A few months ago, developers voiced their optimism about the property market in Malaysia. This had brought a lot of attention especially to investors who relied on the announcements of the developers to determine whether it will be wise to continue investing, or to pull back and to observe further. Recently, the words were out, when there is finally a more realistic announcement about the possibility of a property bubble burst in Malaysia.
When the latest economic recession began in 2007, many investors were still optimistic about the property market and saw a lot of people still holding on to their property and still investing, hoping to ride through the rough waves of the recession. Europe and Japan rode on the optimism, and continued to be positive about it all. During these last two years, finally reality set in with the Greek debt and the stall in Western Europe’s property development (which is just slowly recovering lately). Although Japan is still not openly admitting the debt in its economy, it is also waking up in its own way to the reality that set in especially since the recent tsunami.
During the last few years, we see some Americans giving up their home as they figured out that the housing loan they were paying were actually higher than the market price of their homes when the bubble burst on them. They decided to put up their house for sale and get smaller units at cheaper rates just to recover some of the lost investments. Some simply could not cope when the recession made them jobless, and decided to get more affordable homes or to move in with parents, siblings or friends to share the load.
In Malaysia, there had been a lot of denial for a long time. Developers kept building homes with the selling price of five hundred thousand ringgit and above, intentionally building three storey homes or a bungalow on independent pieces of land due to the rising land prices that makes the building of a condominium or apartment, or smaller double storey homes, less profitable. Prices kept rising, up to even a hundred percent price increase for most houses within the past three years!
Read more in Is There Going to be a Property Bubble Burst Soon? Part 2