/// West Malaysia Property News
Average Household Income of RM14,580 a
Month to Afford a Home in the Klang Valley
Rocky Road Ahead for Property
Sector
developers work handin-hand to build more
houses that are not only
accessible. but which
can appreciate in value,”
he said.
Abdul Rahman hoped
that other property
developers and the
academia can carry out
similar surveys in the
country.
Based on the findings,
Sime Darby said that
68% ofplanned housing
schemes in the Klang
Valley were in the
accessible range.
You must have an
average household
income of RM14,580 a
month to afford a home
in the Klang Valley,
according to a recent
study.
that are considered
not only accessible but
have the potential to
appreciate in value.
They include Nilai, Denai
Alam, Bukit Jelutong and
Bukit Subang.
The study spearheaded
by Sime Darby Property
Bhd in collaboration
with the Faculty of
Built Environment of
Universiti Malaya – takes
into account the current
household spending
trend, price of homes
and mortgage rates.
A report of the study
said that houses
in selected areas
in the Klang Valley
remain accessible to
homeowners who may
be looking to invest in a
second home.
It found that certain
groups of buyers
interested in strategic
areas can have access
to houses that are
priced at 56 times their
household income.
The study also found
that this same group
can afford to spend up
to 26% of their monthly
household income to
service a mortgage.
It identified strategic
areas in the Klang Valley
68
The Housing-Income
Index which was
launched here
yesterday by Urban
Wellbeing, Housing
and Local Government
Minister Datuk Abdul
Rahman Dahlan, who
said the survey results
would be useful for
potential house buyers.
“The Index and its
key findings had
been reviewed by the
ministry, and we find
that the information
is valuable as it can
help policy makers and
www.PropertyHunter.com.my
“We intend to utilise
the results to develop
innovative, high quality
products that are
accessible and meet
market needs,” said
Sime darby Property
managing director
Datuk Seri Abd Wahab
Maskan.
The Housing-Income
Index was developed
to gain a better
understanding of
home-owner profiles,
specifically household
incomes and spending
patterns in relation to
owning a home.
The study covered
1,529 respondents,
of whom 1,183 were
home owners at 12
locations: Bukit Jelutong,
Denai Alam, Bukit
Subang, Bandar Bukit
Raja, Subang Jaya, USJ,
Putra Heights, Ara
Damansara, Mont Kiara,
Melawati, Kajang and
Nilai.
We prefer township
developers, which should
benefit from resilient demand
for landed and affordable
housing. Conglomerates and
investment asset owners
should also see earnings
holding up.
MRT line is still tunneling despite
rocky path
We expect property sales
this year t o decline by 5% to
10%, dragged down by slower
volume, although prices will
likely hold up due to cost push
(as seen in the past during
periods of sharp spikes in
inflation).
House price growth may
moderate to 3% per year (first
nine months of 2013: +12.5%)
as rising new supply meets
weaker demand. Sentiments
should remain subdued
(at least in the first half of
2014) given recent tightening
measures and inflationary
pressures.
A potential interest rate hike
could dampen disposable
income further (every 50 basis
point rise pushes affordability
down by 1.6 percentage
points).
While developers may hold
back launches and offer more
incentives, which will eat into
margins, earnings visibility
should be intact given current
large unbilled sales.
Watch out for pressure points
as rising building material costs
and tight foreign labour supply
could heighten execution
risk and dampen developers’
margins (challenging to pass on
to buyers amid softer demand).
There is no property bubble for
now, but we fear an oversupply
of Kuala Lumpur office space,
hybrid high-rise units and
Iskandar Malaysia high-end
condos. Government projects
with high import content and
low multiplier impact may also
be delayed (but MRT lines 2 &
3 should proceed as planned).
We view IOI Properties
Group Bhd as the new sector
bellwether given the dearth
of large cap entrepreneurialdriven developers. Sector
price-to-revised net asset value
(RNAV) is trading below the
historical mean, which may
have partly priced in potential
headwinds, but it still lacks
re-rating catalysts in the short
term.
We cut target prices across the
board (based on 40% to 55%
discount to RNAV) to factor in
weaker sector outlook.
MKH Bhd is one of our top
picks given its large exposure
to affordable housing and
landed residential property
in the Kajang-Semenyih
growth corridor in Selangor
(beneficiary of the upcoming
MRT) along with strong
earnings growth potential from
rising plantation contribution.
Our other top picks are Eastern
& Oriental Bhd (potential
strong re-rating from STP2
approval and Medini launch)
and Wing Tai (M) Bhd on
resilient earnings from retail
and Penang mass residential.
We’ve downgraded S P Setia to
“fully valued” (from “hold” due
to heightened execution risk)
and YTL Land & Development
Bhd to “hold” (from “buy”) due
to high exposure to high-end
condos around KLCC.