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PETALING JAYA: The government must be ready to burst the housing bubble, and the risk that it causes an economic crisis, said the Institute for Democracy and Economic Affairs (Ideas ). Dr. Carmelo Ferlito ( pix ) in his paper titled "Affordable Housing and Cyclical Fluctuations: The Malaysian Real Estate Market" recommends that the government respond with market-based solutions and pay special attention to the market. financial exposure of households.
"Second, the government must minimize its role in the real estate market by reducing the number of government agencies and encouraging the private sector to get involved in the affordable housing market. literacy, with a focus on the value of savings and the opportunities offered by the rental market, "said Ferlito in a statement released today
. n and facilitate regulation on the real estate market for foreigners who are in possession of a regular work visa and pay taxes, to help the industry.
Ferlito's policy paper highlights the evolution of the Malaysian real estate market over the past decade, resulting in a high number of unsold properties, particularly in the high-end segment, and a partially unsatisfied demand for affordable housing.
He stated that the spectacular growth of the high-end real estate segment was stimulated by growing demand and at a later stage by a favorable credit market
The mixture of these elements generated a bubble which, following the dynamics of real estate transactions, reached its peak between 2012 and 2013, and this bubble is now
Ferlito noted that the focus on the high-end segment was justified by strong demand and it is therefore natural that investments have developed in this sector.
He added that the strong involvement of government agencies in the affordable housing market was likely to oust private initiative and prevent the necessary restructuring from taking place. "
" It is important to let the bubble burst; Too much credit will only delay the burst, keeping prices artificially high and jeopardizing the financial solvency of buyers. Without credit support, the crisis will occur more quickly and will force both capital restructuring and lower prices, "said Ferlito
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