Developers are being hopeful despite the sharp rise in property prices throughout the years.
Recent years have seen a trend of new homes, especially in Penang, where developers built homes that are two and a half or three storeys high, tagging them at an average of RM800,000 each, or expensive condominiums that may actually sell for an average of RM500,000 if they come with amenities such as some shoplots for retail within the area in the name of ‘convenience’.
The main reason for this is due to the scarcity of land in the island, and the land prices hiked so much over the years that developers find it not feasible to build less expensive homes. However, their marketing teams come up with creative idealism of townships, culture and lifestyle to capture the market into believing that the companies are building the homes conceptually to improve our lifestyle.
But then again, it is surprising how the properties are quickly sold out within hours from the launch, especially for projects by developers such as the esteemed IJM. Everyone predicts that a property sold at RM800,000 today will go up to RM1.2 million within a few months, and that spurred the move to invest highly on these properties, putting the strain back on the consumer with debts in the form of bank loans that may come to an average of RM5000 a month.
Yet, industry experts and developers are still positive that the property bubble will not burst, not even in 2011. This may be due to the government’s move to introduce the new scheme of loan repayment that can be extended to two generations, and the easy sheltering of bad economic news in national newspapers that gives the ambiguity leaning towards positive growth in our economy.
In fact, the President of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS), Mr Choy Yue Kwong, said that in 2011, property prices will still improve despite the office market staying soft. According to him, the property market is still buoyant and interest rate is still relatively low. But the question remains, will it stay the same?
Also, can this be just some words to comfort and encourage new buyers so that developers may protect their own profits since they have invested so heavily in their projects?