Will the Rising of Property Price Benefit the Citizens?

Saturday, April 14 2012 stated in the star news online property prices are rising tremendously in the big cities throughout the world, especially in the developing countries. Malaysia is one of the developing countries and the property prices in the cities like Kuala Lumpur, Penang and Johor Bahru are seen to be rising rapidly recently. Properties are segregated into residential, commercial and industrial. 

The main reason for the rise of the residential property price is that the human population is increasing and the land size remains the same. Property is a basic human necessity when you call it shelter and every society aspires for a minimum standard of comfort. But it is more than shelter – it’s a lifestyle, it’s luxury, and it caters to the rich, the poor, the middle class and the working class. Therefore the demand is always increasing. When the demand is higher than the supply, the price will increase. The rise in the price for commercial and industrial building is due to more and more commercial and industrial building are in demand as the country moves towards the direction of a develop country. Allowing foreign buyers is also one of the factors to this issue because they speculate the market price and want to make profit by selling and purchasing properties. This will cause the property price to shoot up. 

The rise in property prices is a hot topic among the Malaysia’s citizen as it brings both advantages and disadvantages to the individual and business operated in Malaysia. For the individual that have already own a property or more, this rise in property prices will benefit the individual because he/she is making profit from the property investment. Individuals that are investing in properties will make a large profit out of this provided there is demand. Whereas, for an individual that have not own any property yet, it will increase the burden of the individual because the increase in salary will not be able to catch up with the rise of the living cost in the cities. Singapore is a good example in this scenario. Because there is such a lot of foreign demand for houses from foreigners, most Singaporeans are stuck to their Housing Development Board flats with no chance of moving higher up in more ways than one. Lastly, this will also caused individuals to declare bankruptcy when they fail to return the bank loan to purchase the property.

The rising property price will definitely benefit the developers. This is because the houses or building built can be sold at higher prices and the developers will make a larger profit out of it. The rising property price will also benefit the property agencies because it shows a higher demand in properties. In this case, the business in the construction line will also gain benefits out from it as more properties are being constructed. On the other hand, the rising properties will bring disadvantages to those business that rent a shop house / office building to operate. This is because the rise in property price will definitely increase the rental. Therefore, it is expensive to rent a shop house / office building in the city centre. The owner of the business will have to terminate the business if the revenue is not able to cover the cost. To sustain the business, the owner often increase the price of the service or goods provided and this is the reason why living cost in the city is much higher than in the outskirt area.

Property is a strange thing. As much as it can keep the economy going and get prosperity levels up and up, it can send them all crashing down at other times. As much as property developers and banks contribute to societal well-being, they can just as well destroy it. Thus, the price of the properties should be monitored as well as the demand. If the property market spectaculars outnumbered the people who actually want to stay there, the property market will crash. We definitely do not want this to happen. We should be looking forward for rising of property prices reflecting underlying economic trends. Property prices should increase along with the real demand for them, which means actual people staying in them and paying for them or the rental for the properties. The recent drop in property prices around the Petronas twin towers area should be an example and we should learn from it. When property prices rise because of hype and speculation without real people to occupy them; it’s a matter of time that the price will fall. As economic prosperity increases and everyone becomes richer, property prices will increase by themselves and keep in pace with the overall increase in incomes. In this case, even property prices increase, they will still remain affordable. This is the scenario that we should be looking forward for.

As years goes by, houses in the city area in Malaysia will be harder to afford. So what happens if more people are not capable of affording a house? The living standard of the people will drop if they cannot afford the cost of living. Therefore, our government should take necessary actions and precautions to deal with this issue. The government can make it harder for the property market spectaculars to boost the price by changing the requirement to apply for a housing / property loan. Lastly, we should not allow foreign buyers to buy the residential properties. Only commercial and industrial properties should be sold to foreigners as it benefit the countries growth. This is because Malaysia is our home and our land, and there will always be only this much of land. We, Malaysians are suppose to be the one staying in our land and not get our property prices manipulated by the foreigners. Actions should be taken now to make sure that our future generation will have a home to stay.

Posted by, Calista Yee Pui Ching