News by Asia Analytica

If we do not innovate and try new ideas, we can never make progress.

he excesses of the past decade, the borrowing binge fuelled by ultra-low interest rates and liquidity, are coming back to bite us, no doubt.

解决房屋可负担性的问题，最直接的方法是先降低各造面对的风险。如何做到？

Home prices have risen rapidly since 1990, fuelled by historically low interest rates and enabled by the then government’s policies (such as home ownership campaigns, Developer Interest Bearing Scheme and a reduction in the real property gains tax) and banks’ aggressive lending for mortgages. As a result, home affordability has declined by half.

Over the last few years, the Malaysian property market has been characterised by sluggish sales and a rising number of unsold homes. Developers are sitting on large stocks of inventories, which are stretching their balance sheets, funded by borrowings from banks, and the debt and capital markets, including issuing perpetual securities. The sector’s poor outlook is reflected in the low valuation of property stocks, most of which are trading at around one-third book value.

How did this situation come about?