housing bubble in malaysia
TRANSCRIPT
Housing Bubble
IntroductionWhat is Economics Bubble??
Situation in which asset prices appear to be based on inconsistent view about the future
Trade in high volume at prices that are different with the intrinsic values or fundamental value
Different Types of BubblesMarket Bubble (Housing Bubble)
Commodity BubbleOccur when the price of commodity increase
Stock Market BubbleOccur when the value of stocks & shares increase
rapidly
Credit BubbleRapid growth in consumer and business credit to
finance higher consumer spending
History of Economic Bubbles
1.Tulip Mania (1600s-1637)
2.Stock Market and Housing Bubble in U.S (2006)
3.Dot-com Bubble (1990s-2000)
Social Psychology TheoriesThe Greater Fool theory
Over-optimistic , Buy and Sell higher price
Herding theoryMimic the actions of a larger group
Extrapolation theoryProjecting historical data into future on the
same basis
Moral Hazard theoryRisk return relationship altered Agency problem emerge
Effects of BubblesStock Market Bubble
Loss of confidence & Reduce spending
Housing Bubble Decrease in consumer spendingRecession
Commodity Bubble (Gold/Oil price) Uncertainty
Good or Bad ??
United Stated Housing Bubble
Why United State Housing bubble will burst?
One of the Main Reason :
Collapse of the Dot-Com Bubble
• Stock market fell, Real estate become the primary market for the speculators
Impact on U.S. Housing Bubble Employment
Is that Malaysia got
housing bubble ?? yes
What causes the housing $ ↑ ??
When 2006, terrace house in city area (KL) worth RM290,000When 2014, the same house worth over a million !
Shortage Of LandKlang valley & Penang – limited land ( but is
the development state, so a lot buyer want to own property in this 2 states. )
Speculative buyersNational House Buyers Association (HBA) secretary-general Chang Kim Loong : “Low Real Property Gains Tax (RPGT) has been a reason which has fuelled false demand and excessive speculation.”
“ Mm2h “Malaysia my second home• Promoted by the Government of Malaysia to
allow foreigners who fulfill certain criteria, to stay in Malaysia for as long as possible on a multiple-entry social visit pass.
• The Social Visit Pass is initially for a period of ten (10) years, and is renewable.
• Attract a lot foreigner : Korea & China Buyer
• China is the biggest beneficiary for this program.
• Malaysia still haven’t set any housing policy for foreigner buyer like SG & HK.
• Foreigner buyer requirement : • Housing $ 500,000above• Need to open a fixed deposit account of RM300,000
( below 50years old); RM150,000 ( above 50years old). Etc.
“ Mm2h “
Government want to prevent the housing bubble by this way:• Supply and demand
1Malaysia Development Bhd (1MDB)
• 1Malaysia People Housing Programme (PR1MA)• Which is charged with the task of building affordable
quality homes, must be doubled and intensified.• 20,000 units of PR1MA homes made available to
middle-income earners across the country.
• Housing Project for the Hardcore Poor (PPRT)• aimed at building affordable homes which are then
rented to the poor at very affordable rates.
In Budget 2014 announcement,
• Curbing Speculation
• Increase in Real Property Gains Tax (RPGT) rate • Increase 10% to 15%• 5% of RPGT introduced- holding period > five
years. (holding period count begin the date of completed the sell & purchase agreement)
• Change the behavior of investor, although cant solve the housing crisis, but can reduce market instability.
• Stamp duty imposed to buyers ( 2nd , 3rd …house ↑)
Malaysia housing bubble will burst?
Future? Depends on others
factors!
Now ? Won’t burst
Why did Malaysia housing bubble won’t burst so soon?
PEAK2013
This is because : China investor !Actually they wish to buy property in Singapore and HK. BUT…SG > curbing the speculation > property speculation tax to foreigner! 10 % in 2011 ↑ 15% 2013 HK - stamp duty on certain real properties has been doubled to 8.5% to cool off the property market.
If loosen, the china investor will go back to SG and HK.
The end Q&a
Presented by :
Goh Chun HongWoo Chia Yuen