Monday, 22 September 2014

Property - They really want to kill it

This is what I said back in June:


"There are so many trades activities that rely on construction industry. Because of our overzealous to introduce more and more cooling measures, everyone will be affected. It is a matter of when it will hit us one way or other. If you killed property development activities, you kill construction activities. With construction down, all other trades related to construction will collapse as well. People will be out of job and out of business. At that time, who cares about property price anymore. The main priority then is to put food on the table. And stock market will be affected too."

Average wage earner already find it hard to buy property priced above a million. What more for property priced above 2 million. Many developers are banking on foreigners to buy their properties. I do not see how this can help to cool down property prices or help the locals to buy property or worry the locals need to compete with foreign buyers to buy local properties.

Those people in the government department is hurting the industry again and again. Of course, they will never feel the pain as they draw their salary from metal bowl. Even if the economy collapsed, they still get their salary. But the people on the street, the wage earners working in the construction and property industry will suffer.

It pains me to see important policy is made without proper consultation and feedback with the stakeholders. Important decision are made by a few hold up in high office.


  1. in your opinion, what should be taken to make house affordable to average incomers, and developers?

  2. If leave it to the developer, it will not achieve much. All developers are profit oriented business outfit. We have to be realistic and not to expect the developers to make losses for providing affordable homes. I have many discussions with my peers in many occasions. The government should come out with holistic policy on affordable home and not piece meal policy now and then. To start with, the government should subsidise the land cost via release of state land for affordable home projects. The government could subsidise the land cost via release of state land for affordable home projects with strict criteria on how this should be done.

    Look at our neighbour down south. Their have a very holistic policy with regards to affordable home with proper regulatory framework in placed.

    Locally, land cost could be as high as 30% of GDV. This is just one part of the total cost of doing business. There are statutory contributions to be paid to authorities. 1% of GDV to IWK, 025% to Water Authority, ISF fund and several more. These are all costs for the developer. Thus, the government, federal and state, should come out with a holistic policy for affordable home project and probably come out with some degree of tax incentive for developer.

    By the way, the notion that developer makes a lot of profit is not quite accurate. Developers have to take in many risks, which include uncertainty of project approval, before they could make any profit just like any businesses.

  3. Someone has got to cool the property market some how. Better bank negara than a sharp needle puncturing the ballooning property bubble one fine day when the ordinary folks are least expected. It is well documented that a system with flushed liquidity will drive asset value up and then all of a sudden, ever fishmonger is getting a loan from the banking system to buy a property whose prices are being driven up by the collective act of fishmonger buying properties that is being financed by the banks in the first place. Speculators with their credit card which limit is infinite will bankrupt the system one day.