Should KL homebuyers go on strike?
| Lee is a Petaling Jaya-born writer who worked in the IT sector and a business weekly before The Malaysian Insider. |
APRIL 16 — Homebuyers in KL and Penang have something in common with those in Melbourne and Sydney — increasingly unaffordable homes.
Their Australian counterparts, however, have gone one step further from merely complaining about it and are actually participating in a campaign — led by lobby group Prosper Australia — to bring down house prices via a home buying strike.
Property prices are a function of what the market will bear. The price for a house can yo-yo up and down for no reason other than what you are willing to pay for it.
The reaction to the Australian homebuyer strike launched last month was predictably divided — and sparked an online war of words between buyers and sellers.
On one side of the divide were the property investors. And nothing gives property investors a cold sweat faster than the thought of demand drying up and dragging down the value of their properties.
Not surprising then they have condemned the strike and said that homebuyers should simply try and save more money instead of complaining about property prices.
On the other side of the divide were the homebuyers — those looking to buy not for investment but simply as a place to live — who claim that the property market has become a ponzi scheme where investors buy property hoping to sell it at a higher price to the next buyer who buys it in hopes of selling it at an even higher price to the next buyer and so on and so forth.
The homebuyers feel that once the bottom part of the pyramid is taken out of the equation, the scheme will be starved of new players, causing a correction in the market.
They moreover sensed that the property market may have topped out — Melbourne property prices, for example, were reported to have dipped 1.8 per cent in the three months leading to February — and the newer buyers, purportedly, will be the ones left holding the damage after earlier investors exit with a profit.
One reader of the Sydney Morning Herald newspaper who was opposed to the strike said that prices are determined by supply and demand and those going on strike were unrealistic in their expectations, saying: “So this bunch of latest GetUp crowd is going to hold its breath like a petulant child until the market delivers them property at prices they like?”
A supporter of the strike, however, argued back that the campaign was merely an exercise of the free market.
“Quite right! How dare buyers only buy at prices they want to buy at. What do they think this is, a free market?” the reader retorted.
In an online poll in the Sydney Morning Herald, 56 per cent of 3,681 readers who responded said that they support the idea of a homebuyer strike while 44 per cent were opposed to it.
In a separate poll, however, 67 per cent of 21,120 readers said that the homebuyer strike will be “unlikely” to bring down house prices while 21 per cent said that it has a “reasonable” chance of making a difference and 12 per cent said it is “too hard” to say for certain.
And while only 2,596 supported the online petition and a mere 707 people liked the Facebook page, some suggested that the numbers could still be enough to tip the balance in property prices as Melbourne, for example, had only 815 house auctions in a recent weekend.
Whether it actually affects property prices directly or not, the strike has managed to provoke hundreds of comments in newspapers and served to further fuel the housing affordability debate in the major cities of Australia.
After some local media reports emerged last year about runaway property prices, the Najib administration made a few attempts at cooling the market such as capping the loan-to-value ratio for third properties.
But compared with our neighbours such as Singapore, which raised stamp duty on new properties to as much as 16 per cent of the sale price to be paid by the seller, and China, which raised interest rates multiple times since October and even in some cases, froze mortgage activity for third properties, the local measures can be considered very mild.
Malaysians aren’t known for their consumer activism but if affordability in cities like KL and Penang doesn’t improve, then a homebuyer strike may start to look more and more appealing.
* The views expressed here are the personal opinion of the columnist.
