This article will help aspiring homebuyers who reside in Johor determine which price range and residential neighbourhoods best suit their income level.
So you’ve decided that you are ready to buy a house. Welcome to the club!
After some online research, you may be feeling a little overwhelmed. Do you want a condominium or a landed house? Will two bedrooms be sufficient enough or is three better?
The more property listings you visit, the more you begin to realise that the house you had in mind is actually out of your financial capacity. Or are you overthinking your budget? After all, you can just apply for a higher home loan amount, right?
Here’s the hard truth: Most banks will not accept a Debt-to-Service (DSR) ratio which exceeds 70%. The DSR is a formula used by banks to assess a borrower’s ability to repay his or her monthly instalments, where DSR = Debt/Net Income X 100.
This ratio shows how much of your income is being used to pay off debt obligations and indicates whether or not you can afford to take up the housing loan in the first place.
READ THIS FIRST: How does DSR affect my home loan eligibility & how to calculate it?
So, which property price range will get your home loan approved?
For simplicity’s sake, we have compiled a house affordability table based on the 70% DSR rule. You can use this as a rough gauge to determine which price range you should be looking at based on your monthly household income. Household income refers to the combined incomes of all people within a particular household or place of residence – it could either be the income of one individual or the joint income of a married couple.
This home loan eligibility guide assumes a 90% margin of financing, a 35-year loan tenure and a 4.5% interest rate. Do note that the “Debt” portion of your DSR calculation should include your (future) monthly instalment payments.
|House Price (RM)||Monthly Instalment
[Int Rate: 4.5%]
|Sum of monthly debt (+RM1,000)||Minimum NET Household Income (RM)
[- EPF, SOCSO & Inc Tax]
|Minimum Gross Household Income (RM)
[Max DSR = 70%]
|300,000||RM 1,278||RM 2,278||RM3,254||RM3,700|
|400,000||RM 1,704||RM 2,704||RM 3,863||RM4,500|
|500,000||RM 2,130||RM 3,130||RM 4,471||RM5,250|
|600,000||RM 2,556||RM 3,556||RM 5,080||RM6,050|
|700,000||RM 2,982||RM 3,982||RM 5,689||RM6,850|
1. The sum of monthly debt (RM1,000) is based on the following estimates:
– Car loan: RM500
– Credit card repayments: RM400
– PTPTN Loan: RM100
2. Net income refers to your income after deductibles, such as income tax, EPF and SOCSO.
3. The Minimum Gross Household Income is based on the latest table of monthly tax deductions by LHDN and assumes the most prudent figure, i.e the highest tax deduction tier – Malaysians who are single with no children. This sum would differ slightly according to the respective individual’s marital status and their number of children.
You can also use our LoanCare tool to check whether you can afford your target property in the first place. This loan calculator which adopts the DSR rule will then show you your home loan eligibility from up to 17 banks in Malaysia.
Where in Johor can you afford a residential property?
Now that you have determined what is the monthly instalment amount you can afford, let’s take a look at median per sq ft (PSF) prices for residential property in 52 areas throughout Johor. You can then check which locations fit your budget and preferred property type.
For this purpose, our data team has compiled the latest residential transaction data as well as the median per sq ft (PSF) prices in each area for the January to December 2018 review period. The data is captured by brickz.my, whose figures are sourced from the Valuation and Property Services Department (JPPH).
In this article, we will be zooming in on the two most popular residential products which recorded the highest sales amongst Johorian homebuyers in 2018 – terrace homes and apartments.
As depicted above, terrace homes dominate the transaction market share in Johor at 70%. This was equivalent to 12,321 transactions. Coming in second is apartments at 9.5% or 1,672 transactions.
The interactive heat maps below showcase the various residential boroughs within Johor and their respective median prices per sq ft for terrace homes and apartments, respectively. Just hover over the coloured dots and you will be able to see an overview of the median pricing of your desired neighbourhoods.
Areas shaded in blue are on the lowest end of the price spectrum, up to RM 249PSF while grey is at the RM250PSF midpoint. The orange areas are between RM251 to RM380 PSF and red areas are RM381 PSF or more. For a better toggling experience, we would recommend readers to play around with the heat maps while reading the article on a desktop.
We have also listed down the Top 7 most expensive areas in Johor for your easy viewing:
|Area||Median Price PSF (RM)|
You can also use this information to benchmark against the property you have your eye on to check whether you are overpaying for that unit or not. Using Tebrau as an example, where the median PSF of a terrace home is RM373.60. Let’s say you are interested to purchase this terrace unit in Taman Mount Austin, Tebrau which is going for RM545,000. Taking its built-up size of 1,800 sq ft, we can quickly calculate its PSF (545k/1800) = RM302.80.
You can see here that you will be paying below what other terrace homebuyers in the market have spent on (Tebrau’s PSF: RM364.90), hence this unit has the potential to be a good deal. Do note that these data points are to assist you with the beginning stages of your home filtering process. You will still have to do your proper due diligence before making a purchasing decision.
On the apartment front, per sq ft prices are generally lower than their terrace counterpart, with the exception of Iskandar Puteri, Tebrau and Permas Jaya.
|Area||Median Price PSF (RM)|
Considering their smaller built-up sizes, apartment units are able to offer first-time homebuyers with a lower entry point. For instance, a 850 sq ft apartment in Johor Bahru, with a slightly higher PSF of RM333 would only set you back by RM283,000.
While combing through property listings online for the best home deal for your Ringgit, do keep in mind the 7 other costs involved when purchasing a home in Malaysia.
We hope the information and data points presented in this article gives you a good head start to do your own research, and the confidence to make better home purchasing decisions. Now, go forth and hunt strategically!