If we own a home which we are staying in, the main thing we are worried would be the maintenance part. We want to make it a comfortable one for the family. Water pipings and electrical wirings must been tip-top condition. Price appreciation will then come naturally, over many years of following the inflation rate for example. If we did not buy the home for own stay but our main focus was to have price appreciation, then the results may be different. This is the reason why the government introduced the cooling measures many years ago. They did not want the speculators to reign supreme and sweeping aside all the potential home buyers because of the fast pace of price increase. The cooling measure worked. That’s why our property market did not collapse due to speculative activities. In brief, sub-prime did not happen in Malaysia which is positive.
Reported in TheSundaily.my Khazanah Research Institute (KRI) director of research Dr Suraya Ismail has urged the government to reconsider the property crowdfunding scheme under the peer-to-peer financing framework. She said, “It’s an investment scheme. There’s nothing to suggest that it’s a home ownership scheme because you don’t get the sale and purchase agreement.” She added, that this is also different from a Rent-to-own (RTO) scheme because in a RTO, you co-own or have mortgage with the bank and that’s the normal way the RTO works. Under the P2P framework, the buyer would have to co-own with a number of investors who are seeking capital appreciation. “It’s not something that will increase home ownership. It will only increase house prices because what they want is for it to appreciate,” she added. Looking further, there’s a potential of rapid house price escalation if the scheme is implemented. Here’s the full article for reference.
Property prices will increase over time because that bricklayer’s salary per hour will increase, the cement’s price will increase and even the cost of the land will be rising. However, if the property price is rising at a pace much faster than the salary could follow, that’s when problems come. I am not sure if P2P may increase the property prices faster than if it’s an outright buy by the buyer. I do know however that a home is a necessity and thus the government must facilitate people in owning one. This is not some get-rich-quick scheme and real savings are needed. If everyone do not buy with their own money, that’s when I really worry. Happy following.
written on 16 Nov 2018
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