Making homes affordable

The rising prices of homes in Penang are a concern to the state government which is studying various proposals that will help enlarge the state’s land bank where affordable housing can be built.

Chief Minister Lim Guan Eng said the state had to do this as its efforts to redress the situation by requiring affordable housing to be built by developers as well as statutory bodies had not been fully successful.

Lim said the state government had also imposed quotas on those projects with higher plot ratios and density to ensure that there were sufficient units built costing less than RM500,000.

“However that does not address the scarcity of land which can only be redressed by reclamation.

“Therefore, we are getting feedback from various parties on the matter,” he said in his speech when opening the three-day Penang International Property Expo 2010 at the Penang International Sports Arena here yesterday.

Lim said the state government was mindful of rising prices and affordable housing but pointed out that developers had the obligation to help as part of their corporate social responsibility.

On the expo, he congratulated the organisers as the gross development value of the projects offered this year exceeded RM3.5bil. A total of 56 exhibitors are taking part in the event.

StarMetro had reported yesterday that the average selling price of a residential unit on Penang island today far exceeded the average yearly income of a household.

Socio-Economic and Environmental Research Institute senior fellow Dr Lim Mah Hui had said in a recent forum on housing affordability that the average annual household income in Penang was RM42,000 while the average house price was RM578,000, or 14.2 times more.

He said the national average annual household income was RM38,987 while the average house price nationwide was RM180,000, or 4.6 times more.

Lim had also said that the selling price of a condominium unit on the island had increased to RM350 per sq ft from RM250 two years ago.

“Terrace houses are now selling from RM700,000 onwards, compared to RM520,000 in the second quarter of 2009,” he said. - The Star


March 20, 2010 at 10:09 PMkoktiong

Penang houses are still cheaper compare to Medan, Indonesia, Hatyai, Thailand, Macau, and China.

March 21, 2010 at 1:53 AMSmart Alex

Anyone buying properties in Medan, Indonesia, Hatyai, Thailand, Macau, or China??. Good luck.

March 21, 2010 at 2:13 AMjack

Good sign in property boosting

March 21, 2010 at 2:17 AMSmart Alex

My next question is, anyone buying properties in Penang?. Good luck to the speculators.

March 21, 2010 at 3:04 AMbelle

Give local penangites dignity and quality of life. Support good governance, expect corporate social responsibilities. Penangites can decide their own destiny by deciding who they patronized.

March 21, 2010 at 11:26 AMJerry

Good sign for Penang property, price will drop soon. More reasonable price and more people can afford. Cheers!

March 21, 2010 at 11:58 AMBe peace

Be smart, honest to yourself and don't bull shit others, Penang property price won't come down. From 1960 until now 2010. Price for single story just $7k, 18k, rm170k now rm400 - rm500k. And don't wait or telling price will come down. Prawn mee last time around $0.50 now you tell me when going to come down if come I give you all kick my butt.

March 21, 2010 at 2:47 PMooooo

Good luck for the ppl waiting Goverment buid cheap hse for u or waiting price down. U can start save $$ at bank waiting hse at penang go down

March 21, 2010 at 3:26 PMPenang Info

There are basically 2 groups of people involving here.

Group 1:-
Investors which are already invested into penang property and hoping that the price will increase further. Thats why they are here to try to convince everyone including themselves that properties prices in penang will never drop.

Group 2:-
The genuine property buyers who find themselves hardly to afford to own their first home because of speculation in property prices recently.

Both groups have their own believe whether the property price will increase further or drop.

But base on all the comments posted here, we can see the most worrying parties are those investors. The parties include not so cash rich investors especially developer staff, property agents, part time speculators, low paid bankers and many more.

As for genuine buyers they still have a choice whether to buy or not to buy. The calls is your, you determine the price and not the market.

Oh ya Group no. 3:-
Agents and developers who try to create demands.

March 21, 2010 at 4:53 PMKW

Well, I think all of us need to face the fact... even my Kampung (only have Police Station and Post Office), less and less ppl stay now compare to my dad generation (those get educated generation will move to city and never start new family at hometown anymore...); the rate is more than 70% out, 20%+ continue stay... However, if some family relocate/move out, they still can seel their old house a lot more hinger price for those minor young group tht stay...

So, how can be Penang Island propety price drop? Unless something very very bad heppen (like those disasters in Hollywood movie) and 'kill' the city, and ppl start to migrate out from island... yes will will price drop, but by then, you will among those who the first one ran away...


March 21, 2010 at 5:15 PMbryan

Be frank, property not like typical items. Typical items like car, TV or even a handphone. you can always hold off your money, wait till price go down or better promotion, or even dun buy. But for property, how long u can wait, if you are about to marry, about to set up a family with your new baby, you have to buy now, and even buy now need to wait for 2 to 3 year befoe can move in to the new house. unless you are telling me, you can delay your marriage, you are delaying your family planning for another 5 yrs.

March 21, 2010 at 5:18 PMPenang Info

KW, many educated people moving to KL and property market in KL experience in price drop too. Many rich people moving to London and they experience drop of property prices too. It is not a surprise when it happen to penang.

People move to penang because it is affordable. If no longer affordable i think you are the first one who move out from penang. Do you see the picture?

KW let me tell you the fact. The fact is there is an oversupply and over speculation in properties after they did a researched. Low occupancy and price increasing sharply will tend to create a property bubble and will burst in any time which god knows.

March 21, 2010 at 5:26 PMooooo

Property bubble will burst,all buyer want wait price down plz wait for it, dont buy properties now.

March 21, 2010 at 10:57 PMJerry

10 years ago, HK government were encouraging people to buy property and then bubble burst in 1998 and their property became negative value. Lots of people bankrupt. Base on the Penang market situation - supply more than demand. I think the price will drop. It just like KL or any place in the world.

March 22, 2010 at 12:46 AMSmart Alex

I guess speculators are trying to convince people that they MUST buy a condo/house before they get married and have babies. Please don't insult the less fortunate people who could not do so. For those couple who could afford and agree, I say this in goodwill as fellow penangites, you don't want to panic and buy at excessive speculative price where you can barely afford, in condos next to sewage treatment plant and dump site, breathing methane, lest you and your spouse, and your babies born addicted to methane (and this is just a 'goodwill' scenario). You get sick, your baby gets sick, big expensive mortgage, expensive medical bill, then the bubble bursts.

Research thoroughly, information is yr best friend; not developer's sales staff, agents, brokers, investment bankers, your lawyers and other reptiles. The more the speculators talk, the bigger hole they dig themselves. You could almost smell their desperation.

By the way, there are buyers and there are sellers. There are also people just speaking out of conscience and some with insider knowledge.

March 22, 2010 at 5:18 AMTim

There is nothing wrong to be a speculator. Everyone wants to make profit out of his/her investment.
But, today, the speculator are greedier as he/she looks for very high return. (Expect return of RM100K out of RM250K-RM350K investment).
I (including couple of my current neighbours)bought a double storey terrace ~7 year ago from speculator. The profit is RM40K-RM50K out of RM400K of investment.

March 22, 2010 at 5:27 AMbelle

Dear Jeremy - see '....think tank' blog. We are all penangites. I wish all local individual speculators, sellers and buyers well. Make tons of money, drive off to the sunset with your honey and little bunnies. Just don't get caught up with the venture capitalists (these big money players who are playing everybody). When the fall comes, you will be grateful for the money you have in hand now. All the best.

March 22, 2010 at 9:46 AMKW

25+ years ago, I migrated to PG Island, I 100% sure I will started my family here, then I bought my first house (and the only until now) ~RM50K+; If I did not made that call, and wait and wait by renting apartment/house for my family 25+ years to hope for property burst, what would happen to me & my family?

Property burst will not impact the true buyer (unless you force to sell [due to biz issue, or lost income], and move to other place to start your family again); If Penang Island not affordable, there are still plenty of 2-3X lower price in mainland of Penang, you just need to cross PG bridge/take ferry if you working in Penang Island. You spend entire 20-30 years doing that, you can save few hundred K, which is more than RM10K per year (but this exclude petrol, toll, car maintenance, and your move valuable time & safety of driving). Anyway, your call, use your own judgments.

一样米 养百样人!

March 22, 2010 at 10:14 AMMr.Business

Penang government should ask PDC Properties to build more medium cost apartment, not those high end landed D'Residence @ Bayan Mutiara or low cost flats that medium income people could not buy.

March 22, 2010 at 12:36 PMbryan niau

what can we say? penang people need to buy expensive properties

March 22, 2010 at 3:50 PMhome

As long as we have secured job in Penang and Banks is borrowing money that monthly loan repayment is 1/3 of our household salary, the risk is minimum. If the supply over demand, all industries and people will get sufferred in this scenario due to economy downturn.
Banks now will tighten the criteria of lending if the property bubble is there.
That bubble will get burst when those big company like Intel, Agilent, Avago, Altera and ...(too many good companies in Penang) are moving out of malaysia, then the price of properties will decrease sharply.
Those ppl to wish bubble burst is those who still have capability to buy home <400k in Penang. Don't wait guys, just go and buy since the economy is recovering. Those MNC companies now are making huge money and reviewing the salary this year. This will increase the household income further. Banks have no worry about the bubble at all

March 22, 2010 at 9:52 PMtkguy

evrybody talk like expert , but nobody provide data , offcourse some have very good point

the worst is the one compare the current situation with 25 + years ago ?!
by that time , Penang start to boom , 10+ years ago, factory worker easily get >10% increment ,but now ? 3 - 5 % is standard .
I am too young to know the increment rate of factory worker 25 year ago , may be KW can tell .How much is the pay of a fresh engineer by that time?

everything will drop after reach the highest point , just a matter of time

March 23, 2010 at 1:41 AMtony

People who are so certain about other people's intention/affordability has intention/ affordability issues themselves. Not everyone who writes in is interested in buying/selling a house(or houses) now or in the near future; but simply to raise awareness. Not everything is always about money or self-interest; only those who think it is, that it is so.

Bank Negara, the banks and developers are friends with each other and with big money local and foreign players playing with other people's money who are playing everybody. They are not your friends (or 'guardians' as some like to implied). When your savings, fixed deposit interest drop, when your bank nickel and dime you, when you see your investments in certain funds disappear, you know why.

Exercise caution. Check facts and figures. Know yourself. Nobody can possibly tell you what is the right decision for you. No conman can con a man who is not greedy.

March 23, 2010 at 5:31 AMbrain

developers who are griping about the current penang govt giving them a hard time must remember that the big lure of penang properties right now is hugely because of renewed faith in the state govt. for yr own sake, pray that it be here forever n b thankful that it is making u do the right things.

don't just reap n not sow. in business term, create goodwill and u shall flourish. take pride in social responsibilities n charities. it wl b worth a thousand times any advertisement u try to run. emotion is a powerful thing. u wl not benefit from people who hate u. so be nice.

March 23, 2010 at 7:44 AMbuyer

want to buy but wl wait 2 see what LGE wl come up. wl not buy fr subsale - $100,000 more fr original price - i rent at $1000/mth for 8.34 years, no mthly interest payments, no mthly condo fees, no repair bills, no tax bills. i think i can wait. even can afford don't want 2 throw $$$ in the drain - no one get rich like that.

March 23, 2010 at 6:06 PMbeehui

the bubble (if there is one) will only burst if any of the following happens:
- BLR increases to over 8%
- One or few giant MNCs moved out of Penang

Buy with "Affordability" and think with "Abundance Mentality".

March 24, 2010 at 9:54 AMbrain

WATCH OUT for the adjustable rate loans. Especially for long-term buyers, if you could not qualify you for a fixed-rate loan, you probably cannot afford to buy the property. If the bank tells you to take the adjustable rate loan and you can refinance after a few years, the problem is in a the few years time the lending criteria is so tight you may not qualified for refinancing.
Facts & figures yr ultimate guide.

March 24, 2010 at 10:16 AMMr.Business

Hmmm...In Malaysia fixed-rate loan is not popular.

March 26, 2010 at 7:43 AMbrain

Psst. Someone tries to sell short shorts to a granny living next door because they were popular.

March 26, 2010 at 11:52 PMbuyer

monkey see monkey do. market get bumped, monkey jump. SPLATTTTT!!!

March 28, 2010 at 10:27 AMSmart Alex

1. AVG ANNUAL HSEHOLD INCOME $42,000 ie 3500/mth

a) fixed rate

loan repaymt @ 30% of mthly inc = 1050/mth
30 yr @ 5% afford max $200,000 @ 1073.64/mth

loan repaymt @ 50% of mthly inc = 1750/mth
30 yr @ 5% afford max $330,000 @ 1771.51/mth

b) ARM 3/1

loan repaymt @ 30% of mthly inc = 1050/mth
30yr/intro 3.5% afford max $240,000 @1077.71/mth
yr4/5% 1273.05/mth (ttl pymts todate 38,797.56)
yr4/7% 1555.17/mth

loan repaymt @ 50% of mthly inc = 1750/mth
30yr/intro 3.5% afford max $400,000 @1796.18/mth
yr4/5% 2121.73/mth (ttl pymts todate 64,662.48)
yr4/7% 2591.95/mth

2) 'RICH' ANNUAL INC $120,000 ie 10,000/mth

a) fixed rate

loan repaymt @ 30% of mthly income = 3000/mth
30 yr @ 5% afford max $560,000 @ 3006.20

loan repaymt @ 50% of mthly income = 5000/mth
30 yr @ 5% afford max $940,000 @ 5046.12

b) ARM 3/1

loan repaymt @ 30% of mthly income = 3000/mth
30yr/intro 3.5% afford max $680,000 @3053/mth
yr4/5% 3606/mth (ttl pymts todate 109,926.00)
yr4/7% 4406.32/mth

loan repaymt @ 50% of mthly income = 5000/mth
30yr/intro 3.5% afford max $1.2m @ 5388.54/mth
yr4/5% 6365.25/mth (ttl pymts todate 193,987.44)
yr4/7% 7775.86/mth

- highest interest rate calculated at 7% becos someone says bubbles when BLR 8%
- max affordability decreases considerably if include car loans, credit card loans, and other liabilities one may hv. Also does not include yr children's milk money, or winnings fr mahjong.
- don't lose yr job.

March 28, 2010 at 11:31 AMtony

Pray price don't drop too. $1.2m condo/hse condo fee/maintenance not cheap too.

'Rich' foreign foreigners 2002-2006 MM2H ttl 8,723 (for whole of Malaysia). Last week, MM2H association said foreigners reluctant to settle here because of everchanging govt policies.

Overseas penangites (and non-penangites who are less likely to buy in penang), can find better value & returns overseas now. Maybe they buy, maybe they don't buy in penang, but chances are they are less likely to buy in penang now.

As to foreigners buying bulk and cash, they are speculators too as the MM2H data shows.

Clue for popularity of ARM. As data by smart alex show, at today's prices, not many can afford to buy at fixed rate. Speculators almost always buy with ARM, thinking to sell before rate goes up.

Figures do not lie. Interpret it and you will find your answer.

March 29, 2010 at 1:53 AMvoice

penangites unite. v cn do wat v did in d last election.

Just don't buy.

spread d word. tell yr families, yr relatives, yr friends & everyone u know here & overseas. so wat v wait, v r not paying condo fees,mortgage... thieves r not stealing our gates, grills, faucets.. in ghost condos n ghost housing areas. our money is in the bank n other investments earning money, n v wl buy cheaper later (if n when v want to buy).

Let's kick butt.

p/s: penangites not yr avg joe, u know.

March 29, 2010 at 9:28 AMbuyer

let's go a few steps further.

1. totally absolutely refuse to buy subsale
2. take your money out from the banks which are aggressively pushing these 'lure & trap', 'pay less, pay later' loans
3. don't buy from developers who favour speculators, and leave genuinue buyers with crap
4. don't buy from developers who build only on the motto of maximizing profits at the expense of the health, safety and comfort of house owners eg toxic air, hardly passable narrow roads, lack of greenery, lack of open space etc. drive around and you will know who they are

do it. you will feel especially good. genuine buyers deserve better than what the market is offering right now. same with financing, enormously guilty of fueling the market. eg ARM 3/1

1. what happens year 4 toooooooooooooooooooo30??
2. do you really believe the interest rate is going to be lower?
3. do you believe the condo/house price is going to be higher?
4. do you believe the condo/house price is not going to drop?
5. can you qualify for refinancing?
6. how much is the refinancing costs?
7. do you want to deal with fluctuating mortgage payments year after year for 27 years?
8. you shoud enjoy your house, not enslave yourself to it

i am sure most penangites already knew what is going on, and are fully aware of what i am saying. it is the speculators who are oblivious to the reality on the ground.

hey, it is not like we have no place to live right now. we are actually quite comfortable where we are. we can most definitely wait it out. believe us. cash-strapped speculators can't hold. cash-rich speculators are smart; do you think they will tolerate the expense of holding for the sake of holding?.

time is on our side. sit back, relax, and enjoy our cup of coffee.

March 29, 2010 at 10:25 AMMr.Business

"ARM 3/1"??

Look like we have some American friends here...Can anyone enlighten me which bank in Malaysia offers "ARM 3/1"? Because I really do not think we have it in Malaysia.

The most popular loan type we have in Malaysia is floating rate loan (the interest rate charged on the loan will move in tandem with changes in the base lending rate). For example 1 housing loan has floating rate BLR-2%. Current BLR is 5.8%, that mean the current rate on the loan is 3.8%.

Get your facts right man...

March 29, 2010 at 8:44 PMjeniferpro

Good idea. Lets don't buy any house and condo in Penang start from now. Lets sell off all our house immediately with good price now and rent a flat to stay temperory. Then later property price will drop. When Semi D drop until RM100K, then we all buy together quickly. Buy as many as possible. Then we become rich. how nice....

March 29, 2010 at 10:13 PMBezbuy

Jenniferpro, if you sell your house or condo now and bet the price will drop, you will not be able to afford another one in future. Face it, in the real world, the property price in Penang will most likely continue to rise due to demand from locals as well as foreigners who have experienced the sweetness of making high returns from their existing properties here. Besides, price increase because raw material and labour cost continue to rise, not just because of speculation.

Even if the bubble did burst, it will be short term only. Buy now, and buy landed properties if you can afford one, and your grandchildren will be thankful to you because they can then afford to buy another house next time, by leveraging on the property you have just purchased today.

March 30, 2010 at 12:22 AMbuyer

i sure am making some people nervous.

i will forgive your ignorance. adjustable rate mortgage (ARM) is the term used in the article 'speculation ... think tank', and if you go to the other projects on this website, you will see the term being used. ARM is the same as floating rate mortgage if you do not know that. if you are not familiar with the term ARM i am not sure you should be involved (speculating?) in properties right now. nothing to do with american or not american; just the difference between knowledge and ignorance. i am a very proud penangite.

different banks offer different package, different intro rates, at different times. anyone with an ounce of brain knows the ARM 3/1 3.5% intro rate used by alex is just a point of reference. i guess the bank you use is 3.8%, then your affordability will be lower and your payments will be higher than the numbers indicated under alex's chart.

i am not fighting with you because your predicament is obvious. i am also not advocating people to sell their home (home - the house they live in). however, if they have more than one house, two, three ... and they have been thinking about selling, this is probably the right time. if your 'extra' property or properties are recently bought, i would sell it. sell it or not, it's up to you. i am not buying.

March 30, 2010 at 12:55 AMMr.Business

March 29, 2010 9:28 AM buyer said...

genuine buyers deserve better than what the market is offering right now. same with financing, enormously guilty of fueling the market. eg ARM 3/1

1. what happens year 4 toooooooooooooooooooo30??
2. do you really believe the interest rate is going to be lower?
3. do you believe the condo/house price is going to be higher?
4. do you believe the condo/house price is not going to drop?
5. can you qualify for refinancing?
6. how much is the refinancing costs?
7. do you want to deal with fluctuating mortgage payments year after year for 27 years?
8. you shoud enjoy your house, not enslave yourself to it


"buyer", we do not have ARM 3/1 in Malaysia. Get your facts right.

March 30, 2010 at 1:08 AMMr.Business

ARM 3/1 has fixed interest rate for the first 3 years of the loan;
typical floating rate loan in Malaysia does not has it.

For ARM 3/1, after 3 years, the interest rate change once a year for the next 27 years or until the loan is paid off. The first number in the name ARM 3/1 indicates the number of years of the fixed rate period while the second number indicates the adjustment interval. An adjustment interval is the period between potential rate changes (in this case, 1 year).
For typical floating rate loan in Malaysia, for example the rate is set as BLR-2% (most popular offer from banks currently). BLR follows trend of overnight policy rate (opr) set by Bank Negara. For example, Bank Negara recently increse opr from 2% to 2.25%, in few days Banks increase BLR from 5.55% to 5.8%. The rate of floating rate loan in Malaysia is always floating.

ARM and floating rate loan in Malaysia are different. Please get your facts right.

March 30, 2010 at 2:03 AMPenang Info

ARM or floating rate whatever it is la...

Don't sweat, don't worry.

There is another round of interest rate hike coming soon. Prepare yourselves for the worst.

Try this game
What if BLR = ?? %

March 30, 2010 at 6:12 AMtze

your comment sound childish. If you would like cheap price property, why not go to mainland and buy instead of complaining island property too expensive.why you wish would like penang property price drop ? Property in penang will only drop is penangites lost their job or MNC factory closed. Else you you can continue with your sweet dream.

March 30, 2010 at 9:59 AMbuyer

this is so funny, never laugh so hard. had to copy brain's comments which is meant to be posted here.

'american? who? if american, would know better, don't you think? after all, they went through the bubble and crashed. more credibility than 'katak dalam kotak'.

wronglah, 'katak bawah tempurong'. no, 'bawah kotak' because maybe in america, no coconut. you think they got 'katak' ah?

wat a bloody idiot. i must be british.

anyway, if there were foreigners, we welcome your views, and we are happy to hear from the horses' mouth since there are these people r always imaginating about foreigners. to clear the confusion some tried to create, adjustable rate is same as floating rate mortgage. - argue with that katak.'

ditto, brain. I know a katak in a kotak under a tempurong in malaysia.

who cares abt the workings in between banks, bank negara and the overnight rates. we are talking about between banks and buyers. espece d'imbecile, that stupid idiot in french. maybe i am french.

March 30, 2010 at 10:05 AMMr.Business

I also laugh so hard here. You are so funny :)

March 31, 2010 at 12:45 AMJO

Apparently, Jeniferpro was insulting the group of people here who just say 'Don't buy' and want to wait for property price to drop.

April 20, 2010 at 10:35 AMJoshua

20 years ago (1991) when I first came to Penang, my pay as a starting engineer is RM2000. At that time, 1 unit of terrace house in Tmn Sri Nibong was $140K, a new apartment was $70K.
That means, apt is roughly 35X my monthly, and house is 70X.

Now, in 2010. A new engineer starting pay is roughly $3K.
Where by a new terrace house is in range of $600, new apt is $300K.
The ratio is 100X and 200X.

So, does the "affordability" improves in the last 20 years ?
I'm afraid not.

May 13, 2010 at 11:24 PMPKC

blr 6.05 soon

December 27, 2010 at 4:24 PMjhtcmy2k

Penang house's quality does not match with the price that sold out, a lot of the house design and quality is questionable. Besides, gangster contractor is another issue for those who buying property in penang, your renovation fee might higher than your down payment. If the housing price still growing up, Penang will be another JB in the next few years, burden to citizen and causing society problems.