YESTERDAY, Housing and Local Government Minister Datuk Chor Chee Heung said the Government is monitoring the spike in house prices. He went on to say that it will not hesitate to implement measures to keep them under control. This is probably the first time the housing minister has come outright to state a fact that has been staring in our faces the last 18 months or more, particularly for landed units in the Klang Valley, Johor Baru and Penang.

Nevertheless, although the housing ministry has been relatively sanguine about it, Bank Negara has not. Last November, the central bank put in place a requirement for buyers of third and subsequent properties to have a 30% downpayment. Real estate personnel say buyers will adjust to this requirement in due time.

Early this week, Bank Negara raised the overnight policy rate which effectively led to banks raising lending rates by 30 basis points. This effectively will result in banks revising their lending, and deposit rates. Two banking groups have raised their base lending rates and base financing rates by 30 basis points to 6.6% respectively. These rates would affect lending rates of property, automobile and hire-purchase loans, among others.

So far, these are the only two measures that will affect the housing market. While the 30% downpayment was implemented to curb property speculation, the recent rise in interest rates will affect a whole gamut of things over and above more than just housing and the way people are buying into the property market. The raise in interest rates will affect the cost of doing business, among other things.

Housing is a very basic need. It is a terrible thing for a young person – or even an older one – to have to fork out rental every month, at the end of which, the house does not belong to him, but to the landlord. A tenant is effectively is helping the landlord to finance his housing mortgage. This does not mean investing in property is immoral or unethical. It is wise to invest, and that’s a different issue.

With the way house prices are going up, and the way our salaries are not, and the rate of inflation today, those who do not have a property to their name, are not in an enviable position. They are being pressured on several fronts or more – the negative effects of inflation on their earnings and savings, their continual need to rent and their continual depleting purchasing power.

In the story on public housing policies undertaken by China (see story below), the Chinese government is pressing developers to go into social housing because this basic social need can turn political. It can be used by ruling and opposition parties.

It is difficult to govern a country of 1.3 billion people. Although they are all Chinese, the Chinese population come from diverse minority groups with different religions, beliefs and communication. That is why the Chinese government uses putong hua – or Mandarin, a single common language – to unite the people. China looks at social issues very carefully.

Malaysia has a population of about 28 million. It must look at social issues like housing because we have a young and diverse population.

Although Malaysia has, and plan to, improve its social housing for the masses to include My First Home for first time house buyers, this scheme is only a part of the whole affordable housing scheme conundrum that is currently bedevilling this nation. There is also the low-cost housing scheme, which is also a segment of the affordable housing scheme plan. Low-cost housing schemes must also be improved as urban slum is another social problem.

There is a need for the Government to come right out with the logistics, location, pricing and its implementation to ensure the public that there is action behind the words. And to do it soon. Very soon.

While affordable housing is being planned – and hopefully implemented – real estate professionals are also calling for measures directed at the housing market in the form of reintroducing the real property gains tax on a sliding scale, requiring sellers to pay a stamp duty and not just the buyers and extending that 30% requirement to include the purchase of a second house, instead of the current ruling for the third and subsequent purchase. These measures, unlike the rising of interest rates, would directly affect housing and the speculative nature of this industry.

SOURCE: The Star

Taman Indah, strategically located within the established township of Bukit Tengah in Bukit Mertajam, Penang. An easy access to North-Sourth Expressway, Perai Industrial Area, Butterworth, Bukit Mertajam and a mere minutes drive to Penang bridge.

This residential property development comprises:

2-Storey Terrace
Unit: 10
Built Size: 20′ x 43′
Lot Size: 20′ x 70′ onwards

2-Storey Semi-D
Unit: 16
Built Size: 25′ x 46′
Lot Size: 35′ x 73′ onwards

3-Storey Link Semi-D
Unit: 28
Built Size: 26′ x 45′
Lot Size: 33′ x 66′ onwards

2-Storey Bungalow
Unit: 2
Built Size: 46′ x 44′
Lot Size: 63′ x 72′ onwards

Property Project : Taman Indah
Location : Bukit Tengah, Penang
Property Type : 2-Storey Terrace, 2-Storey Semi-D & Bungalow
Tenure : Freehold
Developer : Airmas Group

Vista Tecoma is the latest addition to Setia Vista in Relau. This new development comprises 10 units of 2-storey semi-detached houses.

Property Project : Vista Tecoma @ Setia Vista
Location : Setia Vista, Relau, Penang
Property Type : 2-storey Semi-Detached
Land Area: 35′ x 80′ ft.
Built-up: 2,700 sq.ft.
Total Units : 10
Indicative Price : RM1,300,000 onwards
Developer : SP Setia

KUALA LUMPUR: The recent 25 basis points (bps) hike of the overnight policy rate (OPR) to 3% from 2.75%, effective since July last year, is mainly due to concerns about asset bubble rather than inflationary pressures, said Dr Yeah Kim Leng, chief economist of RAM Holdings Bhd.

“If we look at the core CPI (consumer price index) growth, which is slightly above 2%, it is still manageable,” said Yeah, indicating that the current level of inflation is still under control and could be absorbed by consumers. Inflation in Malaysia rose to 3% in March from a year ago on higher food and fuel prices. He said the 3% inflation rate recorded in March was in line with the country’s long-term level, which has been sustained over the last three decades.

Curbing inflation was one of the reasons for the increase in the OPR and statutory reserve requirement (SRR) by Bank Negara Malaysia (BNM) last week.

Yeah told The Edge Financial Daily on the sidelines of RAM Holdings Bhd’s annual general meeting on Monday, May 9 that asset prices had been increasing lately, especially in the high-end property sector in cities such as Kuala Lumpur and Penang as a result of ample liquidity, low interest rates and inflationary expectations as investors looked to investing in property as a hedge against inflation.

“That is why BNM did not only raise the OPR, but the SRR as well, as it wants to reduce liquidity and curb excessive lending,” he explained.

However, Yeah said the emerging asset bubble was segmented, based on the location and type of property. In this case, high-end properties are seen to be in demand as they are the targets for speculation.

According to Yeah, if it is left unchecked, the situation will create a ripple effect that will also inflate prices of property which are farther away from the city centre areas.

“The rising prices of high-end properties have also lifted the prices of lower- to mid-range properties, especially within urban areas,” he said.

Yeah noted that property bubbles are normally fuelled by easy credit. By increasing the OPR and SRR, the central bank will tighten lending and the supply of easy money. Speculative pressure would also eventually decrease due to the tightening measures, added Yeah.

On inflationary pressures, the economist noted that for a country which has successfully maintained relatively high annual growth rates of between 5% and 6%, inflation is still manageable and under control.

“They (inflationary pressures) will gradually raise prices, but even if the inflation rate reaches 3.5%, it would still be manageable because if we look at 2008, just before the global financial crisis, we had a CPI rising up to close to 5%. We are not likely to revisit those high-inflation levels,” Yeah explained.

He expected inflation to be moderate throughout the year, with an inflation rate of 3% to 3.3%.

Source: TheEdgeProperty

THE state is looking at imposing surcharge on super condominiums, and the amount collected will be used to build affordable housing for the people, said Penang Chief Minister Lim Guan Eng.

He said such a move would help the state government to absorb the cost of building affordable homes.

“This will come under the charge of Penang Housing Board which will be established on July 1,” he said in his winding up speech at the state assembly.

At this juncture, Muhammad Farid Saad (BN-Pulau Betong) stood up and urged Lim to come up with a mechanism meant to compensate the people whose houses have to be demolished to make way for development.

To this, Lim said the state would ensure that nobody, including the landowners, squatters or developers, is short-changed even though they are still coming up with a mechanism on this issue.

“If the imposing of a charge on super condominiums for the construction of affordable housing was implemented in the state, it would also be a first in the country.

“The state was studying the move where the amount collected would be used to supply and provide affordable housing to the people in Penang.

“We are imposing a contribution, not a tax. We cannot impose taxes,” he said in a press conference after the state assembly sitting.

He added: “We don’t know the price to be imposed. Maybe before the occupation certificate (OC) is issued, they (the developer) will have to pay a certain contribution if they build houses above a certain limit.”

State Town and Country Planning, Housing and Arts Committee chairman Wong Hon Wai and Local Government and Traffic Management Committee chairman Chow Kon Yeow have been directed to look into the move.

Earlier, the water conservation surcharge became a matter of contention again between Lim and Datuk Arif Shah Omar Shah (BN-Seberang Jaya).

The latter said the surcharge would be unfair to big households and would be a burden to the head of the family.

To this, Lim said the surcharge of 24 sen per 1,000 litre for domestic users who use more than 35,000 litres of water was meant to encourage Penangites to conserve water.

“The Penang Water Supply Corporation (PBAPP) had carried out studies on the matter before deciding on the implementation.

“Since the implementation of surcharge, the average usage of water for domestic users had dropped to 286 litres from 291 litres per day. We hope to achieve the national average of 202 litres per day,” he said.

Source: The Star