Malaysian prominent real estate economist Tham Kuen Wei warns of a potential property bubble in Malaysia, but the government must take correct and prompt procedures to intervene while allow for market forces to coordinate supply and demand.
In an interview with MPT, Worldwide Properties Managing Director and Senior Researcher at University of Malaya Centre for Real Estate, Tham Kuen Wei explained that the two “economic dynamics” which have resulted in the current property situation in the country, where the prices of homes are beyond the reach of most and the oversupply of such homes, has led to many being left unsold; as well as the inability of mortgage repayments caused by a huge number of macroeconomic factors, which could be explained by econometric studies that explained the behaviour of the dynamic implications surrounding it.
Figures from the National Property Information Centre (Napic) have indicated that as of the first quarter of 2017, some RM10.08 billion worth of residential units are unsold in Malaysia. This figure does not include serviced apartments, which have since 2015, been classified as commercial properties.
“Malaysia is undoubtedly experiencing a housing bubble and the unsold properties are a natural consequence of this bubble. This had worsen due to the inability of income to catch up with mortgages and interest rates. The earliest indicator of a property bubble setting to burst lies in the rising of unemployment, inability of income to rise as opposed to interest rates, frequent NPLs and slow economic growth for the case of Malaysia.” he explained.
The Malaysian government and Khazanah Nasional, sponsored Tham on a research to pursue indepth analysis into the matter. Tham suggested policies on rising of real property gain taxes to curb speculation, and lowering of the goods and services taxes to ease inflation and increase purchasing power to enhance loan repayments. According to a government spokesperson of the Central Bank, real property gain taxes are in the process of being revised. The goods and services taxes is currently being lobbied to be eradicated.