Monday, January 24, 2011

Melbourne housing now "severely unaffordable"

The writer, Chris Zappone below cited ratio of house prices to the median income of typical households. So, where are we in Kuala Lumpur? I don't have exact figures but if let's say we take median income in KL as RM60k per year, and median house price in KL and the suburbs like Subang Jaya as RM500k... then we have median house price 8.3 times our median annual salary. Still not as bad as Melbourne at 9.0, I guess... But apparently, London is 7.2 and LA is 5.9. So, we are still quite bad...

Chris Zappone
January 24, 2011

Melbourne has scored near the bottom of an international ranking of housing affordability, stoking fears runaway house prices have made Australia a less equitable country.

Update The Demographia International Housing Affordability Survey, which ranked 325 markets by affordability, listed Melbourne as the world's 321st most affordable city, more reasonably priced than only Sydney and a handful of other locations.

London is more affordable than Geelong.

The ratio of house prices to median yearly household income was 9 in Melbourne, versus 9.6 in Sydney - the second least affordable city in the world, in spot number 324, according to data produced by the US-New Zealand anti-regulation group Demographia in a survey of six English-speaking nations and Hong Kong.

Advertisement: Story continues below The group put the median Melbourne house price at $565,000 with the median household income at $63,100.

Hong Kong came in last at number 325, with an income-house price ratio of 11.4, while Saginaw, in Michigan ranked No. 1, with a multiple of 1.6. Demographia considers markets with a median multiple of 3 or less "affordable", while those with 5.1 or more are considered "severely unaffordable". Australia's major markets were all considered "severely unaffordable''.

US-based geographer and author Joel Kotkin said that even after the housing bubble implosion in the US and Britain beginning in 2008, the ratio of home prices to incomes has grown in major cities such as Los Angeles, San Francisco, Boston, London, Toronto and Vancouver.

"Perhaps most remarkable has been the shift in Australia, once the exemplar of modestly priced, high-quality, middle-class housing, to now the most unaffordable housing market in the English-speaking world," he said. "The real issue is affordability and Australia has gone from a middle-class paradise in that regard into a more stratified society - just as we find in Britain and parts of the US."

Mr Kotkin, who has visited Australia extensively, described the trend as "neo-feudalism" that unravels the social achievement of spreading property ownership.

Demographia's report comes as Australian home prices are expected to show little growth in 2011, after double digit yearly growth as recently as 2010, driven by the slow pace of construction approvals, strong immigration, and an economy that hasn't experienced a recession in nearly two decades.

House prices plateaued in mid-2010, amid interest rate rises and a weaker pace of sales. The national city dwelling price fell 0.2 per cent in November, to $466,000, according to RP Data-Rismark information. Six in 10 Australians live in major cities.

The third quarter 2010 rankings were compiled from national housing reports and estimates drawn from census data on incomes, with calculations made in local currency.

Swelling cities

Separately, a report from the Department of Immigration and Citizenship calculates that if 260,000 migrants come to Australia per year, both Sydney and Melbourne will need to expand by 430,000 hectares, or 4300 kilometers by 2060.

“Expansion of urban areas raises issues such as likely increases in traffic congestion, city (air) pollution, and competition for land as a resource,” the report concluded. “The latter is an important issue since peripheral land of a number of capital cities has been relatively productive agriculture land, which can supply fresh food to the local area with lower freight requirements.”

The report on the physical impact of immigration was prepared by Flinders University and the Commonwealth Scientific and Industrial Research Organisation Sustainable Ecosystems Department of Immigration and Citizenship.

'Severely unaffordable'

The Demographia report showed Australian cities shared the mantle of “severely unaffordable” with American, Canadian, British and New Zealand cities.

Demographia listed Melbourne as the world's 321st most affordable city, more reasonably priced than only Sydney, which came in at 325th, and a handful of other locations.

The survey found that the ratio of house prices to median annual household income was 9.6 in Sydney. It put the median house price at $634,300 and median income $66,200.

Brisbane's affordability trailed London’s so-called exurbs, which stretch into neighbouring counties in east and southeast England. Queensland’s capital ranked 303 in terms of affordability, with a ratio of 6.6 per cent while the English markets were 297, with a ratio of 6.5 times.

The median house price in Brisbane was $447,500, while the median household income was $67,900.

Perth, ranked 291, with a 6.3 ratio, based on a $480,000 houses with a median household income of $75,700, lower than the New York City areas, which scored 289 on the list.

Better times ahead?

Sydney-based real estate research and investment group Rismark believes Australian homes will become more affordable through 2011, as incomes remain strong and house prices flatten out.

"As Australia's business investment and export boom drives strong household income growth at the same time as interest rates keep dwelling prices in check, we are likely to see a substantial improvement in residential real estate valuations," said Rismark joint managing director Christopher Joye.

By Rismark's calculations, the ratio of price to disposable household income ratio has dropped from 4.6 to 4.4 between the June and September quarters, as the median quarterly Australian home price fell from $418,000 to $405,000.

Rismark includes homes outside capital cities, apartments and attached units, and draws on income data that captures wealth generated from investments and multiple sources of revenue, when calculating house-price to income ratios.

Melbourne-based innovation research agency 2thinknow, which compares the social and commercial advantages of 289 cities worldwide, agreed with Demographia's assessment on Australia's affordability.

"Anything [with an income-house price ratio] above 5 is a high multiple - based on two incomes and the lifestyle flexibility to have children," director Christopher Hire said.

The impact means Australian cities receive low benchmarks in the world on 2thinknow's property prices in the Innovation Cities Index. Sydney ranks among the least affordable places, with a 0 out of 5 rating, on a par with San Francisco and Hong Kong, while Melbourne, Brisbane, Adelaide, and Hobart have a rating of 1.

"High property prices mean investment that should be in productive infrastructure or capital is spent on property," he said, leaving the country unprepared when the mining boom ends.

Saturday, January 8, 2011

Iconic: The Met @ Sathorn, Bangkok

The Singapore Embassy at Sathorn Road has land... so what does one do when one has land?..... One Builds! And then we have this iconic masterpiece in the middle of one of the busiest districts in Bangkok...

This building has about 60 floors but amazingly low density. It has units ranging in size from 1000+ sf 2 bedroom units to large family packs of 4 bedroom units. The smaller units are at the lower floors while the larger ones occupy the higher floors. The ratio is almost 1.5 lifts to a unit. The 2 bedroom units share a common lobby which has a 2 lifts - a regular one and a service lift.

As in all cities in this region there is a glut with these luxury pieces, so there are several developer units still in stock. The 2 bedroom units start from RM1.4million which comes fully furnished.

There are a few facilities deck in this building. One of them has this gorgeous pool above. The sauna which comes in both the steam and dry variants also have a hot and cold jacuzzi in a really nice spa setting.

The 2-bedroom unit that I viewed has this lovely balcony with a tree planted in it. Unfortunately, the balcony access is via the bedroom instead of the living room where I think it should be.

Nevertheless, there is quite a nice straightforward layout to the living room with an open kitchen.

The bedrooms however may be too small for one's liking. The 2nd bedroom actually seems a bit more spacious that the master bedroom because the interior designer decided to pack a walk in closet into the already small master bedroom making it look claustrophobic.

I really struggled to find a good angle in the compact master-bedroom to take a good picture but managed to get a good one of the 2nd bedroom above. However, the bathroom in the master bedroom is nice with this large window - these days people don't design windows into bathrooms of compact apartments. So this is a nice welcome.

This unit comes fully furnished as it is. Accessories are also provided such as the intercom below and all the white goods in the kitchen which includes a washing machine, dryer and dish washer.

Thursday, January 6, 2011

Downtown Condominium @ Bukit Ceylon

Since there has been a flurry of interests in Downtown Condo, I thought I make a piece here about this property. With Seri Raja Chulan and Menara Bukit Ceylon's prices shooting above RM600k, perhaps this is the last place in Bukit Ceylon where you can get away with around a RM500k budget for a 3-bedroom unit.

Lately, I have noticed there has been some minor work on the facade and entrance to the building. Many units inside have since been renovated but the lifts and common facilities remain drab as before.
The typical layout is 4 units per floor.

2 units faces the car park above. This is a prime piece of land which is awaiting development. So, the 2 units facing this car park will be facing dust and noise apocalypse for 3 years when the construction starts.

The other 2 units faces the side of Somerset Seri Bukit Ceylon and the front of the building, which is Changkat Raja Chulan. The back of these 2 units are very close to Seri Raja Chulan (picture below). So close you can stab your neighbour with a laundry pole*.

*laundry pole - in Singapore, a great number of people live in HDB flats and back in the days there were no dryers, Singaporeans dry their clothes by hanging them off laundry poles which are stuck out their windows perpendicularly from the building.... not so elegant but it is still a working solution till this day...

Wednesday, January 5, 2011

Thais' Fetish with Bathrooms....

I haven't really visited that many projects while I was in Bangkok, but the record has so far been 100% i.e. in all of the projects I visited, the bathrooms tend to have this huge window looking out to the bedroom. In one case, at Ideo Mix Saphan Khwai, the bathroom of their corner units have a huge window which makes the person having a shower very visible from the Skytrain station right next to it! Here are some selection...

picture above: Single bedroom unit at Prueksa's The Seed Mingle, Sathorn

picture above: The Seed Mingle's 2 bedroom unit with a nice blind covering the bathroom window but the blinds are controlled from outside the bathroom!!

picture above: One-bedroom unit of The Rhythm Sathorn - the WC is actually separated with the bathroom by a sliding door, so that you only get to see the occupant having a bath, not while poo-ing

picture above: Luxurious one-bedroom unit at 185 Rajdamri however has a full display of every action in the bath and toilet

Other projects not featured above who also have this sexy bathroom style are M Silom by Major Development, The Condolette at Convent Road by Prueksa, Vue by Sansiri etc etc,...
Let's learn something from the Thais....

Sunday, January 2, 2011

Mutiara Sentul @ Sentul

Sentul has gone through somewhat a lot of transformation lately thanks to YTL, with projects such as the D's... and spices such as Capers, Saffron, Tamarind etc. Being formerly a Railways quarters, connectivity in Sentul is naturally very good. There are 2 LRT stations within the area and a KTM station. The Titiwangsa monorail is also not far. Almost all the YTL projects have done very well in terms of take up and appreciation. Tamarind for example was launched at around RM200k for a 3 bedroom unit back in 2000 and now worth no less than RM500k. Due to the immense convenience, even the medium and low cost apartments in Bandar Baru Sentul, a leasehold patch along the Sentul Timur and Sentul LRT tracks have seen prices shot up to above RM220k from an initial purchase price of RM120k few years ago.

Picture above: Land marked by YTL for future development

There is more to come. There are large swathes of land, mostly freehold yet to be developed by YTL. There is also a proposal to build the KL-Singapore Bullet Train terminal here (However, this proposal was rejected by the government but it keeps coming back - on and off). Besides, the potential and the connectivity, Sentul is also home to many authentic eateries such as the Charcoal fried noodle pictured below. It is certainly, a very liveable place.

Unfortunatelty, there really isn't many good affordable properties in this area at the moment. As mentioned, the bulk of the appreciation has already taken place on the YTL projects and the leasehold Bandar Baru Sentul flats. However, I managed to chance upon a very attractive property at the center of all this.... Mutiara Sentul...

Location-wise, Mutiara Sentul is not really as hot. Unlike the Bandar Baru Sentul flats, it's almost a 1km walk to the stations. Neverthless, it's still located in the thick of the Sentul action. Mutiara Sentul is sitting right beside the plot where YTL has proposed to build the KL-Singapore Bullet Train terminal. It is also located right at the entrance and exit of the DUKE highway and just a block away from the Sentul Boulevard township.
picture above: Sentul Boulevard

picture above: Swathes of prime land opposite Mutiara Sentul

picture above: The mouth of the DUKE highway

So, here I've found something affordable in Sentul. Priced well below RM200k, you'd get a 950sf, 3-bedroom FREEHOLD unit in Sentul (pictures below).

So, this is a 11 storey building with approximately 200 units, all of them around 900+ sf with car park and security. As per the pictures above, the place looks like a low cost flat, smells like a low cost flat, sounds like a low cost flat but make no mistake, it's actually a condo!

Apparently, the strata-title is yet to be issued to this 10 year old building. However, the management has already been handed over to the owners. The RM150/month per unit maintenance fees among others pay for the upkeep of the swimming pool,

...a gym...

....kiddies play area....

...sauna and a squash court!
At best, it's a Grade C managed building but it's not all that bad as I've seen much worse. There is a good mix of families and migrant workers living here. A non-furnished unit in the most deplorable condition can fetch up to RM1100/month rent. Not bad I think for an investment as in the worst case scenario, you'd see no appreciation but get a good steady rental income. As I have researched, they are extremely hot in the rental market.