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The Correlation between Education & Cost of Living That Influence Real

Estate Industry
The welfare economics can be chracterized as a branch of the economy that
studies. How the distribution of income, resources and goods affects
economics well- being (Marshall and Pigou, 1890). each individual will enjoy a
decent standard of living with this welfare economy. The welfare economy can
be divided into several categories, including education and living costs.
Institutional education is a key facility and service that facilitates the economic
growth of the country. While, the higher the cost of living in some areas will
affect the demand for property, including the growth of the real estate
industry. The aim of this essay is to identify the correlation between education
and the cost of living for the real estate industry and to investigate the
contribution of education and living costs that directly and indirectly affect the
real estate market.

The existence of educational insitutions will increase and have a dirct impact
on the development of real estate in the surrounding area. Fomerly, Puncak
Alam was a palm plantation of the Federal Land Development Authority in
Bukit Cherakah, nothing more than an oil palm plantation, but as the
development of UiTM Kampus Puncak Alam begun, more future development
was planned in the vicinity of the educational institution. The UiTM Puncak
Alam Hospital, the University Teknologi Mara Hospital (UiTM) is being
plannes in the vicinity. The nearest Hospital is Sungai Buloh, 27 km away.
Puncak Alam has begun to blossom as a new property project. It came to
prominence a few years ago, and today there are a lot of developers in
Puncak Alam.

The development of educational establishments in Puncak Alam attracts more


developers to develop a number of new urban areas, such as Eco Grandeur
(Eco World), Shah Alam 2 (IJM Land). these projects include a collection of
apartment, terraced apartments. It is a well-planned and sustainable township
with a good connection to many highways. IJM Land Managing Director
Edward Chong Sin Kiat said that the completion of the University Teknologi
Mara Campus has helped to boost the vibrancy of the township. It clearly
shows that the educational establishment is essential to boost the new
township. In addition, the establishment of UiTM affected rental rates around
Puncak Alam a few years ago. Based on the data reported by Edge Prop, the
current rent for terraced house is RM 85O to RM1,500 per month for buildings
of 1,400 to 1,950 sq ft. For apartments, the rent is from RM600 to RM900 for
units of 720 to 900 sq ft. As a result, the rental market will stagnate when new
developments come on-stram, so that property owners will get more benefit
from the rental income that will increase from years to years due to student
rentals. Education is the main catalyst for the increase in the value of housing
market and will also enchance certain areas where demand is slightly high.

According to data derived from Bank Negara Malaysia, based on the annual
report, a single citizen is expected to earn RM2,700 a month, RM4,500 for a
couple withour children. Meanwhine, a family with two children is expected to
earn at least RM6,500 for a living wage. Bank Negara Malaysia also reported
most of the household were affected by the higer cost of living recently. The
lower income group that live in urban area much affected due to increasing
rate cost of living that result to most of lower income group are not afford to
buy a house especially the young adult. The increasing of cost of living has a
relatively large impact on economic well being. The Malaysia Consumer Price
Index (CPI) reported an increase of 1.0 per cent in January 2020 compared to
0.9 per Cent in December 2019. this indicates a bad sign for the economy just
an inflation has undermined purchasing power. Using a household-centric
perspective to measure the impact of housing on economic welfare, almost 30
per cent of Malaysians reported not having enough shelter based on the
Gallup World Pool. This is more remarkable among urban residents than rural
areas. However, expensive housing prices are commonly seen as an urban
issue rather than a potential market failure in housing. Housing market failure
occurs when house prices have risen above inflation, which has caused many
people to struggle to pay for housing and create wealth inequalities.

Another example of the failure of the housing market includes empty housing
& homelessness, chronic home supply that generates excess demand and
labour immobility due to high house prices & rents. Next, Malaysia’s house
are simply unaffordable. According to Khazanah Research Institute and Bank
Negara, the signal for well-functioning affordable home market is that the
median price for the entire housing market is three times the gross annual
household income.

In a nutshell, the Correlation between Education & Cost of Living are likely
become a major influence to real estate market. The rise in the inflation rate
has a knock-on effect on the cost of living, which much be felt among B40 and
M40 and those that are living in developed areas, because the market has
failed to achieve economic efficiency, causing further uproar in the dumping of
houses in the property market.

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