By Sharen Kaur
Published in NST on July 1, 2014
THE local property market has “deep” structural problems and it will come under more pressure as cooling measures continue to take effect.
Bukit Kiara Properties group managing director Datuk NK Tong said there is severe asset inflation everywhere because of the synchronised global monetary inflation.
He said cooling measures by Bank Negara Malaysia may affect the efforts to keep house prices low in the long run.
“Malaysia has a growing population. When cooling measures are applied, the production of housing stock slows down because sales are depressed. This creates a shortage of housing, and by default, the demand for housing too,” he said in an interview.
Tong said the key to keeping house prices affordable, aside from stopping the global monetary inflation, is to ensure an adequate supply of new housing and making land affordable.
“The government should release large tracts of government land for affordable housing, failing which, the problem will not be solved,” he said.
Tong said, high household debt is another concern that is plaguing the local property market.
“Malaysia’s household debt is at 87 per cent. But if we drill down into those numbers, a significant proportion of this debt is in unproductive and depreciating asset classes, namely car loans, personal loans and credit card loans.
“These loans are a real burden to the rakyat as not only are the assets that were purchased with these loans depreciating extremely fast, but also often the interest rates are very high.
“The government should look at applying cooling measures in these categories to stop the pain and destruction of wealth that the rakyat are facing.
“By contrast, while housing loans may be larger, these loans, in the long run, do not burden the rakyat because the interest rates are low and reasonable, and better yet, the properties appreciate in the long run, and not depreciate,” he said.
On the Goods and Services Tax (GST), which will be implemented next year, Tong said it is still too early to speculate on the exact effects of GST in general and on the housing market in particular.
“However, a recent example in Japan could be a good indicator. I am told that their first quarter gross domestic product was high because of the rush ahead of the GST hike in April this year.”
Published in NST on July 1, 2014
THE local property market has “deep” structural problems and it will come under more pressure as cooling measures continue to take effect.
Bukit Kiara Properties group managing director Datuk NK Tong said there is severe asset inflation everywhere because of the synchronised global monetary inflation.
He said cooling measures by Bank Negara Malaysia may affect the efforts to keep house prices low in the long run.
“Malaysia has a growing population. When cooling measures are applied, the production of housing stock slows down because sales are depressed. This creates a shortage of housing, and by default, the demand for housing too,” he said in an interview.
Tong said the key to keeping house prices affordable, aside from stopping the global monetary inflation, is to ensure an adequate supply of new housing and making land affordable.
“The government should release large tracts of government land for affordable housing, failing which, the problem will not be solved,” he said.
Tong said, high household debt is another concern that is plaguing the local property market.
“Malaysia’s household debt is at 87 per cent. But if we drill down into those numbers, a significant proportion of this debt is in unproductive and depreciating asset classes, namely car loans, personal loans and credit card loans.
“These loans are a real burden to the rakyat as not only are the assets that were purchased with these loans depreciating extremely fast, but also often the interest rates are very high.
“The government should look at applying cooling measures in these categories to stop the pain and destruction of wealth that the rakyat are facing.
“By contrast, while housing loans may be larger, these loans, in the long run, do not burden the rakyat because the interest rates are low and reasonable, and better yet, the properties appreciate in the long run, and not depreciate,” he said.
On the Goods and Services Tax (GST), which will be implemented next year, Tong said it is still too early to speculate on the exact effects of GST in general and on the housing market in particular.
“However, a recent example in Japan could be a good indicator. I am told that their first quarter gross domestic product was high because of the rush ahead of the GST hike in April this year.”
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