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Tuesday, September 16, 2014

When It Seems It Is a Problem, Suddenly It Isn't

Our beloved country, Malaysia was shocked with the news that affected thousand of it citizen and all of them were only 12 years old. The news broke the whole nation when it is confirm that Mathematics and Science Papers for Ujian Penilaian Sekolah Rendah (UPSR) need to be retaken. If this kind of news broke 20 years ago, surely it will not become such a phenomena as it is right now. This is because kid nowadays are more intellectual, they learn alphabet not as A for Apple, B for Ball and C for Cat instead A,B,C for Apple Inc, Blackberry and Computer. Yes, nowadays technology have taken most of our life. Furthermore, parent that been over protective for their children in this kind of issue and some who have been carefree have contribute to this issue. The emergence of the internet thru social media have made this story more sensational and to begin with, this problem start from the internet itself. This issue just not grab the attention of the parent who their child involved with this year UPSR but also million other citizen. As a saying goes ' bread will sell when it is still hot'.

Since my time during secondary school, I have always concerned about buying assets. Malaysian youth who just started working like to buy cars instead of houses because car is a material that others can see. Car price is inversely proportional to its age where house price is proportional to its age. The older the house the more expansive  it become. The question is why house price keep increasing and how can the people afford it?

If we compare 20 years ago, people who earn around RM1500 per month can already own a house which the price range is around RM40,000 to RM100,000. Compare to that stat with the current situation where people who earn around RM1500 per month, they definitely can not buy a house. One of the factor is because house that cost RM40,000 20 years ago will cost around RM120,000 to RM200,000 in this era. This show that house price have increase more than 300% in the past 20 years.  New regulation from the bank also not favor to the people where the bank will not approved any house loan that is less than RM100,000. Moreover, it is quite difficult to find house that is below RM100,000 unless we could find a desperate seller for a house. If we could find a house that cost less than RM100,000 then the problem is how to collect RM100,000 cash? The third factor that hinder people from people buying a house is the fact that bank only provide 85% loan from the house price and house price average in Klang Valley is around RM400,000. For example if a person want to buy a RM500,000 house, the person need to prepare RM75,000 in cash plus other cost and fee. If a person already have RM75,000 in his bank 20 years ago, he could afford a nice apartment without committed to any house loan that usually bind the person up to 30 years to settle the loan. This development between the house price versus the person income is not in balance. People who earn around RM2800 per month will also struggle to own a house. The weird thing is this issue have been around in the headline for the past several years but why we the people didn't do any appropriate actions compare to the UPSR issue or the Selangor MB issue?

When will the house price graph going down?

Although the house price is increasing significantly, many houses project were claimed to be sold out but the truth is this a marketing strategy to lure people to buy the house. From my observation, less than 20% of Malaysia citizen age 20 to 35 years old already own a house. There are many house development projects and most of the house were sold out, yet many of us still can not afford to buy a house. This scenario lead to the rich become richer and the poor still become poor. With the implementation of Goods & Services Tax (GST) in April 2015, house price will increase around three percent due to increase in price for raw materials such as brick, cement and sand. The main contribution for the increase in house price is the property or land price. During this 20 years, many of areas in Malaysia have been developed where there are transportation hubs, schools and business complexs. This developments contribute to the increase of land price and eventually increase the house price.

Today 16 September 2014 is the 51st anniversary for Malaysia as a country that consist the Peninsular and Sabah Sarawak. Our country have a healthy development and we never encounter any major issue such as war or bankruptcy. Changes sometime are good and sometime are bad. If something never be done, I'm afraid that for the next 20 years there will be no Malaysian who can own a house in Malaysia.

Happy Malaysia Day    


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