Buyers having no purchasing power

This time it is real estate veteran Ernest Cheong who said that Malaysians do not have the financial capacity to own homes with some failing to even pay their monthly instalments.

When the property crash comes early next year, Cheong expects the prices of houses to fall from RM500,000 to RM300,000.

This time, it is the property market that is of concern, with the Deputy Finance Minister Lee Chee Leong saying the property builders and sellers were offering generous payment schemes, allowing buyers to pay as little as 1% to acquire a property.

Cheong said this “generous payment mode” exists because developers are finding it hard to sell off their new properties.

He said they are in danger of losing their bridging finance from banks if they fail to sell at least 40% of the total units. The bridging finance is used by developers to support their construction.

“This is where the danger starts. I predict if this continues, markets will crash within 24 to 30 months because consumers do not have the financial capacity to buy properties any more.

“Furthermore, developers who started building two years ago are expected to flood the market further with their units.”