What is a Property Bubble?
A real estate bubble or property bubble (or housing bubble for residential markets) is a type
of economic bubble that occurs
periodically in local or global real estate markets.
Characteristics of a Property Bubble
There are 3 characteristics that
preceded the bursting of a Property Bubble:-
i) Rapid increases in property prices
ii) Property prices reach unsustainable levels
iii) Property prices decline
I will examine the issue “Property
Bubble: Fact or Fantasy” in 3 Articles. In Part 1 of my 3 Articles
I will examine the 1st Characteristic of a Property Bubble namely “Rapid
increases in property prices”.
Is Malaysia
We shall now examine the 3
characteristics that preceded the bursting of a Property Bubble to ascertain if
Malaysia
is heading towards a Property Bubble.
Examination of 1st
Characteristic - Rapid increases in property prices
Did Malaysia ’s
property prices increase rapidly? For
the answers, we will examine the movement of prices of terrace houses and
condominiums in typically Middle Income Residential Suburbs in Kuala Lumpur from 1981 to 2013 including:-
i)
Overseas Union
Garden
ii)
Happy Garden (Terrace Houses)
iii)
Taman Desa (Terrace
Houses)
iv)
Bangsar Baru (Terrace Houses)
v)
Taman Tun Dr. Ismail (Terrace Houses)
vi)
Faber Heights
Overseas Union Garden , Kuala
Lumpur
Year Property Type Land
Sale
Area Sq. Ft
Sq. Ft RM RM
5/1999 Terrace House 1,600 250,000 156 100
9/2002 Terrace House 1,600 260,000 162 103
11/2005 Terrace
House 1,600 320,000 193 124
9/2007 Terrace House 1,600 350,000 218 140
9/2008 Terrace House 1,600 420,000 262 168
9/2009 Terrace House 1,600 450,000 281 180
12/2009 Terrace
House 1,600 505,000 315 202
7/2010 Terrace House 1,600 530,000 331 212
11/2010 Terrace
House 1,600 575,000 359 230
6/2011 Terrace House 1,600 675,000 421 270
5/2012 Terrace House 1,600 830,000 518 332
Happy Garden, Kuala Lumpur
Year Property Type Land Sale
Area
Sq. Ft
Sq.
Ft RM RM
8/1990 Terrace House 1,540 120,000 78 100
7/1993 Terrace House 1,400 150,000 107 137
1/1994 Terrace House 1,915 170,000 88 113
12/1998 Terrace
House 2,883 200,000 69 89
8/2000 Terrace House 1,540 245,000 159 204
11/2002 Terrace
House 1,200 215,000 179 229
8/2004 Terrace House 1,540 348,000 225 288
3/2007 Terrace House 1,400 578,428 413 529
3/2011 Terrace House 1,400 851,000 607 779
3/2012 Terrace House 1,400 948,000 677 868
3/2012 Terrace House 1,400 1,100,000 785 1,006
Taman Desa, Kuala Lumpur
Year Property Type Land Sale
Area Sq. Ft
Sq. Ft RM RM
12/1991 Terrace House 1,872
185,000 98 100
9/2004
Terrace House 5,424 650,000 119 121
2/2006
Terrace House 1,646 328,000 199 203
7/2007
Terrace House 2,646 365,000 137 140
3/2008
Terrace House 1,649 520,000 315 321
12/2009 Terrace House 2,044 660,000 322 328
6/2010
Terrace House 1,869 620,000 331 338
7/2011
Terrace House 2,259 580,000 256 261
9/2011
Terrace House 1,869 830,000 444 453
10/2012 Terrace House 2,126 1,100,000 517 527
Bangsar Baru, Kuala Lumpur
Year Property Type Land Sale
Area Sq. Ft
Sq. Ft RM RM
5/1999
Terrace House 1,760 456,000 259 100
5/2002
Terrace House 1,760 790,000 448 172
9/2005
Terrace House 1,760 610,000 346 133
6/2008 Terrace
House 1,760 850,000 482 186
1/2011
Terrace House 1,760 1,180,000 670 258
10/2011 Terrace House 1,760 1,750,000 994 383
3/2012
Terrace House 1,760 1,300,000 738 285
8/2012
Terrace House 1,760 1,450,000 823 317
12/2012 Terrace House 1,760 1,530,000 869 335
3/2013
Terrace House 1,760 1,580,000 897 346
Taman Tun Dr. Ismail, Kuala
Lumpur
Year Property Type Land Sale
Area Sq. Ft
Sq.
Ft RM RM
1/1992 Terrace House 2,797 400,000 142 100
1/1995 Terrace House 1,980 660,000 333 234
10/2000 Terrace House 3,109 610,000 196 138
8/2001 Terrace House 2,130 580,000 272 191
5/2002 Terrace House 1,900 658,000 346 243
8/2007 Terrace House 1,900 780,000 410 288
12/2009 Terrace House 1,872 866,000 462 325
11/2010 Terrace House 1,807 1,020,000 564 397
8/2011 Terrace House 1,721 1,330,000 772 543
8/2012 Terrace House 1,904 1,330,000 753 530
Year Property Type Unit Sale
Area Sq. Ft
Sq Ft RM RM
8/1984 Condominium 936
190,000 218 100
1/1985 Condominium 882
198,000 244 112
11/1996 Condominium 1,183 275,000 250 114
10/2000 Condominium 936 228,000 265 121
5/2004 Condominium 1,215
295,000 261 120
9/2007 Condominium 936
245,000 281 128
9/2010 Condominium 946
355,000 406 184
8/2011 Condominium 946
480,000 545 250
8/2012 Condominium 936
510,000 586 268
4/2013 Condominium 946
530,000 602 276
Summary on Price Increase
Location Property
Lowest Highest %
Type Price (RM) Price (RM) Increase
OUG Terrace
250,000 (1999) 830,000 (2012) 332
Happy Garden Terrace 120,000 (1990) 948,000 (2012) 1,006
Bangsar Terrace 456,000 (1999) 1,580,000 (2013) 346
Conclusion on 1st
Characteristic - Rapid increases in property prices
From reading the above
statistics, during the period from 1981 to 2013, property prices in the 6
locations in Kuala Lumpur at various rates as follows:-
Location Lowest Price Highest Price Period Increase
RM RM %
Overseas Union 250,000 830,000 1999
– 2012 332
Garden
Happy Garden 120,000 1,100,000 1990 – 2012 1,006
Bangsar Baru 456,000 1,580,000 1999
– 2013 346
Dr Ismail 400,000 1,330,000 1992 – 2012 543
With price increases ranging from
276% (2.76 times) to 1006% (10.06 times), such increases would be considered “rapid increases in property prices”.
The 1stt Characteristic of a
“Property Bubble” is fulfilled.
In Part 2 of my 3 Articles I will
examine the 2nd Characteristic of a Property Bubble namely “Property
prices reach unsustainable levels”.
In Part 3 of my 3 Articles I will
examine the 3rd Characteristic of a Property Bubble namely “Property
prices decline”.
Further
Information
You may want to visit www.ipropertydata.com
to check on property prices before you make your next property purchase.
Please visit Dr. Ernest Cheong’s blog at www.propertygandhi.blogspot.com
Please join Dr. Ernest Cheong at Facebook: JDBB Consultants by Dr Ernest.
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