KOTA KINABALU: Senior valuer Chong Choon Kim was not optimistic about the property market in the state capital over the next five years due to several factors.
Chong, who is CH Williams & Talhar Sdn Bhd managing director, noted that for the past five years, the market showed a continuous upward momentum and he reckoned that the next five years would be rather gloomy.
He said that in order to strengthen the political position in Sabah, the Barisan Nasional government had made several substantial allocations to develop the infrastructure in rural areas.
“Hence, for the next five years, we would see cautiousness and the government would likely reduce spending on schools, medical services such as hospitals, road constructions and other essential services to cut budget deficit,” he said.
Chong was not optimistic about further Kota Kinabalu urban road developments, especially after both KK parliamentary and state seats were not retained by BN during the recent general election.
“Hence, we would not see massive urban road development, opening up more suitable land for development. Therefore, to lower the land value for urban housing development, the government should continue to provide more urban roads,” he said.
Another factor that Chong pointed out in the expected sluggishness in demand was the imbalance of the take home pay of young people and their ability to pay for the rising prices of houses.
“With rural-urban migration of population at five per cent per annum, theoretically there ought to be commensurate increase in demand for new houses.
“However, owing to the inability of young people to match their income with the rising prices of houses, the purchasing power is simply not there.
“Traditionally, Sabah is agro-based, and once the young people abandon the rural lifestyle, they tend to flock to KK urban area for jobs.
“Now in KK, over 50 per cent of employees earn less than RM2,000 per month, 20 per cent between RM2,000-RM3,500 per month, a further 20 per cent between RM3,500-RM7,000. Only 10 per cent earn more than RM7,000 per month,” Chong said.
He said the government has categorized houses valued at RM250,000 as affordable, but young people earning RM2,000 per month can only afford houses worth RM150,000 with a pay-back period of 30 years.
“Otherwise, they have to live in rental quarters life-long. Only those with an income of RM3,500 per month can afford the affordable houses. Only the elite group with monthly income of RM7,000 can afford the RM500,000 houses.
“At the moment, the saturation point is already reached for the high cost houses, and the developers should divert to the RM250,000 affordable houses,” he said.
Chong also pointed out that owing to the slide in palm oil prices, the Indonesian producers with bigger land size and younger trees do not augur well for immediate recovery of the ‘golden crop’.
On industrial development, he said KK tends to tilt towards the service industry as our manufacturing industry is still not developed at the Kota Kinabalu Industrial Park (KKIP) and unable to compete with neighboring states and countries.
The government should open up undeveloped KKIP area for affordable housing development, he said.