“By 2010, Malaysia had recovered from the mild 2008 recession and that was the beginning of a property price hike through tactics used by these stakeholders,” said Ernest Cheong, a 50-year veteran in the real estate business.
He said the developers and gurus, knowing that middle-income earners were beginning to make more money, decided to instil fear in them and encourage their greed.
“The property gurus drummed up fear into parents,” he said. “They said if you don’t buy now, the prices will shoot up further in two years. Houses would become out of reach to their children.”
This message was repeated at all property seminars, he alleged, adding that concerned parents who heard it would book second houses as investments for their children by paying the required 10% deposit.
He also alleged that some developers would create a false demand by having their own people book newly-launched properties.
He said this created long queues at property launches and the developers would claim that houses were snapped up within days.
“This was especially so in 2013, 2014 and 2015,” he said. “They would say all the units had been booked. And then they would call the disappointed potential buyers after a week, saying the former buyers’ bank loans had been rejected.
“All of this caused fear among buyers. The demand increased and so did the price of properties.
“With the money they made, developers started advertising extensively to woo more buyers.”
He recalled that the government was then saying the economy was doing well by pointing to the demand for properties.
He also said many people who bought properties in 2012 and subsequent years were now unable to service their loans because they were trying to contend with the high cost of living brought on by the goods and services tax and other factors, such as increases in assessment charges and electricity tariffs.
On Tuesday, Cheong told FMT that the property market would take a hit next year, with developers and house owners finding it terribly tough to find buyers. He warned of a possible market crash.
Henry Butcher Malaysia CEO Tang Chee Meng disagreed although he acknowledged that the market was sluggish and the stock of unsold houses could increase next year.
However, he said properties priced under RM500,000 were still enjoying good take-up rates, adding that this was true also with more expensive properties that were well located.
“For anyone to say that the market will crash next year is a bit too pessimistic,” he said.
Tang also noted that Malaysia’s economy was projected to grow between 5.0% and 5.5% next year and that there had neither been any significant increase in non-performing loans nor a substantial rise in the number of foreclosed properties.