MALAYSIA - At a recent condominium launch in Sentul, Kuala Lumpur, each person was given exactly one minute to choose a unit. Those who failed to do so would lose their turn.
But still the 900 odd units were sold out in two days. And this is despite each unit costing about RM800,000 (S$315,000).
There were so many people at this property launch that some waited from the night before, reported the New Straits Times.
While some people are able to afford the sky-high prices, most Malaysians cannot.
"I think maybe up to 60 per cent of Malaysians cannot afford to purchase properties," said real estate valuer Ernest Cheong.
"In order to buy a RM700,000 house - if you take a 30-year loan - it will cost you about RM3,800 per month. About 60 per cent of Malaysians earn RM4,000 and below," he said.
"Even if you forego eating every month, you still can't afford to pay the monthly instalments."
Dr Cheong said the factors driving up the prices of homes include the younger generation's willingness to take on debt, the culture of instant gratification and unscrupulous practices by developers.
The central bank's policy on loans has also made them easily available to the people, creating a surging but artificial demand for houses as people sign up for larger and larger loans. Their willingness to buy is based on the assumption that Malaysian property prices will keep rising.
"When I started working in 1965, I rented a small place. Every month, I saved part of my salary. In those days, the banks gave loans of up to only 60 per cent of the value of the house," said Dr Cheong.
"In five years, I finally managed to buy a terrace house for RM11,000. I paid 40 per cent upfront and the remainder I paid off with a 10-year loan."
But today's graduates have a radically different approach to home ownership, said Dr Cheong.
For starters, loan tenures have been extended from 10 to 12, to 15 and finally to 30 years.
This, combined with an increasing culture of instant gratification, would see fresh graduates applying for a 95 per cent loan over 30 years.
He added that the Malaysian public have the perception that "if you don't buy now, property prices will be higher tomorrow".
Developers also have ingenious ways to make it appear as if their properties would quickly sell out.
"It's basically a cartel. It gives a psychological edge. It creates a rush. All the while, the people are being led by the nose."
Dr Yeah Kim Leng, the group chief economist of RAM Holdings, said that if house price increases continue to outstrip income growth, then the prices wouldn't be sustainable in the long term.
He said: "Of course, if you look at the reality of purchasing power on a cross-country basis, Malaysia is cheap, largely because of the high price levels as well as the strong currency of the other countries, for example, Singapore. But those Malaysian houses are affordable for foreign buyers, not Malaysians."
He feels that the current situation of escalating property prices has reached a point of concern.
A combination of low interest rates, easy availability of credit, a positive economic outlook with expectations of a continued rise in property prices, has now transformed the property into an asset class rather than an essential item.
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