Malaysian developers accused of manipulating home price inflation
Malaysian developers accused of manipulating home price inflation
Time for government to step in?
Price increases among Malaysian homes may not be really organic and are prone to manipulation by real estate developers, experts contended in response to an exhaustive report released yesterday by Malay Mail.
Chang Kim Loong, secretary-general of the National Home Buyers Association (NHBA), called on the federal government to impose stronger regulatory measures on certain forms of property speculation. “Today, developers continue to artificially increase price of new launches and then give rebates set off against the downpayment,” he told the Mail.
This scheme enables speculators to buy Malaysian properties by bulk, leading to an increase in prices, the NHBA reported. Developers allegedly mark up price points to reflect the required downpayment that will then be offset with rebates. “This again artificially increase house prices and encourages false demand as no downpayment is actually paid,” Chang said.
More: Malaysia leads Southeast Asian house price growth, per Knight Frank
The Malaysian government’s lending policy, loosened after the global financial crisis of 2008, may have also played a part in encouraging such bulk purchases. “I think there is a need to see if there was a correlation between the quantitative easing measures… and house price increase in 2008,” said Liew Chin Tong, DAP federal lawmaker for Kluang. “We must learn from it to avoid it in the future.”
In addition to the dubious practice of rebates, Chang cited the Developers Interest Bearing Scheme and the relaxation of the real property gains tax as possible factors for housing price inflation in recent years.
Malaysian authorities banned the Developer Interest Bearing Scheme earlier this year.
Read next: Will Malaysia’s developer lending scheme sink or save the market?
Source: Property Report