High Malaysia Properties Price Causing Inflation Indirectly

 According to the statistic released by The Board of Valuers, Appraisers and Estate Agents Malaysia, property price index in Malaysia in the second quarter still rose 7.5%, and quarter to quarter is rose for 1.07%. The average price of Malaysia properties are raise from the first quarter RM206,513 to RM208,725. From the statistic, we can know that the inflation is still standing high and is of uptrend.

For the performance of respective states, apart from Perlis, all the other states or regions have achieved an annual growth performance. Terengganu and Sabah are having the largest percentage increase, which is 15.5%, and 15.1% respectively. Other states that recorded double-digit growth are including Selangor and Kelantan. However, for quarterly comparison, only 6 states are achieved growth of property prices, these states are Terengganu, Kuala Lumpur, Selangor, Penang, Sabah, Kedah and Sarawak.

It is noteworthy that the average housing price in Kuala Lumpur is still top among other states, with the price of RM442,864 and is trailing by Sabah and Selangor. The average housing price in Sabah has risen to RM341,222. Meanwhile, the price gap between Kuala Lumpur and Sabah has been narrowed down from first quarter of RM112,474 to RM101,642.

This means that the special phenomenon of Sabah's properties still having no improvement. As the housing prices continue to rise and the local residents still suffer from the dilemma of low-income, this has even worsen their living standards.

The Average Income of Malaysians is Unable to Cope with High Housing Prices

Now, we may do a simple calculation on average housing price in Malaysia by using the available statistic. If anyone wish to buy house at this moment, they will have to come out with at least RM20,873 of down payment, together with other expenses including legal fees, stamp duty, loan processing fees, and etc. Which mean a consumer must have at least RM30,000 in hand in order from the consumer to buy a house. This still not include the money for renovation, furniture, appliances and other expenses.

For the remaining RM190,000, a consumer will need to get the housing loan from bank. Thus, assuming the interest rate is 5% for the repayment period of 30 years(base lending rate or BLR is currently at 6.3%), which means a consumer will need to pay for RM1,000 for the monthly installment. This may seems not a big amount for most of the people especially those who are having income of more than RM3,000, it hardly become any burden for them.

However, the thing that we want to clarify here is that, according to the data released by World Bank, Malaysia's per capita income is only $7,900 (approximately RM24,700), and if we divide it to become monthly income, it will be only RM2,058. For such level of income, the people simply cannot afford to pay for expensive housing prices.

Though some people may against the so-called per capita income is includes elderly and children who are having no productivity at all, so this calculation is not accurate at all. Well, if we calculate the total labour forces in Malaysia of 1,274,000 in July 2011, by multiplied the per capita income by 2, then it will be about RM4,000 per person. But this is still low compare to the ratio of housing price with the personal income of other developing countries.

We may do some simple calculation on the monthly expenses as oppose to a person monthly disposable income. A typical Malaysian will have to pay for:

- Housing loans: RM1,000
- Car loans, gasoline, maintenance, parking, etc: RM1,200
- Food expenses: RM1,000

And the remaining money is actually less than RM1,000. If a person didn't saving up the money, any unexpected event happen may easily used up all their remaining money.

In view of this, even though Malaysia's housing prices and other prices are still keep at an acceptable level, but with the continued rising of the price, no doubt will make the spending power of Malaysia people continues to drop, which may result in the decline of the country's overall standard of living.

Malaysia Property Price Indexes in 2nd Quarter 2011

Area	Per Annum Comparison(%)	Per Quarter Comparison(%)	Average Price(RM)
Malaysia	7.5	1.1	208,725.00
Kuala Lumpur	6.2	1.1	442,864.00
Selangor	11.5	3.5	318,322.00
Johor	3.4	-1.5	145,196.00
Penang	5.6	1.5	232,377.00
Perak	7.5	-1.4	125,256.00
Negeri Sembilan	7.0	-4.3	137,187.00
Melaka	1.7	-2.0	128,116.00
Kedah	6.6	3.4	131,250.00
Pahang	4.9	-3.3	141,987.00
Terengganu	15.5	9.7	161,039.00
Kelantan	10.6	-1.9	129,633.00
Perlis	-0.7	-11.2	102,186.00
Sabah	15.1	4.8	341,222.00
Sarawak	3.4	1.0	266,596.00