The lender, the borrower and the market.

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When the property market is getting too hot to handle, the government steps in with cooling measures. Whether it’s Malaysia, Singapore, Hong Kong or even China, it’s important for governments to be attentive enough not to let the market ‘explode’ due to speculative activities. When the market gets a little too cold, then it’s also up to the government to heat it up a little. It can be through fiscal measures such as tax and some useful mega projects or it can be through monetary measures by the central bank (BNM) such as reducing interest rates which will then spur more investments since the returns from banks are less attractive. All these measures should however be done in an orderly and SYSTEMATIC manner and not haphazardly. Let’s now look at the lender and the borrower.

Banks lend to qualified borrowers so that both parties will benefit. The bank will continue to have monthly mortgage payments and the borrower would not need to lose their home due to inability to pay. This is why the banks should not lend to borrowers who do not qualify and why buyers must not overstretch themselves financially to buy something they could not afford. I hope this resonates well with most of kopiandproperty.com readers because when we look at Malaysia’s property market, we will know that the market has been slowing down (transactions wise) since 2013 and not 2018. However, despite all these years of slowing down, we did not face any sub-prime crisis issues. The reason is due to what I mentioned above. Hopefully we keep to that.

I love the Malaysian property market because we are NOT an advanced property market, not yet anyway. I love the Malaysian property market because the median age of Malaysia is just 29. (Lots of future) I also love the Malaysian property market because Bank Negara Malaysia has been pretty pro-active when it comes to handling potential speculative issues. There are many things I do not like but that’s another story for the future. The reason for this article is to remind all the ministers we have to also understand the market and think before giving their thoughts because whatever they say is construed as a potential policy in the future. It will be very good to engage more stakeholders too, especially an independent one like kopiandproperty.com perhaps. Happy following.

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written on 6 Feb 2019

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