Wednesday, 22 October 2014 17:43
TOO EXPENSIVE! JB properties beyond reach for most locals despite cooling market
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Mohd Mazlan has been saving up to a own a house in Johor Baru for the past 12 years but news that property prices in the region may be dropping has not given him new hope.
At 30 years old with a wife and two children, Mohd Mazlan, is part of the new generation of Johoreans who are feeling squeezed and priced out of Johor Baru, even as the government and the business establishment hype about the success of Iskandar Malaysia.
Although property experts, landlords and politicians say that the market is cooling off after several years of runaway price hikes, there is still a sense that houses prices are out of reach for the majority of residents.
Quite a few used the phrase "it’s not for us" when asked about new properties in south Johor.
The phrase represents their frustration at being left behind in the property boom taking place because of the Iskandar Malaysia project.
It is also a critique of Iskandar Malaysia as a whole. For if Johoreans are not tasting the fruits of development that Iskandar Malaysia is bringing, then what is the purpose of the project?
Cooling measures
Experts say southern Johor's property market boom was the result of the marketing and hype surrounding Iskandar Malaysia.
Launched in 2006 and with five flagship zones, Iskandar Malaysia was also meant to rejuvenate Johor Baru, which over the years had turned into a huge discount market for Singaporeans and worker colony for the island city.
High-end projects have sprouted all over its already congested landscape. Johor Baru's popular Lido beach, which used to be crowded on weekends and looks out on Singapore, is no more.
Most of the seaside has been sold to mega-construction companies from China who are building seven-figure waterfront condos.
Some of these companies are so rich they can afford to bring in their own equipment, materials and workers from China.
“The hype and excitement created was matched by the entrance of many new players in the form of catalyst projects, developers, investors and consequently speculators,” said V. Sivadas, a property consultant based in Johor Baru.
“The latter thrived as the financial environment was lax and less prudent," said Sivadas, executive director of PA International Property Consultants.
But the market has cooled down this year after the government revised the Real Property Gains Tax and ruled that foreigners could only buy property worth RM1 million and above.
The 2014 period up to June, however, showed a substantial decline in sales and value of sales, compared with the first half of 2012, said Sivadas.
“In comparison to the first half of 2012, there was a drop of about 48% in terms of total transactions, and about 37% drop in terms of total value of transactions in the first half of 2014.”
Hype has not died down
Yet, news of the market cool down has not been greeted with cheers by people like Mohd Mazlan of Kampung Majidi, Johor Baru or Loh, who runs a hardware store in Bukit Indah, next to Nusajaya.
Shop rental rates in the area have gone through the roof, said Loh. Last year, his landlord charged him RM1,000 for his downstairs lot. This year, it went up to RM2,000.
Shop owners have bought into the hype of higher consumption and population growth from Iskandar Malaysia and are trying to cash in, said a commercial property owner in Johor Baru who requested anonymity.
What these property owners do not realise is that tenants like Loh are not raking in profits as inflation and operation costs have gone up.
“The cost of electricity went up this year. Our stock is also more expensive and we cannot raise prices because then our customers will run away.”
A The Malaysian Insider survey found that higher operating costs because of higher rental rates topped the list of complaints among 18 businesses around southern Johor.
The second biggest complaint among businesses was that the wages of consumers could not keep with inflation.
According to the government’s Household Income Survey 2012, the average household in Johor earns RM4,658 a month.
As the cost of living goes up in Johor Baru, residents feel they cannot pay the monthly instalments that come with owning houses priced on average, at RM300,000.
“And that’s in Kulai,” said Mohd Mazlan, referring to the town some 30km from Johor Baru.
Everyone must prosper
Sivadas believes that the government both at the federal and state level must get more involved in the property market.
A balance needs to be struck between catering for investors in the market and the public’s needs for affordable homes.
For instance, the “carpet-building” of luxury condos on Johor Baru’s waterfront created the perception that there was a glut of high-end properties, he said.
It’s also not clear who would buy these units as they were priced above what locals could afford.
“The power remains with the state to correct the apparent mismatch of supply and demand in the residential sector,” said Sivadas.
“The government should also open up new main roads to encourage development of housing in areas, such as Kempas, Senai, Kulai, Ulu Tiram and Pekan Nenas.”
“GLCs with land banks should concentrate on housing the poor and middle income, instead of competing with private developers at the high-end sector.”
It’s only by balancing the needs of investors, developers and residents that Iskandar Malaysia’s prosperity can be enjoyed by everyone, said Sivadas. –TMI
Full article: http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=383922:too-expensive-jb-properties-beyond-reach-for-most-locals-despite-cooling-market&Itemid=2#ixzz3GsKe4eZj
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