Bulk-buying drives up property prices but not illegal, says D-G
Bulk-buying of houses by investors’ clubs is not a sure-fire way for people to make money as they could lose everything if a deal goes bad.
The Urban Wellbeing, Housing and Local Government Ministry’s Housing Department said yesterday there were risks involved for people who joined such investors’ clubs, especially when the price of real estate fell or did not appreciate as hoped.
“Those who took loans from financial institutions face the risk of having their property auctioned off or being declared bankrupt,” said the department’s director-general, Datuk Mohamad Yusoff Ghazali.
Responding to the front page Malay Mail report yesterday on the call by certain groups to ban property bulk-buying, he agreed that the investors clubs’ activities would indirectly cause property prices to surge but pointed out they currently did not contravene any legislation.
In the report, Federation of Malaysian Consumers Association president Datuk Paul Selvaraj said priority should be given to first-time buyers and not to bulk buyers, whom he deemed “property speculators”.
Malaysian Institute of Estate Agents (MIEA) deputy president Erick Kho had also said bulk-buying created an unnatural scenario of demand and supply within the property industry.
Mohamad Yusoff admitted the activities of the investors’ clubs caused a shortage of property in the open market, in addition to inflating prices and causing them to be much higher than the original purchase prices.
“The properties are sold to club members at far lower prices compared with those sold to other buyers,” he said.
“The discounts were from 10 per cent up to 20 per cent off the original price. Those who purchase the properties from club members will pay a premium over the original price.”
Mohamad Yusoff said the ministry had introduced several steps to counter speculative activities in the property market and stabilise housing prices.
“To this end, we have raised the Real Property Gains Tax (RPGT), increased the minimum property purchase price for foreigners to RM1 million, and disallowed developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS),” he said.
“To increase transparency, we have also required developers to explain in detail the selling price of a property including benefits and incentives offered to buyers.”
Source: The Malay Mail Online
It is true that bulk buying is not illegal. But that should not be an excuse. Nothing is stopping the authorities from introducing new laws to illegalize such activities.
But here comes the difficult part. Is the authority fully convinced that property speculation and bulk buying have done more harm than good to our country?
I agree that the inflated demand by speculators has increased demand for homes, therefore increase demand for construction, and therefore more jobs and contracts in construction industry. But think again, all these activities have mostly benefited the rich (landowners, developers, indos, speculators etc). They have made obscene amount of money from doing pretty much nothing productive (eg. building unwanted sohos etc), while the middle class have suffered the most.
I think the housing dept’s D-G is not looking at things from the correct angle, when he said “Those who took loans from financial institutions face the risk of having their property auctioned off or being declared bankrupt”, implying that we should continue to allow such activities because speculators took their own risk, profit is not guaranteed, therefore don’t bother them and we should just mind our own business.
If someone took their own risk and gamble at a casino, that’s their own business. Regardless of how much they win, or loose, it doesn’t impact the general public.
BUT, when someone gambles on property, the general public is affected as they have to fork out more of their future money to buy a home. If the gamblers win money, that means home price keeps going up, if the gamblers loose money, that means some home buyers could be underwater on the mortgages. Either way, it’s bad for the people. When everyone is affected, the authority can no longer mind its own business, intervention is needed!
Make it illegal, please. Don’t talk only like NATO (No Action, Talk Only).
I like ketiak comment.