By Lim Sue Goan
MAY 14 — Economic data are usually released by Bank Negara. Prime Minister Datuk Seri Najib Razak rushed all the way from Sibu to Putrajaya yesterday (May 14) to announce that the Malaysian economy has recorded a robust growth of 10.1 per cent in the first quarter of 2010.
He was trying to tell the people that, under his governance, the country has walked out from the impact brought by the financial tsunami, ended the negative growth and started to recover.
Similar to other Asian countries, the main factor for the strong economic rebound is because of the country’s fund injection and huge stimulus plans. But when the market confidence is restored, hot money will flood into Asia, giving birth to assets bubbles.
There are also bubbles in Malaysia, particularly because of high-priced housing.
From newspaper advertisements, we can find that housing prices around Klang Valley have been rapidly surging. A terrace house was sold at about RM400,000 two years ago but today, it costs over RM700,000 per unit. And it is common to find semi-detached and detached houses to be sold at more than RM2 million.
When being asked to comment on the soaring prices, those in the industry will always say: It is still cheap compared to foreign countries, the prices are reasonable.
But please do not forget that only 20 per cent of the people in this country are high income earners, while 40 per cent are middle income earners and the remaining 40 per cent are earning less than RM1,500 per household. Some of them even earn only a few hundred ringgit per month. They can never afford a million-ringgit-house even if they starve themselves.
I believe those who buy expensive houses are rich people, permanent residents and foreign citizens. Would these people be able to accept and digest all the houses that have been continuously introduced to the market? Many developers are competing to build high-priced houses as they bring high profit margins. But once the market collapses, who is going to clear up the mess?
High-priced housing speculation will also bring up the prices of other houses and eventually lead to inflation.
Middle- and low-income earners will be the victims of the plight.
It is worrying that the government’s economic development strategy is actually stimulating the bubble. For example, the government and the Employee Provident Fund (EPF) will form a joint-venture to develop a 3,000-acre tract of land in Sungai Buloh into a new hub for the Klang Valley.
In addition, the government has been partnering Naza TTDI KL Metropolis Bhd to build a RM628-million premier convention centre, the country’s largest exhibition and convention centre, in Jalan Duta, Kuala Lumpur.
The prime minister’s New Economic Model (NEM) should be heading towards a knowledge-based, high value-added and high-tech development. It is not the government’s responsibility to take part in the real-estate industry. And real-estate is also a non-productive economic activity.
China, Hong Kong and Singapore are in the implementation of control measures to cool down the housing market frenzy. After the outburst of the European sovereign debt crisis, the world economy may face another decline. If we do not address the issue of assets inflation now, once there is another financial crisis and the bubble bursts, the consequences will be more severe.
Starting from end of last year, China has raised minimum down payment for second homes while Hong Kong has increased stamp duty for luxury houses, cancelled internal pre-sale and provided that first released units can only be sold to individual buyers.
The government should uphold the principle of “people first” and control housing prices as the people will be the one who suffers when housing prices keep soaring.
Too much of international spare and hot money will create a crisis while the real estate bubble will bring the biggest calamity. — mysinchew.com
He was trying to tell the people that, under his governance, the country has walked out from the impact brought by the financial tsunami, ended the negative growth and started to recover.
Similar to other Asian countries, the main factor for the strong economic rebound is because of the country’s fund injection and huge stimulus plans. But when the market confidence is restored, hot money will flood into Asia, giving birth to assets bubbles.
There are also bubbles in Malaysia, particularly because of high-priced housing.
From newspaper advertisements, we can find that housing prices around Klang Valley have been rapidly surging. A terrace house was sold at about RM400,000 two years ago but today, it costs over RM700,000 per unit. And it is common to find semi-detached and detached houses to be sold at more than RM2 million.
When being asked to comment on the soaring prices, those in the industry will always say: It is still cheap compared to foreign countries, the prices are reasonable.
But please do not forget that only 20 per cent of the people in this country are high income earners, while 40 per cent are middle income earners and the remaining 40 per cent are earning less than RM1,500 per household. Some of them even earn only a few hundred ringgit per month. They can never afford a million-ringgit-house even if they starve themselves.
I believe those who buy expensive houses are rich people, permanent residents and foreign citizens. Would these people be able to accept and digest all the houses that have been continuously introduced to the market? Many developers are competing to build high-priced houses as they bring high profit margins. But once the market collapses, who is going to clear up the mess?
High-priced housing speculation will also bring up the prices of other houses and eventually lead to inflation.
Middle- and low-income earners will be the victims of the plight.
It is worrying that the government’s economic development strategy is actually stimulating the bubble. For example, the government and the Employee Provident Fund (EPF) will form a joint-venture to develop a 3,000-acre tract of land in Sungai Buloh into a new hub for the Klang Valley.
In addition, the government has been partnering Naza TTDI KL Metropolis Bhd to build a RM628-million premier convention centre, the country’s largest exhibition and convention centre, in Jalan Duta, Kuala Lumpur.
The prime minister’s New Economic Model (NEM) should be heading towards a knowledge-based, high value-added and high-tech development. It is not the government’s responsibility to take part in the real-estate industry. And real-estate is also a non-productive economic activity.
China, Hong Kong and Singapore are in the implementation of control measures to cool down the housing market frenzy. After the outburst of the European sovereign debt crisis, the world economy may face another decline. If we do not address the issue of assets inflation now, once there is another financial crisis and the bubble bursts, the consequences will be more severe.
Starting from end of last year, China has raised minimum down payment for second homes while Hong Kong has increased stamp duty for luxury houses, cancelled internal pre-sale and provided that first released units can only be sold to individual buyers.
The government should uphold the principle of “people first” and control housing prices as the people will be the one who suffers when housing prices keep soaring.
Too much of international spare and hot money will create a crisis while the real estate bubble will bring the biggest calamity. — mysinchew.com
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