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KUALA LUMPUR, Oct 18 — Developers are artificially inflating prices and offering rebates that allow speculators to buy without down payments, according to the National Home Buyers Association.
Its secretary-general, Chang Kim Loong, said the practise was negating efforts by the government to rein in property speculation and spiralling real estate prices.
“Today, developers continue to artificially increase price of new launches and then give rebates set off against the downpayment,” Chang told Malay Mail Online in response to a report on housing published this morning.
“This again artificially increase house prices and encourages false demand as no downpayment is actually paid.”
He urged Putrajaya to prohibit the practise, and to introduce more measures to hinder owners of multiple properties from acquiring more for speculation.
Malay Mail Online’s report this morning looked into the property construction ecosystem and how a skewed industry had made homes severely unaffordable for most Malaysians.
Chang said NHBA concurred with the report, noting that the excuse used by developers to justify the expensive house prices — increased in construction cost — was baseless.
He also noted that the Developers Interest Bearing Scheme, other zero entry cost and the relaxation of the real property gains tax in the past have caused house prices to skyrocket.
According to NHBA, the rebate given by the developer comes in the form of a “deduction” against the 10 per cent down payment that the buyer must make, based on a retail price that was inflated by the same amount.
This essentially allows the buyer to obtain full financing for the purchase with a loan for 90 per cent of the face value.
Chang said speculators have exploited this scheme to snap up properties in bulk, causing prices to increase.
Critics say the controversial scheme helped created the house price bubble in the past five years.
NHBA had previously warned of a “homeless generation” and a housing crisis is imminent unless the government takes drastic measures.
Chang had also called for the government to regulate house prices.