save malaysia!
Why property crowdfunding is considered a sham
savemalaysia
Publish date: Sat, 18 May 2019, 04:35 PM
IT is baffling how the pursuit of gains has rendered a floor, a couple of walls and a roof an investment instrument, with no consideration for societal norms for the need to own a house as a fundamental human right to shelter.
Real estate has, over the decades, been a much-loved investment avenue, especially among Asians. The sort of property investment we are familiar with mostly involves rental and tenancy. The real estate investment trust is yet another property-linked investment, where investors receive dividends.
The unveiling of a property crowdfunding (PCF) framework by the Securities Commission (SC) yesterday, however, takes property investment to a whole new level.
Housing is now seen from a purely moneyed viewpoint – will house prices rise or fall? The investor would want prices to escalate, as he profits only if it does.
The strange part is that the SC equates PCF to “an alternative” form of funding home ownership. In what way is it home ownership when the buyer may not be able to buy it five years down the road because the price has escalated? He would be homeless. Will he then go on to the next PCF platform and will he still be considered “a first-time buyer”?
Stranger still is the fact that this legal framework experiments with this “new alternative” by placing the young first-time home buyers squarely as a bait against money-eyed investors chasing after yields and profits. Both have widely different agendas.
Under PCF, you need a platform operator, investors, developers and house buyers. It will not work without someone taking the bait.
Now, the SC has plainly said that it is not going into the property sector, that it is merely providing a legal framework.
As housing is a big-ticket item, there will come a time when the house buyer would need a loan to pay the 80% or 90% he does not own. Or, he can opt out and be homeless. One might say that he could rent, but that is not the point. The point is, how will PCF help a young person purchase his own house?
The banking sector may not be involved in the initial years as the investment runs its course. But just as there is an exit point for investors to make a killing after, say, five years, the house buyer has to decide to exit, or remain.
By all measures, crowdfunding has its merits because it allows like-minded investors to put their money in a project or a business. But is this pooling together of resources linked to home ownership? Instead of a house, let’s take the case of a vintage car (we will forget about that Mercedes because it is a depreciating asset).
Millennials cannot afford a vintage car, but under this crowdfunding alternative, they can put down 10% and “own” it for five years.
The investors will bet that the price of the vintage car will rise. Granted, he can’t live in a car, but this is to drive home the point that crowdfunding as “an alternative” to bypass the bank has its merits when it involves a business, project or even some cause. However, it is unacceptable to promote it as “an alternative” to fund a young person’s hopes of owning a house.
This brings us to the next question, why is the government equating home ownership to an investment proposition when it is so obvious that the young house buyer and the investor have different objectives? Has it anything to do with the fact that the country has more than 32,000 units of unsold residential units with no takers because banks have put in place stringent lending guidelines?
So, the powers-that-be conveniently dig a new path to bypass the banks in providing “an alternative” in a bid to bring these unsold units down, while at the same time quelling the cries of first-time home buyers who find it impossible to buy a house.
If this is the case, then we have politicised housing, without thinking of societal and economic consequences, and without actually bringing house prices down.
Affordability issues are not being resolved here, only new ways of financing are being created.
Read more at https://www.thestar.com.my/business/business-news/2019/05/18/why-pcf-is-considered-a-sham/
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Discussions
Be the first to like this. Showing 24 of 24 comments
anyway this kind of articles are too set in their ways, unable to experience new experiences......
2019-05-18 16:59
Unker it's the new ways that introduce the most risks... If old ways can work, they won't try to invent new ways, very clearly our property market is doing 'well', that's why need all this kind of rent to own, whatever crap packages, and now even crowdfunding LOL. They are very desperate now to sell their completed units... Tough times ahead. Good for future homebuyers.. But now is not the time yet
2019-05-18 19:01
https://klse.i3investor.com/blogs/savemalaysia/207105.jsp
this is a much better way of looking at it.....its called solving problems.
2019-05-18 19:03
Good luck to these students who learn from the property guru, they will be poor for life. That's what happens if you become a sheep and can't think independently and objectively. Good for them. But I do have grudges against these so called property gurus - or scammers I like to call them.
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Posted by Gtrade > May 18, 2019 8:03 PM | Report Abuse
now we are under the trance of buying properties especially for those just starting work. 10 or 30 years ago ,only those working more than 10 years consider buying house. Nows the frenzy is worked up property guru who charge 5k to 20k on 3 days course how to become millionaire buying property. Of course the guru makes tens of millions promising the students million dollar dream, while students are struggling with housing loans payment.
2019-05-18 22:33
If developers reducewn the price change into cheaper product/material with 3-5% profit . It should able to sell decently.
But land is expensive.
2019-05-18 22:54
look like we have a very serious problem in malaysia:
students who borrow from ptptn dont want to pay back loan
ppl who dont earn enough want to buy big house cheap
last time our parents time, students ALWAYS pay back their study loans.
and ppl who dont earn enought are willing to rent and work harder to upgrade their income.
why cant youngsters emulate our forefathers?
2019-05-18 23:34
Education nowadays are not cheap, if study oversea the tuition fee & living cost a bomb so end up student taking part time job to compensate the fluctuation of currency..
My usage years back was around myr2k~
Now easily 3-5k per month.
Repayment loan monthly - rm 800++ include interest for 7 years.
If default - blacklist immigration & bank loan.
2019-05-18 23:59
overseas is for the 1%.... if u belong to the 10% no need overseas. some 1% also don't like overseas because too far away
2019-05-19 03:47
Enjoy 5 years but remaining years-suffer till death, best describe this PTP property idea. wakaka
2019-05-19 10:47
PTP property is to help developers to clear out too many hanging houses but not the poor commoners' income per capita or affordability issue. Gomen must think how to increase our income....naturally, all will afford....why gomen BUSYBODY help developers? wakaka
2019-05-19 11:05
Crowd funding no use loh.....!!
If want to clear the property glut on high end must come up with incentive to allow to buy more than 1 properties loh...!!
Also allow foreigners to buy these type of properties loh...!!
The B40 and M40 still can go for low cost & affordable home loh...!!
2019-05-19 11:09
then how goverment or malaysia wan to get improve more without local professional?
2019-05-19 12:25
very simple....this is just one of the ways to help clear the stock and help young purchasers.........it is not a cure all silver bullet.
2019-05-19 12:34
crowdfunding for the house you want works only if the location is good.
you buy in places having oversupply 5 years later house still same price.
the key is purchasing property in places which are constantly in demand.
2019-05-19 12:38
enigmatic > May 19, 2019 12:38 PM | Report Abuse
crowdfunding for the house you want works only if the location is good.
you buy in places having oversupply 5 years later house still same price.
the key is purchasing property in places which are constantly in demand.
========
goes without saying.....buyers still have to make the right decisions.
2019-05-19 12:41
More like a scam. Don't forget 2008 subprime crisis. They will keep telling you buy the houses now, or else 10 years later you won't be able to afford it. That's how you get all these substandard quality loans, and when this so called "solution" cannot handle the excess supply, that's when all hell breaks loose. Malaysians may have short memory span, but I am definitely not one of them. Education costs is way too high now, the ROI for it is probably not even worth it anymore. That's the case with US, and very soon with us.
Those who don't remember the history is bound to repeat it. - "whoever that said this"
2019-05-19 14:13
We need more people with opinion and able to think critically, not sheeps that feed on information given to them and never give them any thoughtful considerations. Generation these days are really sheeps, you tell them A, then they believe A. What's more, most of them are living in their own bubble, if you criticise them, they will hate you. Bunch of jokers. Do you all truly think housing prices will go up and up and up? Please lah, even rocket boosters will fall back to Earth once the fuel runs out. There's no such thing as things that keep going up. You want to compare with Hong Kong? Hong Kong is the World's Financial Hub, is Malaysia a Financial Hub?
2019-05-19 14:15
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I can see clearly how 'well' Malaysia property market is doing... Looks like all these new packages, new offerings, new type of funding to push sales is really making it seem that the market is doing well. Continue to live in your bubble, and you'll be financially bound to a house for the next 30 years, good luck.
2019-05-18 16:43