NO BUBBLE: Housing affordability has never been better, and there is no property bubble. In fact, high-end condominiums are not selling at all while the secondary market has already slowed down, so there is no need for more cooling measures, suggests some experts at a property forum recently.
Citing statistics from the Ministry of Finance, CIMB head of research Terence Wong claimed that house prices in Malaysia are still affordable to the average homebuyer amid concerns of a property bubble in Malaysia due to the steep spike in house prices for 2010–2011.
“Income has grown faster than house prices in Malaysia, even in the Klang Valley,” said Terence, explaining that while property prices rose in tandem with income before the Asian Financial Crisis in 1997, post-crisis household income has risen faster than property prices.
He also pointed out that mortgage interest rates had decreased over the past ten years. “Borrowing costs for buying property used to be 10–12 per cent. It used to be BLR plus 2 per cent, but in the last two years, it has gone down to BLR minus 2 per cent,” he said.
Real Estate and Housing Developers‘ Association Malaysia (REHDA) Immediate Past President Datuk Ng Seing Liong agreed, adding that for developers to be able to build and sell houses in the RM150K–RM220K range, the government should give the land free to developers who could then build houses based on construction costs of RM100–RM120 psf. “If the government build good transportation to these areas, then the affordability problem can be solved,” Ng said, adding that there must be political will to solve the affordability issue.
Another option, apart from reducing the apartment size to about 400–600 psf, is to increase plot ratio for construction, and then price them between RM300K–RM500K each. It’s guaranteed to fly off the shelf, said Ng. Ng and Wong were speaking recently at the “Macro Economic Trends and Real Estate Market: Malaysia and Abroad in Asia Pacific” forum jointly organised by Real Estate and Housing Developers’ Association Malaysia (REHDA) and Le marché international des professionnels de l’immobilier (MIPIM) Asia. By Khairie Hisyam Aliman