No one would blame you if you thought this because most confine their assumptions to just the few usual choices; hotspots within Kuala Lumpur, for example.
When informed about property choices located further away, the reply is typically, “It’s too far.”
When asked when they would consider buying property within a hotspot of their choice, their reply is typically, “It’s too expensive.”
Last but not least, if asked what they think about an upcoming and well-planned township, their answer is typically, “It will take many more years. I can always buy later…”
Well, let’s talk about why new townships represent super opportunities.
Affordability: What’s affordable? It depends on the location and the type of property you are looking at as well as your household income.
If you equate this to mature neighbourhoods, RM700,000 or even higher will usually be a high-rise of under 1,000 sq ft.
These mature neighbourhoods, also known as hotspots would usually be RM700 per sq ft or usually, more.
The reason is because everyone wants to stay there, thus demand (current) is bigger than supply (new). There are not many empty pieces of land left within a mature neighbourhood.
If there is available land, the property will be built as high as possible and priced at a level high enough for the developer to make a decent profit.
What about landed property? Greater Kuala Lumpur is also connected to the Malaysia Vision Valley and KLIA Aeropolis.
With continuous economic growth as well as growing household incomes, affordability will continue to change and that will continue to drive the property market. It’s about evaluation of the choices you did not yet think about before.
Finding your own “home sweet home” is not about buying the most expensive home you can afford with your salary.
It is about living comfortably and enjoying your life instead of worrying about the mortgage at the end of every month.
For someone with a wife and two kids for instance, you have to accept the fact that if one person in the family has to change their lifestyle so that every one else can enjoy a decent quality of life, that person has to be you.
You could wake up earlier every day to drive to work but at the same time, you can hope your wife sends the kids to a nursery nearby, drops by a nearby supermarket for the groceries and after picking up the kids in the late afternoon, go to a park nearby.
Appreciation: You could look at buying an affordable home (based on your income) and make it into a “home sweet home” but the reality is that you may NOT be staying in that “home sweet home” until you retire.
One day, many years down the road, when your income has risen to a new level and you are thinking of an upgrade, it’s important to be able to sell your current home to another someone who will be able to enjoy it as their “home sweet home”.
Property prices in Malaysia have been rising by an average of 6.75% from 1990 to 2016.
If you take a conservative 4% price growth per year, a RM500,000 home today would still be RM608,000 after five years.
This appreciation is pretty good because how else would you be able to save over RM100,000 in five years while still having a home to stay in?
Additionally, the savings you enjoy from just RM2,000 rental per month for five years is RM120,000.
New townships, especially the well-planned ones, will provide this A.H.A opportunity.
The only thing you need to remember is that even the prices of all these new townships will continue to rise over time. Just look at property prices 10 years ago, five years ago and today.
It’s not rising too fast to become speculative but the continuous rise is a very good sign that demand is growing slowly and that buyers are usually families instead of those who speculate.
This article first appeared in kopiandproperty.com
Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.