Beyond Reach!

Just Beyond your Grasp

A household is categorically defined as members in a family who share the same rice-pot.

Relating affordability to house purchase, a Sime Darby-Universiti Malaya study discovered that to own a home in selected areas  in the Klang Valley, you must have at least RM14,600 household income (HHI). Their formulaic assessment is based on household spending trends, house prices and mortgage rates.

Bukit Jelutong

For those who intend to purchase houses in such strategic areas, they must ready resources that is 56 X their monthly household income. This same group of potential purchasers must at least have 26% of their income to service mortgage loans.

The study identified these areas as having potential to appreciate and would attract potential buyers.

They ranged from:

Melawati Area: At least RM9,360 HHI (RM3,120 for Mortgage loan (MG)

Nilai Area: At least RM9,430 HHI (RM3,143 MG)

Bukit Subang Area: At least RM9,670 HHI (RM3,223 MG)

North Klang Region: At least RM11,300 HHI (RM3,766 MG)

Putra Heights Area: At least RM12,190 HHi (RM4,063 MG)

Kajang Area: Atleast RM12,300 HHI(RM4,100 MG)

USJ Area: At least RM13,320 HHI (RM4,400 MG)

Klang Valley Region: At least RM14,580 HHI (RM4,860 MG)

Denai Alam Area: At least RM15,160 HHI (RM5,053 MG)

Ara Damansara Area: At least RM15,660 HHI (RM5,220 MG)

Subang Jaya Area: At least RM15,660 HHI (RM5,220 MG)

Bukit Jelutong Area: At least RM17,310 HHI (RM5,770 MG)

Mont Kiara-Duta Hartamas ARea: At least RM20,160 HHI (RM6,720 MG)

So, what is the message that is being sounded through this solitary study; if at all it is to be accepted as credible?

These will be the layman's off the cuff conclusions:

Unless you earn a HHI of at least RM10,000, do not expect to buy any house in these areas or anywhere strategic in the Klang Valley.Even on a joint husband-working wife salary they will be hard-pressed after having to deduct for rentals, car loans and sundry overheads such as EPF deductions, SOCSO and the household budget. If you have children, it could be much worse as you may have to pay towards childcare, school bus-fares, insurance and tuition.

Sadly, you are unlikely to buy any low to medium cost houses as you are the middle income group caught in a pincer trap as tax payers sans any help from the authorities. So, you may have to pay taxes with little return from the government. Feeling sad and abandoned, already?

If prices of houses in these identified areas continue to rise 5% per annum, forget about ever buying them. Just rent them as these highly capitalised houses need not fetch high rentals. Sometimes commuting from a faraway place such as Seremban is marginally cheaper but you will inadvertently have to pay the toll in body and mental health besides putting yourself and your vehicle under severe stress. Rent near to your place of work or the schools your children attend. It's a much safer bet!

As Malaysia is now in the tingling throes of high inflation, you may want to buy into some land in your kampungs; with the hope that they will appreciate in time and you can protect the value of the cash ringgit (which is slipping southwards) in a more permanent mode. Or even buy some foreign currencies to ward off the diminishing value of your ringgits.

Do find out also if you are eligible for those government sponsored schemes which are highly subsidised and those earmarked ones at the old airfield in Sg. Besi and also the ex-RRIM land in Sg. Buluh which is about to be farmed out for development.

Do not be hasty in buying a house which is a big ticket item. Do not be slave to the bank that will tie you up for life. Buy only when you are comfortably ready!