Demand for old bungalows in Petaling Jaya

Recently, Petaling Jaya has been a popular talk among house buyers or investors due to the high request on old bungalows which are used for each buyer’s own purposes based on a written article entitled “Values of old bungalows in PJ hold steady” that is published in The Edge Malaysia, September 10, 2012. The demand of old bungalows is increasing every year due to its city’s prestigious status as well as the convenience of the city to highways and well-built infrastructure. Stated by CB Richard Ellis Malaysia associate director Wong Tack Loong, “The average selling price for the old bungalows are between RM 1 million and RM 3 million, depending on the size land area, terrain, type, tenure and condition of old building.”  Despite its high-priced factor, there is still a huge demand for old bungalows. But, what makes it so appealing to the buyers?

In 2003, there are 503 of old bungalows sold and increased to 959 in 2008 although the sales in the next year dropped, it managed to increase to 946 transactions in the year 2010 and it is still increasing to this very year based on the data collected by Zerin Properties. This only proves that the demand for old bungalows in Petaling Jaya are increasing each year, thus causing the property price to increase. Percentage of quantity demanded by buyers of the old bungalows are higher than the percentage increase in price. This is why there is no standard figure as prices for each old bungalow varies. For example, in Jalan Kemajuan, a house along the main road that was valued at RM230 psf can be transacted up to RM 400 psf. Each old bungalow is well dependent on its location and purposes when it comes to the price of the bungalow.

           

Each purchaser has their own personal needs for each bungalows for example some of the old bungalows especially the ones facing the main road are used for commercial use such as boutique or a showroom and some of this outlets charged at a higher price depends on renovation done as well as its location. Some of these outlets range from RM 10,000 and RM 15,000, or from RM 3 psf onwards. Some of the owners prefer to tear down existing building to build a new building on the land and sell it on the secondary market or rent it out to those that are interested to gain profits. But majority of them are looking for residential purposes instead. This is because of the large land size which most of them prefer to tear it down to build a bigger home. Furthermore, its ample amenities, low density and exposed to a lot of greenery make it more appealing to homebuyers to re-create their ‘home sweet home’.

The one obvious change from our ancestors generation that can be observed today is that quality of lifestyle for people have improved. People from the low and middle income group today can afford far more things than those from back then. Actually in truth, the spending power for these groups of people today are increasing. The middle income group today can even afford to buy a decent sized home and pamper themselves to luxuries once in a while as compared to people a decade ago. Furthermore, the population of this generation has increased and more and more people are searching for the perfect land to invest on and the old bungalows in Petaling Jaya satisfy most of the requirements thus the demand of the old bungalows are high. Another factor that affects the price rate is the number of years left on the lease. Bungalows that still consist of 60 years to go and because it still has its commercial value can go for RM300 to RM350 psf while the average Section 5 house is going for RM200 psf. But, there is market equilibrium as the price of the old bungalows balanced the needs of buyers and sellers.

The Selangor government also approved the renewal of leases up to 99 years at very affordable rates and payment terms which is called “Private Residential Ownership”. This which established last year allow the landowners of residential properties to renew land leases at a sum of RM1000 instead of the high premium price based on current market rate with a condition that owner must remained on the property itself. Moreover, in the recent Budget 2013, one of the incentives are to enable more Malaysian to own their very first residential property called the ‘My First Home Scheme’, which was launched under the previous Budget, will be improved by increasing the income limit for individual loans from RM3,000 to RM5,000 per month or joint loans of husband and wife of up to RM10,000 per month. More buyers especially the newlyweds that are looking for a place to start a family will be able to afford a better land for residential purposes therefore eyeing on the potential old bungalows that are available in the market.

 Nevertheless, there will always be a high demand for the old bungalows in Petaling Jaya regardless of each buyer’s purposes. Based on the high request of the old bungalows, it will reach a period where there is shortage. In economic terms, when there is a shortage, this will be an increase in demand and the demand curve will shift rightward which also causes the price to increase along the supply curve. Real estate agent and property consultant Nixon Paul, director of Carey Real Estate SdnBhd stated that it is difficult to buy anything under RM2 million, which is generally the asking price depending on the land size and condition of the house. Due to the city’s abundant benefits, there are no wonders that buyers find the old bungalows in Petaling Jaya captivating. In my opinion, the values of old bungalows are most likely to hold strong in the future as there will eventually be a short supply of old bungalows with substantial land areas.
                                                                                               By Chuah Yean Yean