So are we experiencing a property bubble?

Article by FREEMEN

In continuation of our analysis of the Malaysian real estate market, let’s take a look at the national statistics of the country and ask ourselves the big question – are we experiencing a property boom or is it a bubble?

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Again, most of our reference will be from the 3rd quarter Malaysian Housing Property Index (MHPI) property report (until September 2011), compiled by the National Property Information Center, NAPIC. MHPI measures housing price changes in Malaysia. These are reports available for public on a quarterly basis. All information is based on secondary or sub-sale residential property transactions, meaning, buying and selling of existing residential properties in Malaysia.

For your reference, the data will be taken in reference from year 2000 onwards until 3rd Quarter 2011. We will also do some data comparison with post 1998 periods.

If we take a look at the MHPI index (left x-axis) since 2001 until Q2 2011, you’ll notice that the growth rate is on a consistent basis. Even the annual growth (right x-axis) shows a moderate growth statistics or 7.5% in Q2 2011. With no significant jump in the price, it shows that the economic growth we are experiencing is not unusual.

However, looking into more specific areas, we notice several key areas which are experiencing huge price hikes. If you take a look at the state of Selangor, you’d notice a huge price hike in the district of Petaling. Not surprising, similar hikes in Penang (as covered in the past article) and Tawau are seen.

The data shows that there are abnormalities in the current trends of certain districts and areas, indicating a risk of prices hikes or micro bubbles in the real estate industry, due to aggressive expansion and large number of developments happening in the area.

2 other key factors need to be assessed, in other to establish the future trends of the property market. One being the interest rates or the base lending rates (BLR). The other is the consumer confidence market. Key ratios such as the property price to income ratio as well as the deposit (down payment) to income ratio need to be taken into consideration to determine the sustainability of today’s market growth.

1 additional factor to consider is the primary market for 2012. How are developers pricing their launches will determine the future trends of the market.

However, at the moment, it does looks like the property market is experiencing a relatively sustainable growth for the year 2012, at least for the next 2 quarters.

For those of you who are interested to know more on our studies, we would like to invite you to our property talk, this coming Saturday (7 Jan 2012), at Vistana Hotel. We’ll be preparing a short property report, for those of you who are interested at RM15 per copy. For the next 17 people who sign up, for the talk, we’ll pass these copies to you, complimentary. To register your seat, please visit

FREEMEN is an organization that has been training investors since 2008 to benefit from any market and helped 200 individuals to invest in over RM30Million worth of properties, ALL with no money down! Serious participants, who came through the FREEMEN™ property workshop and coaching class, bought their property with NO MONEY DOWN. In Penang, 82% of Penangite who came through this property workshop has bought a property NO MONEY DOWN and is continuing to do so.

Penangites are coached by Penangites and because the coaching is so intense and there are only a limited number of coaches, we can only take in another 20 people. Are you ready to change your life? Come meet us this Saturday, 7th of Jan, 2012 as there will be a workshop in Vistana Hotel, Penang entitled “How to achieve your financial freedom in 5 years of less” from 1:00pm till 6pm. Book early as we will be expecting a full house.

So hurry take action now to register here as seats are limited