Rising cost of housing

 Price 14 times more than average household income

THE average selling price of a residential unit on Penang island today has far exceeded the average yearly income of a household, says Socio-Economic and Environmental Research Institute senior fellow Dr Lim Mah Hui.

“The average annual household income in Penang is RM42,000, while the average house price is RM578,000, or 14.2 times more.

“The national average annual household income is RM38,987, while average house price nationwide is RM180,000, or 4.6 times,” he said at a recent forum on housing affordability in Penang.

Among the speakers present were Raine & Horne senior partner Michael Geh and Real Estate & Housing Develeopers’ Association (REDHA, Penang) chairman Datuk Jerry Chan.

 

 A place to call home: Terrace houses on Penang island are now selling from RM700,000, say realty experts.

 

Lim said the selling price for a condominium unit had now increased to RM350 per sq ft from RM250 two years ago.

“In some areas, the selling price per sq ft has increased to RM500, while new projects have a price tag of RM600 per sq ft.

“Terrace houses are now selling from RM700,000 onwards, compared to RM520,000 in the second quarter of 2009. In some locations, a new terrace house is selling for RM1.2mil,” he said.

Speculation was responsible for the high house prices in Penang, said Lim, adding that special financial packages introduced last year further fuelled the speculative trend.

Raine & Horne senior partner Michael Geh said that over the past two years, there had been developers on the island who invited speculators to take up over 50% of their newly launched medium-cost condominium schemes priced around RM220,000 and RM250,000.

”The speculators then re-sell these units at a higher price, making between RM50,000 and RM100,000 from each sub-sale.

For more affordable units: The Government should be responsible for low-cost projects as this will remove the low-cost subsidy borne by developers, says an expert.

 

“How much they make de-pend on the time that they sold. Such speculation has caused the price of medium-cost housing to rise by more than 20%, compared to two years ago,” he said.

Meanwhile, Chan said the Government should be responsible for low-cost housing and community projects as this would remove the subsidy for low-cost housing borne by developers who pass the cost to house buyers.

“Developers can then price their property more affordably.

“The plot ratio guideline in Penang is also outdated, as developers are allowed only to build less than one sq ft for every one sq ft.

“In Singapore, the plot ratio is 2.8 times to five times. The plot ratio guideline should be revised to give developers more scope for innovation and creativity which allow them to develop units with a variety of prices,” he said.
  
By DAVID TAN, Star, also in 

http://article.wn.com/view/2010/03/19/Rising_cost_of_housing/