Housing for the rich?

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It is becoming increasingly difficult for ordinary Malaysians to find decent affordable housing in urban areas.

Blog reader Marika Simon complains:

I’m trying to buy a second-hand apartment or condo. The owner bought at a low price but is selling at a very high price. I saw an 800 sq feet apt selling for RM280K but the banks valued it at RM180K–200K!

These people are greedy. It may be their choice to sell at a price they like but how to get buyers if your unit is ridiculously priced?

In areas near Batu Ferringhi, homes are bought up by foreigners. Most housing caters to the rich. It’s disappointing. Even a 700 sq ft bird cage-like-unit is going for RM300K!

I wish there would be laws that control how much owners can sell their units for. So many places are only for the rich and I wonder … how many millionaires, billionaires are there? I even heard that a guy bought three units at RM90K each but is selling each at RM180k to RM200K!

Greed. Reserves a place in hell.

What economic and financial measures can be imposed to tackle the soaring house prices?

Some suggestions:

  • reform Capital Gains Tax
  • introduce tighter controls on foreign buyers
  • impose limits and restrictions on ownership of second homes
  • impose restrictions on housing loans
  • look into reasons for low income
  • increase quotas for low- and medium-income income for public, private sectors and GLC developers

The big picture is that we are seeing a failure of market mechanisms to ensure everyone has a roof over his or her head. The idea that a ‘hidden hand’ can somehow work miraculously to achieve an optimum balance – despite many people acting individually based on the impulse of greed and selfishness – has been proven to be a fallacy.

Can the tinkering of market mechanisms resolve this market failure when the larger value problems in society of corporate and individual greed, corruption, and accumulation of wealth remain while workers’ incomes are suppressed?

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rizal

BN said it will build low cost housing of RM300K per unit.

RM300K is low cost when 70% of rakyatearns less than RM3K a month?

Yang

Yes housing cost is due to escalating cost of land and building materials and also the infrastructure such as outside road, drain, electrical and water pipe installation build free for the govt and utilities company.

And don`t forget that when you build or rebuild your house, one house become half a house. So your purchase cost of RM200 sq ft become RM400 per sq ft not including materials and other cost

Straight Talk

The main problem of affordability of housing right now is the rise in income is not comparable to the rise in housing prices or for that matter food prices. For example, a new graduate had a starting pay of around RM1,800-RM2,000 in the 1990s and it is probably around RM2,500 right now! As long as our wages/salaries remain stagnant, which is largely due to the influx of cheap foreign labor, the affordability of housing will remain an issue. Despite what we may say about the greed of developers etc., it is an industry fact that developers have to increase house… Read more »

Tigerz67

The thing is everybody wants to live on the island. The demand fuels speculation. Its like shooting fish in a barrel. If people had more choices, and demand was more diversified to other places, speculators will find it difficult to target you. The mainland is still affordable and maybe further out to places like Kulim or as someone mentioned – SP. I have friends who are targeting retirement homes in Alor Star or even Ipoh. So why are people reluctant to move to these places? Penang is obviously a great place to live in. But I don’t see why we… Read more »

MMC

yang,

for all the complaints about expensive flats, lets try to find some solutions.
never easy. brainstorm for some solutions pls.

Yang

To Penangite, apartment in Penang is expensive. To Hong Kongite and Singaporean its cheap. In Hong Kong a normal average apartment now goes for at least HK8000 per sq ft coverted to RM its about RM2500 per sq ft. Currently in Penang its about RM300 – 500 per sq ft depending on the type of condo. So in a way its still cheap in Penang. In Penang you need to apply to the State govt for Low Cost at 42k and Low Medium Cost at 72k which normally upgraded to 170k. In Hong Kong to apply for public housing its… Read more »

tunglang

Yang: Yes compare to our standard of living its very very expensive. Work 3 jobs, pay little or no taxes (ask accountant Anil), sleep less, eat less, buy less, save more, sell yourself (resume or pro services) like Donald Trump or Richard Gere, network locally & globally, know more rich people, know a few millionaire “Khai Mah”(god mother), think & treat money like a rich fella, and work all of these until you reach the 1 or more million mark to get a decent condo in Penang. What a dog’s life! Note: Don’t try if you are like me in… Read more »

Kevin

If you want to compare the prices of property in Hong Kong and Sg you should also compare the average or median income of their citizens to ours. Our average income is about USD 11k a year. The average income in Singapore is easily USD 50k a year. About 5 times ours. There is no way we can be compared to Sg until we are a high income nation. Right now you have high cost of property just like in Sg, but unlike them, you have low per capita income.

tunglang

Question to Pg state gomen:
Penang is able to attract FDI but is our salary scale still peanuts (attractive to these MNCs)? The same salary question for local private employers.
Note: With constant influx of foreign labors competing at low, low salaries, how are we Penangites to get jobs at decent salaries? Even those with degrees end up selling perfumes at shopping malls!

Yang

TungLang,
Our salary will always be peanuts unless you really upgrade yourself or do some small business and if it is good will generate a reasonable income.

Multinational come here because of low labour cost but they are much better than the ‘China man’ company. To the ‘China man’ no problem if you don`t want to work for me, I can get lots of wai lau (foreigners) at very very cheap salary and working more than the prerequisite hours

Huat Leong

Malaysia is trapped in the middle-income syndrome.
We can attract investment from MNCs because we can continue to provide cheap labor (that suppress wage growth) by importing Bangla and Indons to the factories. In the process those labour agency (likely to be BN cronies) earn huge commissions!

moo_t

Anil, it is too easy to blame “the hidden hand has failed”, while there is too many factor that Bolehland(TM) government corruption and fatal transportation policies play a HUGE role on escalate housing price. The whole issue is interlocking, a simple “restriction/quota/etc” is not going to work, like all those quota impose in many Bolehland economy sector. How many people see the HIDDEN COST of a housing project? Besides the land price, material price, laying sewage,drainage, utilities,access road,etc, all cost money. Many people just taken for granted and refuse to factor in all these hidden utilities inside housing cost. Somebody… Read more »

JY

Please be informed there is a (certain) Real Estate Agency known as …, address (in KL) which is also I believe (allegedly) linked to gangsters. I was told they (allegedly) approach Property Developers and sign an Agreement. This Realty (allegedly) reaches an agreement with the Developers that they will guarantee sales of all the and that this Realty to be paid 10 percent brokerage fee in violation of the regulations set by the Real Estate organisation. With free hand and blessings of the Developer they (allegedly) raise the price of the unit. Example if the Unit cost RM 300,000/- (the… Read more »

Yang

JY,
Yes and its happening here in Penang. After the launch the developer will say it is sold out. They will (allegedly) give out a certain percentage to these gangster say about 30 or more unit omce OC is out. Then you will (allegedly) be approached by these gangster through their agent again. You want a unit, no problem under table 30-40k, (allegedly). You will still find it cheap/ Why !!! Because once OC is out the price will be very much higher than the sales price.

tunglang

This is not news, but already happening in some developers office where staffs (allegedly) got first preference to ‘book’ the best units to be resold at a profit.
Insider trading of house sales. A breach of law.
This sickness must be tackled firmly by the gomen otherwise we are taken for fools.
One effective way is for the state gomen to blacklist & shame the recalcitrant developers & agents with full page notice in MSM. And take over the sales of their housing units for fair distribution to deserving buyers minus the gangsters’ greed.

MMC

its even worse in KL. try buying a landed property in PJ. Its being priced out of working middle class. This sharp price increase is not confined to Malaysia, Its happening regionally n Singapore, Hong Kong and Thailand amidst ironically the bearish housing market in Europe. QE3 is on and its gonna create another round of asset inflation in SE Asia where the economic outlook is better. Unless the Government, be it state or federal, implements some measures o prevent asset bubble from forming, one day we will face the backlash when the bubble burst. Admittedly, the state has less… Read more »

XiaoWei

property prices are moving in tandem like other countries, only our tke home pay is not moving at the same speed. Just remember we are still talking below 1k as min wages. Our federal govt have failed. This coming Budget raised Real Property Tax for first 3 yrs to 30% to take out all speculators and for 3rd property min down payment must be 30% front. This will leave the actual buyers around and those who are rich and capable can for few units if they have plenty to spare.

Batu Ferringhian

the market will burst. look at the USA. the same will happen in Penang, it’s just a matter of time.

Kevin

I don’t think that will happen. Penang has a unique resistance to the bubble bursting. For over 40 years people have been waiting for that bubble to burst. With the number of new high-rises and houses coming up, one would think that pg will not be able to absorb them, hence the bubble shall burst. But that has never ever happened here. I don’t know what’s so special about Pg, but history just shows it cannot occur. Maybe because it is an Island very much in demand and the supply is always met by adequate demand. At the most you… Read more »

klcharmer

I blame it on the goverment for not coming up with proper policies. The truth is the BN only cares about enriching the already rich, they do not care about the poor and middle class. If the goverment is sincere they should come up with proper policies such as the following to ensure that decent housing is available to everyone. The rediculous prices of residential property is not a problem only in urban areas but also in the outskirts. Look at areas like sungai buloh Rawang ect, people who bought houses there for RM180K are selling for RM350K to RM400K.… Read more »

capitalist

This is capitalism, the system you are promoting already quasi socialist. Maybe North Korea is a good country for you. There they have limitations on ownership.

Kevin

North Korea is communist. Communism and socialism are very different ideologies. In any case, he did qualify his points by saying that they are for houses below 300k which in Pg is now the threshold for affordable housing. Even finding a decent house under 300k is a problem. I think it is fair that one person is only allowed to buy one affordable home. He or she cannot be using both at the same time and so the opportunity should be given to others. That seems fair to me. On the other hand, if he or she wishes to buy… Read more »

Cik Bidayuh

Do not forget toask why our salary all these years (decade) cannot rise in accordance with barang naik.

Are you still counting on Vision 2020 (8 years away) to be a high-income Malaysian?

frankie

At this rate, rent is a much better option and you get to save loads of $ on interest and cost of purchase. It ain’t worth it to slave your life to the bank for a miserable pigeon hole.

Kevin

You may be right looking at the short term but if you don’t buy a property as soon as you can afford it, whatever money you have will keep shrinking in value. Buying a property is not just meant to provide you with a roof over your head, it is to safeguard your savings as well as the future of your children and grandchildren. If you do not buy it now, in future they may not be able to buy anything. Worse still, whatever money they have may be too small in value to even rent a house. 30 years… Read more »

tuakee

Housing properties rise in prices not just in Penang.
Sungai Petani houses getting expensive these days, and i am lucky to “migrate” over here and now able to reap some profits selling them off should I want to return to Penang (unlikely as SP a heaven for cheap quality food unknown to many Penangites).

tunglang

Tuakee, you have just advertised (word of mouth) SP as alternative choice to stay. I am afraid more wildebeests of Penang’s Serengeti Property Chase may divert their frenzy to SP.
I am keeping my patience (one more year) before I partially relocate to Belum Rainforest for a lifelong career / lifestyle of adventure, creativity & simplicity.
As it is, I am happy that nobody wants to live in a jungle & create artificial hellish lifestyle of urban living into Belum!

tunglang

Blame it on the property gurus of GREED, GREEN EYES & COVETOUS Teachings.
They also deserve a place in Hell?
Try dig a hole into the centre of the earth & you are sure to hear some of them crying & lamenting with red eyes.