Are there still affordable homes for Johoreans?

Yes there is. However, first time home owners should target for homes near to new growth corridors in and around Iskandar Malaysia and near to transport hubs.

Country Garden in Danga Bay. Photo: Khalil Adis Consultancy.

Country Garden in Danga Bay. Photo: Khalil Adis Consultancy.

By Khalil Adis

Take a drive from Nusajaya all the way to Tanjung Puteri and you can’t help but notice the many housing projects marketed as “luxurious” by developers in Iskandar Malaysia.

With an average pricing of RM1, 000 per sq ft for condominiums in Nusajaya and around RM900 for condominiums in Johor Bahru, a studio unit would range from RM450, 000 to RM500, 000.

Is this something that locals can afford?

Let’s do the maths.

Assuming a loan of 80 per cent with a current interest rate of 4.45 per cent (Base Lending Rate of 6.85 per cent minus 2.4 per cent) for a RM 450,000 property, the monthly mortgage would work out to around RM1, 813.

With an average income of RM3, 000 per month, these homes are by no means affordable for Johoreans and are more geared towards the Singapore and overseas markets.

Additionally, let us look at statistics that will help give us an idea of what affordability means to Malaysians.

According to iProperty.com Malaysia’s Asia Property Market Sentiment Survey for the second half of 2014, majority of Malaysians (49 per cent) have an annual income of RM30, 001 to RM90, 000

This means their monthly income would range from RM2, 500 to RM7, 500

Of the 5,295 respondents surveyed, 5 per cent are from Johor, while the majority is from Selangor (48 per cent) and Kuala Lumpur (31 per cent).

Majority (53 per cent) of the respondents have a budget of less than RM500, 000 for their homes.

If we take a median income of RM5, 000 across Malaysia servicing a mortgage for an RM450, 000 home, this will leave them with around RM3, 200 for other expenses.

For Johoreans, however, we have to adjust this downwards to RM3, 000 as this is the average income for most graduates here.

Thus, this will leave them around RM1, 200 – perhaps just enough to get by.

Hence, affordability will be a major issue for fresh graduates and first time home owners.

The next question is then, “are there still affordable homes for Johoreans?”

The answer is yes.

Affordable homes will drive the market in 2015

With a general slow down in property transactions in Iskandar Malaysia from Singaporeans and overseas buyers, developers are already bracing for a tough time ahead.

Data from the National Property and Information Centre (NAPIC) showed that property transactions in Johor saw a steep decline of 33 per cent quarter-on-quarter in the fourth quarter of 2014.

While this will mean a challenging time for the medium to high-end market segments, this will spell good news for local buyers as affordable homes will be the focus for this year.

Already the state government has put on hold approvals for serviced apartments in Iskandar Malaysia while developers are shifting their focus to the local market.

New hot spots

The eastern corridor of Iskandar Malaysia where the Pengerang RAPID project is located at is the next area of growth. Photo: Khalil Adis Consultancy,

The eastern corridor of Iskandar Malaysia where the Pengerang RAPID project is located at is the next area of growth. Photo: Khalil Adis Consultancy,

For those of you who are thinking of buying your first home, you might be wondering, “where are the affordable homes and which areas should I target for?”

If you have missed out on Nusajaya’s and Johor Bahru’s transformations, fret not.

There are other areas where the federal government is focusing on for the next phase of Iskandar Malaysia’s economic development – the corridors of Pasir Gudang and Pengerang.

In fact, Pasir Gudang and Masai are poised to be the new hot spots as it will enjoy the economic spillover from Malaysia’s largest oil and gas hub in Pengerang.

First announced in March 2012 by Datuk Sri Najib Tun Abdul Razak, this RM70 billion project spanning 2,000 hectares has already created 40,000 jobs in the construction industry, 400 jobs for engineers and a further 4,000 jobs for trained technical staff.

This has fueled demand for homes in and around the area.

To gear up for the economic spillover from this Economic Transformation Programme (ETP), a new mixed-used development will be coming up in Pasir Gudang that is expected to create some 12,100 jobs with 865 units of affordable housing to be built by 2018.

Developed by UM Land, the project called Taman Seri Albion will comprise an industrial park targeting Malaysian and Singapore small manufacturing enterprise (SMEs) including food and beverage production, garment manufacturer, printing and packaging industries, electronics, storage and warehousing, services, information technology, machinery spare parts, carpentry and furniture production and automotive workshops.

This will not only create businesses and jobs for locals but also enhance the desirability of homes in Iskandar Malaysia’s next growth corridor.

Chief Minister of Johor Dato’ Mohamed Khaled Nordin, who was the guest-of-honour at the event, had noted that this project will add to 37,000 affordable housing that will be coming on-stream by 2018 in Johor.

“The township will change the investment landscape here. It is a step in the right direction considering it is a mixed use development with affordable housing for Johoreans,” he said.

He also noted that this project is different from the federal-launched PR1MA housing project as the highest quantum price here will be capped at RM150, 000 with high-speed internet connection.

PR1MA homes

Speaking of PR1MA homes. there are four projects of choices for bumiputeras spanning from Tebrau to Pasir Gudang..

The starting prices for the projects in Tebrau and Pasir Gudang start from RM180, 000 to RM185, 000 respectively onwards.

There is no indicative pricing yet for the projects in Masai and Pulai.

Transport hubs

The Bus Rapid Transit (BRT) lines are expected to commence their services this year.

Therefore, this will increase the desirability for properties that are located along the lines.

Areas that are worth looking into include BRT Line 1 spanning from Bukit Chagar to Tebrau, BRT Line 2 spanning from Bukit Chagar to Senai and finally, BRT Line 3 spanning from Bukit Chagar to Nusajaya.

This article was first published by iProperty.com Malaysia in its June 2015 issue.

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