For those who have been reading kopiandproperty.com for some time, you would know that I do not believe cooling measures would cause prices to drop a lot. Maybe for the way too highly priced ones. Those units which are not interesting for the super-rich but not really affordable for even a household with two managers. Cooling measure as the name imply is meant the cool the market. In other words, property prices should stop climbing so fast and start to become normal again. In brief, still growing but not to push prices down. Yes, I firmly think Malaysia still face shortage in appropriate properties; affordable and good ones.
I read some interesting views from Datuk Alan Tong’s article in The Star. He reiterated some of the cooling measures taken which include the 70% loan policy for third property purchases, housing loan limits calculation based on net income instead of gross, and loan tenures reduced from 45 years to 35 years, the removal of Developer Interest Bearing Scheme (DIBS) as well as the revision of Real Property Gain Tax (RPGT) rates. He said these measures did manage to reduce the number of transactions in 2013 but by end of 2014, the transaction has grown again, even if just slightly. 246,225 units in 2013 and 247,251 units in 2014. He then quoted statistics from Savills Malaysia and Raine & Horner International Zaki + Partners which showed that in the Klang Valley, the price of terraced houses and high-rise residences recorded 8.6% to 18.5% growth year-on-year in the first quarter of 2015. During the same period, similar properties in Penang gained 12% to 17% in price. This meant that prices are still growing even if transactions have barely moved upwards when compared on a year by year basis.
He then quoted the statistics from National Property Information Centre (NAPIC) which showed that the number of transactions in the secondary market has risen from 78 percent to 87 percent between the years of 2010 to 2014. He said something which he said before, that the housing industry which are producing less than 100,000 units per year for the past 2 years meant that there are just not enough units being built and he said that these cooling measures have actually discourage the increase in supply. He suggested that the government should fill up this gap in affordable homes with their land resources, conversion of agriculture land for residential use and faster approval process. Cooling measures have yet to solve the root cause and this has to be quickly supplemented by the building of more affordable homes.
I think it is quite true that the number of units being built is insufficient. for the past 2 years. However, to rely on just the private developers is never the best solution. To be fair to these private developers their main aim is profitability and not charity. However, I would love to see some of them thinking along the lines of maintaining overall profit in absolute numbers but reducing their margins. Actually, this is still possible and can be seen from some of the happenings today. Just look at some of the advertisements in Facebook or in SMSes or in online property portals. Some developers are offering very attractive rebates. Truth is, no developer would offer big rebates if they could sell the units easily. A big rebate also could only be offered if the developers do not suffer losses by selling such prices. If they suffer losses, they would just stop building.
As for the affordable homes, I think the government just have to step up their game and ensure more are built but ensure that only those who qualify gets to buy them. I would be sad if those who do not qualify buys them and rent out to those who should be the ones in need of such housing. I always feel that we should judge them (federal and state governments) by their promise and the actual units built every year. I think this would ensure they deliver what’s promised and not only keep talking but not acting on it. Everyone should continue pushing for more affordable homes. All the best in owning your first property as this is definitely a necessity for our future.
written on 4 Oct 2015
Next suggested article: Reselling of affordable homes allocated? Sigh.