Residential property prices on the rise

It is still a good time to buy property as the market is heading upwards, says Real Estate and Housing Developers' Association Malaysia

Prices of residential properties will rise 10-20 per cent over the next six months because of cost and inflationary pressures, says Real Estate and Housing Developers' Association Malaysia (Rehda) president Datuk Michael K.C. Yam.

"The current housing market is simmering. There is no boom or bust, but property prices will rise. The increase will be in high-rise and landed properties in all price categories across Malaysia," Yam said at a half-year property market briefing in Kuala Lumpur yesterday.

He said it was still a good time to buy property as the market was heading upwards, noting also the liquid banking sector and improvement in credit facilities for construction players.

According to Yam, developers are planning more launches in the second half and each project will comprise more than 150 units.

He also said that there was pent-up demand for semi-detached houses, bungalows and terraced houses priced more than RM800,000 each, especially in the Klang Valley and Penang.

"There are a lot of upgraders who want to move from a terraced house to a semi-D or bungalow because of security and to live in a green environment."

Yam said that key challenges for the sector would be higher interest rates, implementation of the Goods and Services Tax and removal of subsidies that would affect the lower-income group.

"We need government support and accommodative policies to ensure the market is simmering. The government should also be more firm in their policies to attract foreigners to buy properties here." - By Sharen Kaur (Business Times)


August 10, 2010 at 3:24 PMkenD

Did your income rise 10 to 20% over the next 6 months? Great... Everything are rising except the wages.

Bankers, "ah long" will love the situation when everybody need more money for living and they are ready to help you out.

August 10, 2010 at 3:48 PMPenang

there is no balance ..sometimes i hate to say this but let the bubble burst and we shall see

August 10, 2010 at 3:57 PMTanner

This caption from Busines Time is just too general, simply due to cost increase and inflation would bring the housing price to go up by 10-20% in just 6 months? Or the message is merely to boost the confidence level of buyers, which gonna stir a speculative process again?

August 10, 2010 at 4:34 PMcraftmodel

yes.. its just the message to boost confidence level.. guess "some" in REHDA also part of the speculator

August 10, 2010 at 5:52 PMTanner

You can check on the members of REHDA, obviously most of the big-shot developers and realtors are in it. These people will not want to see the market cooling down, or else how the hell IJM gonna sell his new leasehold for 450psf, light colection 700psf, and mahsing service suite 450psf?

August 10, 2010 at 6:33 PMJohn

There are currently so many projects, property and especially commercial lots which are vacant and unoccupied.
Yet, there are more future, upcoming projects in the horizon???
Does not make sense.
It seems like the economy in Penang is unable to catch up with the supposedly rise in everything and mainly in property price.

Yet, I do not deny that a lot of projects are still being snapped up.
Is there real demand other than that from speculators?
Or is the demand caused by articles such as the above, making the public think that everyone should buy some property, any property, before it goes up again? Is it driven by the fear that they may not be able to own their own house or upgrade to something that they could?
Or is it driven by confidence so strong that property investment is the best investment vehicle regardless whether you're Tom, Dick or Harry?

We will never know...
Meanwhile, the property prices still keeps going up until there is another economic downturn / crisis that will cause the property bubble to burst... Else there will never be a factor strong enough to burst the bubble.

August 10, 2010 at 11:28 PManthony

There are some of the biggest speculators who would like to mislead the public that they should start buying any property by making sweeping statements. They are trying to incite and exploit to the fullest the herd-instinct. we should not give credence to such articles .. property bubble may burst...

August 10, 2010 at 11:36 PMAntsy Renovations

If you talk of Penang, it mainly depends on MNC investments. Since MNC mostly originated from US and Europe regions, they are more interested to create more jobs in their homeland than offshore in Asia. Also, with a stronger ringgit, that means higher cost to these investors. If you read the news recently, there is a report of a drop in Msia exports. There is rampant cut in projects and thus cost-cut on fringe benefits and stagnant salary increment on-going.

Weaker US economic activity, the impact from austerity measures in the euro-zone and slower economic growth in China would affect external trade and therefore impact factory orders. Even Singapore forecast a wane in growth.

I don't see an improved global economy which would justify a boom in property market unless it is really drawn by local population demand, which I doubt given the many vacant premises after 2-3 years Vacant Possession and OC granted. Sad to say, not many people like to hear the truth especially speculators.

August 11, 2010 at 12:06 AMPENANG

The property market may be starting to overheat. The developers know better. If not, why the surge in new launches. They want to sell before the bubble burst, otherwise they need to wait another few years for the market to pick up.

Once a purchaser signs the S&P, he or she is legally bound even if the bubble burst the next day.

Many "investors" (speculators) will then be stuck with huge loans to service but the property difficult to dispose off or rent out. Developers are the ones laughing all the way to the bank.

Those who had experienced the Asian financial crisis should know.

August 11, 2010 at 6:30 AMtan

Inflationary pressure is double edged sword. It may bring up the house cost. It also may hurt the buyer affordability.

But, I do believe more that the house cost goes up is due to greedy developer/speculator looks for high profit. Buyer also plays a role in it.

The house cost in Penang island is 3x higher that house cost in Prai. But, the consturction material/worker cost are the same. The only difference in the land cost. But, it would not justify the cost to go as high as at the extent of 3x.

August 11, 2010 at 10:27 PMengineer

Quote "The house cost in Penang island is 3x higher that house cost in Prai. But, the consturction material/worker cost are the same. The only difference in the land cost." Unquote.

I beg to differ on the statement saying the only difference is the land cost.

1) With the land scarcity in Penang island, nowadays flat and easy-developed land is getting less and less, as compared to the mainland. The problem at stake is that the developers are left with only limited hilly & uneven terrain land or alternatively they get the land by reclamation (sand pumping or embankment).

The earthwork, rock blasting, massive excavation & filling & extensive foundation will incur high cost also. It usually can be up to 20% of the overall development cost, depending on the site conditions.

2) The developer need more time to complete the massive earthwork and this will incur opportunity cost for waiting & delay due to unknown factors that may arise (Eg: more rock to be excavated due to localised treatment or inaccuracy of soil investigation report, etc)

August 11, 2010 at 11:12 PMtan

Greedy developers will make all sort of claims and excuses to hike up the prices ...the truth is they will not reveal and do not want the public to know the actual costs. It seems like these unscrupulous developers are increasing prices at their whims and fancy ... and laughing all the way to the bank. The government should do something about this and do it fast!

August 12, 2010 at 6:44 PMVoice

Guys... Developers are running business, not running charity.

Even the government is unable to do charity.

Let's be realistic that if we become developers, we will do the same, and such logic is not too difficult to understand.

August 12, 2010 at 10:45 PMAndy

This Voice is very narrow-minded and selfish in thinking..
If Voice is the authority in this country, die-lah ...many become homeless, have to live on the street, no more cheap affordable medicine from hospital, petrol prices can skyrocket any way they want, food prices can crash thru' the roof (running business mah!)
...we can then only pray to God for divine intervention (no more hope on the human race)

August 13, 2010 at 3:34 AM亨利陈

From what i know, when someone or some media said:" Now is the best time to invest" means is time to retrieve or stay back !

August 13, 2010 at 1:52 PMHealeth

My wife's sister used to work in the finance department of a local(Penang) developer firm. She knows how the developer/property firm mark up the price.....for those who work in developer/property firm finance department, you should understand how ridiculous these greedy businessmen make you work like a slave for bank.
Because of this kind of ridiculous & unhealthy property market, it has directly/indirectly depreciate our $$.

August 13, 2010 at 5:09 PMinvisible man

亨利陈 you are right!!

When the media say "Now it is time to retrieve"
means it is already too late to retrieve. You already become the victim.

August 13, 2010 at 7:59 PMAndrew

Instead of hoping the government will do something, we as buyer should do something, ie. don't buy the over priced house from developer.

August 13, 2010 at 10:12 PMPENANG

The way developers are pricing their new launches in Penang, they're very worrying. A RM300k loan of 25 yrs at current rate would require a monthly repayment of about RM2000.

Starting salary of new graduates is RM2000+ and after deducting living expenses, buying a property will be difficult for the younger generation. With the gradual lifting of subsidies by the govt, cost of living will sharply escalate while salary increases still crawl at snail's pace.

Maybe the Penang state govt should initiate something like the HDB of Singapore. Build quality but affordable highrise within RM200k range. Conditions to purchase must be very strict and transparent. The objective is not profit maximization (or call it "business greed") but state social responsibility.

August 14, 2010 at 7:55 PMTim

US economy recovery is slowing down for sure in the 2nd half of 2010 based on those giant corporate quarterly earning report in the last few week. Singapore is also reported to slow down. But, the biggest fear is whether US is going for recession....

August 14, 2010 at 11:38 PMChong

The three AXIS of EVILS in our society...

1. Greedy DEVELOPERS with outrageous and insatiable greed

2. Irresponsible BANKERS who are fuelling the bubble

3. Corrupt & Irresponsible AUTHORITY who are not taking swift and stern actions to prevent frenzy speculation & overheating

Imagine the scenario when these 3 axis of evils are actually working in collusion with one and another to enrich themselves at the expense of the people, what hope is there for the ordinary people ??

the people will continue to suffer ...

August 16, 2010 at 11:03 PMDoris

Haha, it's very funny that the price keep going up no matter what. If the world economy is falling while our property price is rising, where did the money come?

August 16, 2010 at 11:52 PMLike

Doris, Don't you get it? It is just like monopoly that we use to play. BTW, money is a legal tender. You can says it is valuable and you can say it is just a piece of paper.

Let me share with you something that you can laugh off and it is true that this is happening in other country.

Developer use bank loan or public money (if it is a listed co.) to buy land and built it. They need to made handsome gain so that they can repay the loan or dividend to people who invest in their share.

Then people buy the property by cash or by bank loan (majority). Then the bank is making money from the loan that they provide to the developer and people who wish to buy/invest.

If the developer and buyer couldn't serve the loan, the bank will be in trouble!!! Then bank negara will step in to bail out. Where do you think the money come from? Eventually, the TAX PAYER which is you (provided that you pay your tax)

My point here is:
1. Developer don't care because they need profit to satisfy their shareholders or themselves
2. Banks don't care because they know the govt will bail them out if they are in trouble
3. Buyer don't care because they still gain from investing.

If nothing happen (recession/property bubble burst), then everyone will be happy.

If something really happen, the one who suffer the most is the RAKYAT who pay tax and investor who have no holding power.

The developers and banks will go scott free.


USA has trillion in debts. Well, just print it if not enough. As simple as that.

August 17, 2010 at 9:43 AMpenang

Not only don't buy from developer who priced their product expensive but also don't buy from speculator when the project is completed. When buying stop, the price will come down and also if speculator stuck with stock, they would not chase after new project = price will also drop..

August 18, 2010 at 4:08 PMRobin

I totally agree with what Penang said. It's a very simple theory of supply vs demand. When we buyer stop buying or even slow down, the price of the property will eventually comes down.

But in reality, will it be that simple? All the boosting and shout-out from media and advertisement plus the tempting housing loan from banks, low downpayment such as 5% (with 2.5% rebate) from developers. All these play very big part of the game in our property segment.

Those with big chunk of cash will have no problem when the "bubble" really burst. It's just the matter of time to get over with. To some of them, economy crisis is really the best time to go "shopping" where those who cant hold on, will need to force sell at much lower price. This is what happened to me during 1997 economy crisis. A lesson learned!

So who can predict?

August 23, 2010 at 10:58 PMJo

I fully agree in your message(Penang,kenD and Quay) especially msg on August 13.

Me and some guys were having a debate not long ago on the Brezza Project in Tg.Tokong. Don't you guys agree that the selling price of this project were too much higher? is that true the Brezza selling like a hot cake?

Some bunch of idiot disagreed with my comment, I think they must be earning loads of money a month to afford to buy half a million property or I guess they have to work for their ass whole life to pay their mortgage.