Saturday, May 21, 2022

Homes in flood-prone areas could be a market washout

Buyers can be expected to take location into consideration following the massive floods which swept through major cities in the Klang Valley.

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Home owners in areas at risk of floods may find it difficult to sell their houses following the massive torrents which recently swept over areas in a number of states including major cities in the Klang Valley.

Speaking to MalaysiaNow, property consultant Natasha Gideon said the floods could also make it an uphill task to market currently unsold housing units in these areas.

In the aftermath of the deluge which has claimed at least 48 lives so far, she said, buyers would undoubtedly take location into account before putting down money for a home.

“We need to look at the frequency of flooding in a given area,” she said.

“Of course, property value will be affected if the area is known for its floods.”

Much also depends on the predictions of experts, she added.

“If an area is expected to experience floods, it will indirectly affect the value of property there.”

This applies regardless of whether the property is landed or high-rise, she said.

While single-storey homes are seen as a less popular option in a flood situation, she said apartments and condominiums are also affected as lifts and basement parking lots would sustain damage.

“Both categories have their pros and cons, so it’s difficult to say in general which is the better choice.”

Buyers more cautious

Lim Hock San, executive chairman of management and investment holding company LBS Bina Group Bhd, said buyers would be more cautious when choosing a home in the aftermath of the recent floods.

Speaking at a press conference in Petaling Jaya on Wednesday, he said his company would look into ways to improve the drainage systems for future housing projects.

Lim, whose company is involved in 14 development projects in the Klang Valley, Johor, Pahang and Perak, expects house prices to increase in 2022, driven by an uptick in cost of construction materials of about 5%.

“But they may not increase by so much because they want to ensure that people can afford to buy homes,” he added.

“So many are likely to buy homes in existing housing projects.”

Gideon meanwhile said the occurrence of disasters such as floods does not necessarily mean that the value of homes will go down, as it also provides an opportunity for developers to improve on future housing projects.

Normally, she said, when large-scale disasters occur, the government introduces tighter policies for development and construction where new standards must be followed.

“After the Highland Tower incident, for example, development in hill areas had new standards,” she said, referring to the collapse of an apartment block in Ulu Klang, Selangor, in the early 1930s.

“Even after that tragedy, the value of property in the area remained stable and houses were sold at high prices.”

But how long it will take to regain the confidence of buyers in a particular area will depend on the place itself and, crucially, on government initiatives, she said.

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