to stay high although the price will be slightly reduced in the secondary market.

Points to ponder

Although things look a little bit promising in the near future, prospective homebuyers should exercise caution before deciding to purchase new homes.

Maybe the worst is yet to come for the residential property market in Malaysia if the domestic and global economies don’t show any sign of improvement next year.

Categories
Analysis Condominium

Venice Hill Condominium – The Most Transacted Condo In Secondary Market

In the last 5 years, Venice Hill Condominium has the highest number of transaction in the secondary market compared to all other condominiums in Malaysia. The condo price has undergone a long period of volatility. The condo price went down after the launch in year 2000 from RM120 per square feet ( PSF ) to lowest point about RM 70 PSF per square feet. In 2013, after about 14 years, it recovered to launch price level and has since showed steady rise to RM 160 PSF.

Venice Hill Condominium overview

Venice Hill is a high density condominium nestled in Batu 9, south of Cheras. It sits on the uphill ad offers lush greenery and Kuala Lumpur city center skyline views. Venice Hill was developed by a bankrupt developer, Li-Foong Group and designed by Australian-based Ehrlich Layton International Architecture. All units were reported sold out within six months over five stages. It comprises of 12 apartment blocks. There are from 17 to 30 floors per block and each unit has built-up area ranging from 1,200 sf to 1,600 sf with 5 different floor plans to choose from. More details on the property:

  • Address: Persiaran Puteri 1, Taman Puteri, Batu 9, 43200 Cheras, Selangor
  • Date of completion: 2000
  • Tenure: Leasehold
  • No. of Blocks: 12
  • No. of Storey: 17 – 30
  • Built-up: 1,200 – 1,600 sf
  • Maintenance Fee: RM 0.15 psf
  • Rental: RM 1,200.00 – RM 4,300.00

Venice Hill price movement is quite peculiar. It is very unusual a for property price went down after launch. So we did further investigation online and found out that Venice Hill Condo was negatively featured in local news headline for quite a number of times. Below are news and blogs that talk about Venice Hill.

What can we learn?

We can sum it up the learning from Venice Hill to the following:

  • Highly transacted property in secondary market is not necessarily a good thing. It might indicates negative trend
  • Know your future neighbors before buying a property. You do not want
  • Research on ongoing issues and developer’s reputation
  • Investigate on workmanship, news on structural issues and pay site visit
Categories
Analysis Condominium Property Public Transport

Moving 5 train MRT stops away from a KL Sentral train station can strip more than RM500K off property prices

It is not hard to see why residential property located near to train stops is highly demanded. Among the benefits living near to MRT stops are convenience, cutting short travelling time and, saving money from paying tolls and car parking fee. However, like many other great things in life, it cost money.

As per our previous analysis suggests the closer the property to train station, the higher the price is (click here). Nevertheless, what is more important to home price is the distance of the nearest train stations to the city center. The closer the stations to the transportation hub of KL Sentral, much higher the price is. It carries far greater influence to home price. In these article we will focus on distance of the stations to the city center rather than the property distance to nearest train stations.

What we cover in this analysis is how property price within one kilometer to train station changes according to distance and time taken to travel to KL Sentral. For this purpose, we have divided MRT SBK lines into two parts- Muzium Negara to Kajang and, Muzium Negara to Sungai Buloh. As for now, we only cover property price near the stations of south-east bound MRT SBK line from Muzium Negara station to Kajang station.

*Note: Muzium Negara station is connected to KL Sentral station by short walking distance. First, let’s look at the overview of MRT SBK line.

MRT SBK (Sungai Buloh – Kajang)

MRT SBK line started its operation on the first alignment from Sungai Buloh to Semantan on Dec 2016. The entire alignment was completed and started its full operation from Sungai Buloh to Kajang on Jul 2017.

Source : https://www.mymrt.com.my

Highrise residential property price near MRT stops.

We have gathered the current asking price of residential properties within 1 kilometer radius from MRT stations for this analysis. In order to make comparison easier, we put all property units into a common denominator of 1,000 square feet unit and we calculated the median price. Why we use 1,000 square feet is because it is a reasonable size of a decent sized dwelling of 3 bedrooms.

Unlike Singapore or Hong Kong, Malaysia is not land-scarce nation, where options for housing aren’t that many. In Malaysia, we have many land banks and increased in transportation connectivity has given us many more options to choose from.

The analysis

As depicted by the chart below, it is clear that the price of property near MRT SBK stations is strongly correlated to the distance of nearest station to Muzium Negara.

Click chart to enlarge

Total travel time from Muzium Negara to Kajang is around 51 minutes and cost you less than RM4 for one way. Along the the train line, the prices reduce relative to the distance to Muzium Negara. You can rarely find 1,000 feet homes with price below RM800K around city center stops ( Muzium Negara, Merdeka, Bukit Bintang and Tun Razak Exchange ). As you travel further down south to Cochrane station the price drops to below RM700K. If you go further to another stop to Maluri, the price starts to drop around RM500K. All it takes is 19 minutes from Muzium Negara and cost you RM2.60 before discount for one way. If you don’t mind adding more time to your commuting, you can see 1,000 square feet homes price at below RM300K at some of the stops at the end of the MRT SBK line.

Everyone wants a better life. Being closer to work place is convenient and give you more personal time. The question is, how much additional premium would you pay to have that? Or, should I put it the other way around, how much additional time you can spend commuting in order to save a lot of money? We leave it to you to ponder. Good financial management or live the most convenient life or anything in between?

The map

Map below illustrates MRT SBK stops in the analysis. Click on the link for interactive map.

Map of property near train station. Click her to view dashboard

As such, that’s it for now. We are a social entrepreneurs that aims to help home buyers to make smarter decision. Our articles are data driven, factual and transparent. We promise to deliver you more in depth analysis. Please subscribe to our newsletter to receive future articles in your mailbox.