Malaysian property sector no immediate bubble risk

PETALING JAYA: The Malaysian property sector is not in any immediate risk of experiencing a bubble, according to property consultant CBRE Malaysia executive chairman Chris Boyd.

He said despite rising residential property prices, houses in Malaysia were still among the cheapest in the region.

“Residential property prices increased at a constant pace in Malaysia until 2009, but have been accelerating until recently.

“However, prices are not as volatile as those observed in Hong Kong and Singapore,” he said in a presentation during the 16th National Housing and Property Summit 2013.

“In comparison with selected Asian luxury residential prices, Kuala Lumpur remains one of the cheapest cities in the region,” said Boyd.

According to him, the average luxury residential property in Hong Kong costs nearly US$3,000 (RM10,200) per sq ft, compared with US$250 (RM850) per sq ft in Kuala Lumpur.

He pointed out that to overcome the issue of rising property prices, the Government had launched two schemes to make houses affordable, namely the Malaysia My First Home Scheme, which was introduced in 2011, and the 1Malaysia Housing Programme, which came into effect in 2012.

Meanwhile, Universiti Putra Malaysia Housing Research Centre professor Datuk Abang Abdullah Abang Ali said the recent Government initiatives were addressing the issue of rising prices but added that it was not clear if that was enough.

He said artificial increase in prices would create a bubble, noting that there was a serious mismatch between income and property prices, especially in the Klang Valley.

“This indicates that affordable homes are not being built to cater to the general market and most buyers in the Klang Valley are likely to be investors or speculators.

“As market prices head for a correction and speculation decreases, there may be an oversupply of properties above RM550,000.”

Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan, in his opening speech, said the Government had to mitigate excessive investment and speculative activity in the property market so as to prevent a property bubble.

“Moving forward, the Government would not hesitate to further tighten the fiscal policies in order to curb property speculation and ensure reasonable and affordable property prices in the country.”

Abdul Rahman said the low real property gains tax, which was increased from 5% to 15% last year, had not been effective in preventing the increase in house prices.

Contributed by EUGENE MAHALINGAM  The Star/Asia News Network

Investing in things that count

Sometimes it is not what we want that bears the richest blessings, but where we are sent that makes the difference.

THERE must be moments in our life when we pass by, say, a high-end store, and wish that we could pick up the latest electronic gadget without even thinking about the price.

The young father who wants the best education for his son may be convinced that the correct route is through a private or international school, if only he has a million ringgit to spare.

Day by day, we may wish for a lot of things. But aren’t we thankful that we do not always get our prayers answered?

The August month on the calendar in my office has a poem supposedly written by an unknown Confederate soldier. Titled “Prayers and Answers”, it includes the following verses:

“I asked for strength, that I might achieve. I was made weak, that I might learn humbly to obey.
“I asked for riches, that I might be happy. I was given poverty, that I might be wise.

“I asked for power, that I might have the praise of men. I was given weakness that I might feel the need of God.”

A friend gave up a nice job in the city to “Teach for Malaysia” in a rural school. The stories she shares regularly on Facebook are truly touching.

The first time I met her was at Fraser’s Hill some years back, when I was one of the facilitators at a writers’ camp.

While the purpose was to teach them to write well, I also told them that I would not expect them to eventually become journalists.

What is more important, I said, is to have a passion for life and a desire to make a difference wherever one is placed.

This friend did go through a stint in journalism but I now see her blooming in her real calling, which is to teach – not to the children of the rich and famous at some private school – but children who still struggle with the basic necessities of life.

The skills she honed as a communicator have allowed her to be practical and creative in teaching these children even the simplest of words. Here is a recent example:

•   She draws a picture of a globe.
•   Students: World!
•   Teacher: Very good! Another word that starts with “E”? We learned it recently.
•   Student: Earth!
•   Teacher: Ada nampak telinga dalam perkataan ini? (Do you see another word in ‘Earth’?)
•   Student: EAR! Ear! Ear!
•   Teacher: *smiling ear to ear* Thank you, Class!

 I should add that this is a Form One class whose standard of English has recently been diagnosed at Level 1.
It is a long haul, certainly, but my friend perseveres.

Meanwhile, another friend is doing something similar among the refugee community somewhere in Chad. Back on home leave, she showed me a clip of the children learning the alphabet by writing on the sand of an outdoor classroom.

These two young women gave up the comfort of home to venture into places where there are no high-end stores and where richness is definitely not measured by material possessions.

In places like this, strength, power and riches do not matter. Faith, hope and love are what really count.

SUNDAY STARTERS BY SOO EWE JIN

> Soo Ewe Jin (ewejin@thestar.com.my), in this season of Merdeka, salutes the many people, unknown and unseen, making a difference in many parts of our country.

American banks need further capital topping

It is important that stress tests are being conducted to asses the health of US banks, some of which are so large that they pose a systemic risk to the world's financial sector - EPA

 Fed's stress tests unveil flaws in planning process

LARGE US banks have lagged in terms of stress tests conducted by the Fed, pointing to possible further capital topping.

The Fed said in a paper released recenty that banks participating in regular “stress tests” had flaws in their capital planning processes, such as being unable to show that they considered all of the relevant risks to their businesses, said Reuters.

The paper pointed to problems such as modeling techniques that did not address bank-specific risks, loss and revenue projections that could not be replicated, or problems with governance of the planning process.

It is important that stress tests are being conducted to assess the health of US banks, some of which are so large that they pose a systemic risk to the world’s financial sector.

It is a tedious process but there is no choice; it is on the Fed to come up with increasingly sophisticated tools to conduct these stress tests.

It is not only in terms of stress tests that the US banks are lagging; progress has been slow in terms of adopting the Dodd-Frank Act.

Four years into the 2008 financial crisis, financial reform is still creeping along.

This is despite the collapse of a 100-year old bank, Lehman Brothers.

In fact, President Barack Obama had recently met with Fed Reserve chairman Ben Bernanke and other regulators, where he received an update and he also urged them to fully implement the Dodd-Frank Act.

Banks are said to be resentful of the Volcker rule that prohibits proprietary trading.

China has set up an agency to co-ordinate among other things, monetary and financial regulatory policies and help regulate financial products where jurisdiction overlaps.

It also coordinated information-sharing and statistics, an announcement on the Chinese government’s Web site said.

Withdrawal of stimulus packages, tightening of monetary and regulatory policies have impacted the financial sector severely.

Hence the timely setting up of such an agency which has no decision making powers; nevertheless the members of this advisory scheme have considerable weight.

The entity would be led by the central bank and would include representatives from banking, stock market and insurance regulators, as well as the State Administration of Foreign Exchange, said the International Herald Tribune.

In its aim towards sustainable financial reform, the Chinese Government hopes that this agency will help smoothen a lot of the hiccups on the way. This agency will have plenty of work ahead, considering the size of the Chinese financial sector.

Despite a 28.4% year-on-year decline in revenue from continuing operations to S$7.38mil from S$10.31mil, the Singapore Exchange is proposing to reduce the standard size of securities traded from 1,000 units to 100 units, and one unit eventually.

Besides improving liquidity and retail interest, the exchange hopes to make the larger, more well-established available to investors.

This will have positive implications for Malaysians trading on the shared platform.

With the change, the minimum needed to buy a SS$10 stock falls to S$1,000, or 100 units of S$10.

Currently, eight out of the 30 stocks in the benchmark Straits Times Index (STI), a collection of the most stable and liquid stocks, trade at S$10 or higher.

In view of capital outflows experienced by emerging markets, this is a timely move to capture back some of the investors’ money.

Contributed by Plain Speaking by Yap Leng Kuen
Columnist Yap Leng Kuen hopes to see more measures aimed at preventing outflows.

Related posts:
 'The year of shame 2012' get any worse in 2013?

 Serious deficits that cannot be financed could lead to bigger global crisis

 For the sake of money people will risk anything

 Malaysian currency weaken as foreign capital outflow