<p><img alt="" src="/documents/10204/0/dispatch-Mahathir-Mohamad-lead-compressor.jpg/66934d88-25f9-4661-b75a-99be9b5e8186?t=1533812265486" style="width: 1400px; height: 640px;" />On the evening of 9 May, the restaurants and bars around Kuala Lumpur’s financial district were unusually busy for a Wednesday. Ties loosened and shirt sleeves rolled up, white-collar workers huddled around beer towers and bowls of food, fixed on television sets, talking occasionally in hushed tones about the only topic on everybody’s mind: Malaysia’s 14th general election and the possibility of waking up to an altered political future.&nbsp;</p> <p>Jutting out above Bukit Bintang’s brightly-lit entertainment strip, the nearby Exchange 106 building though served as a stark reminder of the present. The centre piece of the capital’s new central business district, Tun Razak Exchange, the soon-to-be tallest building in Southeast Asia is the brainchild of ousted premier Najib Razak and his now infamous 1Malaysia Development Berhad (1MDB) scheme, a now-defunct state investment fund that is mired in scandal that could yet put him behind bars.&nbsp;</p> <p><a href="http://property-report.com/detail/-/blogs/2018-propertyguru-asia-property-awards-malaysia-the-winners-lis-1" target="_blank"><strong>More:&nbsp;Who won at the 2018 PropertyGuru Asia Property Awards (Malaysia)?</strong></a></p> <p>Set for completion later this year, the 492-metre-high commercial tower is one of many high-profile multi-million dollar projects rolled out by 1MDB at the behest of Najib. In contrast to such showpiece developments though is a dearth of affordable homes in Malaysia: a big deal when average household income in the nation is a respectable, but hardly high-rolling MYR5900 (USD1460) per month. His 2013 election pledge to build one million affordable homes stalled at the 17,000 mark.&nbsp;</p> <p>"We all know that there's a growing need for affordable housing as the burden on citizens gets heavier every day," Tan Huiyin, senior associate at KL-based law firm Tan Chap &amp; Associates, says.</p> <p>Affordable housing, defined by the Kuala Lumpur-based Khazanah Research Institute as costing no more than three times the median household income, has been a sore point in Malaysia for the best part of a decade.</p> <div class="pull-quotes-container">We all know that there's a growing need for affordable housing as the burden on citizens gets heavier every day</div> <p>The issue initially came to the fore between 2012 to 2014 when the average supply of 85,000 new units fell considerably short of the demand from 118,000 new households, according to Bank Negara Malaysia (BNM).&nbsp;</p> <p>In a clear indication that situation has since deteriorated, a February bulletin by BNM announced that the supply of new residential units nationwide remained “seriously unaffordable by international standards” with a median multiple of 5.0. Although the maximum affordable house price in Malaysia is approximately MYR282,000, the actual average house price is currently MYR313,000, it added.</p> <p>The number of unsold completed residential units in the first quarter of 2018, meanwhile, totalled 34,532, a 56 percent year-on-year increase, according to the National Property Information Centre. Tellingly, a third of the units launched, which were priced between MYR500,000 and MYR1 million, remained unsold.</p> <p>"It is an issue of not having enough income and houses being too expensive," BNM governor Muhammad Ibrahim said during the 2017 National Conference of Public Sector Accountants last August.</p> <p>With the BNM projections stating that demand for affordable housing units will continue to soar, hitting 1 million by 2020, it is now down to the new – and former – prime minister Mahathir Bin Mohamad and his ruling Pakatan Harapan coalition party to take up the mantle.</p> <p>In what appears to be the incumbent government's first move on the matter, the recently appointed housing and local government minister Zuraida Kamaruddin announced in June that she aims to streamline all existing social housing agencies, including those handled by the Prime Minister's department as well as the 1Malaysia Housing Programme, which will be rebranded to distance it from the previous administration and 1MDB.</p> <p><a href="http://property-report.com/detail/-/blogs/meet-kuala-lumpur-s-heritage-loving-design-de-8" target="_blank"><strong>More:&nbsp;Meet Kuala Lumpur's heritage-loving design dean</strong></a></p> <p>Experts believe however that it will take much more than a reshuffle of government agencies and a few new logos to resolve Malaysia’s affordable housing crisis.</p> <p>"Most importantly, it requires a high degree of cooperation from the private sector,” Huiyin says.</p> <p>Yet high construction costs, which account for around 80% of property prices, according to the Real Estate and Housing Developers’ Association Malaysia, make it especially difficult for developers to meet BNM’s affordable housing ceiling of MYR282,000.</p> <p><img alt="Voters queue up in the early morning in Tuaran Sabah to cast their ballots during the 14th general election in Malaysia. hairul_nizam/Shutterstock" src="/documents/10204/0/shutterstock_1086679757-compressor.jpg/444d363c-1733-4b31-97f5-28e85b42d64c?t=1533814548265" /></p> <p>“Even if they do build a house according to that price, people will not buy it because they want a ‘wonderful’ house to live in,” Knight Frank Malaysia Managing Director Sarkunan Subramaniam says. “We cannot expect developers to sell houses that are not marketable.”</p> <p>Developers in turn have been critical of the banks, claiming that consumers are struggling to gain adequate financing. But BNM’s Mohammed rebuffed this suggestion. He claims that “the problem is not about access to credit”, citing that the overall housing loan approval rate of 74.2 percent remained high.</p> <p>Soaring land prices also make it increasingly difficult for developers to build affordable homes in desirable locations, according to Huiyin.</p> <p><a href="http://property-report.com/detail/-/blogs/malaysia-s-luxury-market-malaise-drags-22" target="_blank"><strong>More:&nbsp;Malaysia's luxury market malaise drags on</strong></a></p> <p>"Location is a defining factor and local authorities should be willing to provide prime state land for affordable housing," she says. "Red tape and corruption also need to be cut to ensure that affordable housing is built on suitable lands and not just the outskirt areas.”</p> <p>Although it remains to be seen whether the new administration is willing to release cut-price land, some leading developers have already publicly backed the idea.</p> <p>Sunway Bhd announced in June that it is eager to work with Mahathir’s coalition on the condition it introduces a “mutually beneficial initiative”.</p> <p>LBS Bina is one of a handful of developers that has started to take matters into its own hands, launching 10 projects, largely in Kuala Lumpur’s Klang Valley area, last year with 58 percent of the units priced below MYR500,000, according to Lim.</p> <p>But for many lower-income families, the hope will be that Mahathir, the man who was responsible for gifting KL with its most recognisable icon, the Petronas Twin Towers, will be just as enthusiastic when it comes to constructing everyday buildings for the thousands of households in dire need of an affordable place to call home.&nbsp;</p> <p><em>For more on the burning topics affecting Asia's innovative property markets, subscribe to the next issue of <a href="https://www.magzter.com/TH/PropertyGuru-International-(Thailand)-Co.,Ltd/Property-Report/Business/214429" target="_blank">PropertyGuru Property Report Magazine</a></em></p>

<p><img alt="" src="/documents/10204/0/sweden-dispatch-147-lead-compressor.jpg/5cc3041c-9315-4bbe-8d01-5cbaac544717?t=1532510945602" style="width: 1000px; height: 666px;" /></p> <div>In Sweden, getting a mortgage has long been like assembling a flat-pack chair from its iconic furniture chain Ikea: pretty easy. And, unsurprisingly, popular with young people and first-time homebuyers.&nbsp;</div> <div>&nbsp;</div> <div>For two decades, the Nordic simplicity of entering into such a hefty financial agreement afforded everyone from young families to fresh graduates and those on low salaries the house of their dreams.&nbsp;</div> <div>&nbsp;</div> <div>But while new homeowners were cheerily deciding on what tabell or soffa to buy, banking and housing analysts were scratching their heads over whether they were on solid ground or heading for a crisis akin to the crash of the early 1990s. Back then the economy was brought to its knees, the national currency, the krona, was devalued frequently and government officials were forced to haggle with foreign creditors.&nbsp;</div> <div>&nbsp;</div> <div>As household debt and house price data over the years turned grimmer and uglier, regulators decided in 2016 enough was enough. The market needed straightening out.</div> <div>&nbsp;</div> <div><a href="http://property-report.com/detail/-/blogs/malaysia-s-luxury-market-malaise-drags-22" target="_blank"><strong>More:&nbsp;Malaysia's luxury market malaise drags on</strong></a></div> <div>&nbsp;</div> <div>“If you had a mortgage prior to 2016, you never had to pay off the principal regardless of what your salary was and regardless of what your debt to asset ratio was,” says Sarah Foxen, managing director of real estate services company Residensportalen AB. “So you could borrow lot of money and only pay off the interest, which led to this crazy market – people were getting mortgages which they were never in their lifetime going to pay off.</div> <div>&nbsp;</div> <div>“It’s insane that someone who is making USD100,000 a year could buy a property that’s a million dollars – that doesn’t happen in any other country.”</div> <div>&nbsp;</div> <div>Since 2007, Swedish house prices had been soaring, rising almost 6 percent a year on average, while household debt surged from 1.2 to 1.6 times disposable income.&nbsp;</div> <div>&nbsp;</div> <div>The sober realisation of a looming housing bubble prompted the government and banks in 2016 to change the rules regarding paying off the principal of the mortgage.&nbsp;</div> <div>&nbsp;</div> <div>Borrowers with debts exceeding 70 percent of the property's value were now obliged to pay back at least 2 percent of the debt each year, while borrowers with a loan-to-value ratio of 50-70 percent to pay back 1 percent.&nbsp;</div> <div>&nbsp;</div> <div class="pull-quotes-container">The warning signs were as strong as those of the financial crisis; then in August transactions basically stopped</div> <div>Suddenly, in the second half of last year, the industry’s pulse went dead.&nbsp;</div> <div>&nbsp;</div> <div>“We started seeing last May that there was something brewing. The warning signs were as strong as those of the financial crisis; then in August [transactions] basically stopped,” says Foxen.</div> <div>&nbsp;</div> <div>“In August, people were still buying – buying a new home and waiting to sell their old home. All of a sudden, people were sitting on two properties. And these people are desperate to rent out one of them because they can’t sell it.”</div> <div>&nbsp;</div> <div>Apart from sales of units in Sweden’s most spectacular developments, such as Gothenburg’s Karlatornet skyscraper, the country’s tallest building at 240 metres, “a lot of projects are standing still,” says Niklas Berntzon, co-founder of brokerage Eklund Stockholm New York.</div> <div>&nbsp;</div> <div>According to Svensk Mäklarstatistik, a local independent supplier of housing market statistics, the price for an apartment in central Stockholm fell by 8 percent in recent months compared to the winter of last year.</div> <div>&nbsp;</div> <div><a href="http://property-report.com/detail/-/blogs/is-the-london-property-market-ready-to-banish-the-brexit-blu-13" target="_blank"><strong>More:&nbsp;Is the London property market ready to banish the Brexit blues?</strong></a></div> <div>&nbsp;</div> <div>However, while it seems the industry has averted a full-blown disaster due to the overall strength of the Swedish economy, more pain is expected. January this year ended a four-month downturn as Swedish home prices rose 3.4 percent from December after dipping 2 percent the month before, according to the Nasdaq OMX Valueguard-KTH Housing Index.&nbsp;</div> <div>&nbsp;</div> <div>But the data fails to give a clear picture of the situation as major cities are languishing more acutely than rural areas, according to Niklas Berntzon, co-founder of brokerage Eklund Stockholm New York.</div> <div>&nbsp;</div> <div>“Different reports state that prices haven’t really come down, some even say the prices have gone up,” he said. “If you ask the brokers in the big cities, such as Stockholm and Gothenburg, they’ll say the market is down between 10 percent and 20 percent.”</div> <div>&nbsp;</div> <div>What most experts can agree on, however, is that the apartment market has been most hit and will continue to see prices drop.&nbsp;</div> <div>&nbsp;</div> <div>“The fall in prices will be unevenly distributed and centred around the big cities, with the flat market being the most vulnerable,” says Tore Stramer, chief economist at Nykredit, a Danish financial services company.</div> <div>&nbsp;</div> <div>He adds that housing prices are expected to stabilise, underpinned by demographic developments and continued decent income growth.</div> <div>&nbsp;</div> <div><a href="http://property-report.com/detail/-/blogs/buyer-blues-in-indone-23" target="_blank"><strong>More:&nbsp;Buyer blues in Indonesia</strong></a></div> <div>&nbsp;</div> <div>Until current house prices do stabilise, however, the current downturn may bring to mind the jitters of the country's credit crisis and housing bubble of 1992, when property prices imploded; yet experts are not showing too much concern, confident the economy is in a stronger position than it was back then and able to absorb the shock of falling house prices.&nbsp;</div> <div>&nbsp;</div> <div>Over the past three years the economy has grown on average 0.9 percent&nbsp;quarterly, whereas in 1992 it barely ticked, and it’s this resilient economy which is holding the fraying financial fabric together – and (at least everybody hopes) preventing a repeat of the catastrophic plunge in the 1990s.&nbsp;</div> <div>&nbsp;</div> <div>Foxen says it will take about two years before the market fully recovers, and does not believe the situation is currently disastrous. However, those people most desperate to move home before then will be hit the hardest.</div> <div>&nbsp;</div> <div>“There will be losers. Everything has to do with time and who has to move and who doesn’t.”</div> <div>&nbsp;</div> <div><em>This article originally appeared in <a href="https://www.magzter.com/TH/PropertyGuru-International-(Thailand)-Co.,Ltd/Property-Report/Business/" target="_blank">Issue No. 147 of PropertyGuru Property Report Magazine</a></em></div>