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The document discusses Malaysia's property bubble that began in 1998 as house prices rose at an unprecedented rate fueled by demand, speculation, and the belief that price increases would continue indefinitely. A property bubble occurs when asset prices become unsustainably high and disconnected from their intrinsic values, leading to a sharp correction when demand declines. When Malaysia's bubble burst, property prices fell dramatically, hurting the economy. Solutions proposed to prevent future bubbles include government affordable housing programs and stricter lending guidelines to evaluate borrowers' ability to repay loans.
The document discusses Malaysia's property bubble that began in 1998 as house prices rose at an unprecedented rate fueled by demand, speculation, and the belief that price increases would continue indefinitely. A property bubble occurs when asset prices become unsustainably high and disconnected from their intrinsic values, leading to a sharp correction when demand declines. When Malaysia's bubble burst, property prices fell dramatically, hurting the economy. Solutions proposed to prevent future bubbles include government affordable housing programs and stricter lending guidelines to evaluate borrowers' ability to repay loans.
The document discusses Malaysia's property bubble that began in 1998 as house prices rose at an unprecedented rate fueled by demand, speculation, and the belief that price increases would continue indefinitely. A property bubble occurs when asset prices become unsustainably high and disconnected from their intrinsic values, leading to a sharp correction when demand declines. When Malaysia's bubble burst, property prices fell dramatically, hurting the economy. Solutions proposed to prevent future bubbles include government affordable housing programs and stricter lending guidelines to evaluate borrowers' ability to repay loans.
PROPERTY BUBBLE LECTURERS NAME : EN MOHD HAFIZ BIN MOHD SABERI GROUP MEMBERS : ALIN HANIS BINTI ZULKIFLI
UMI AMIRAH BINTI RAZALI
NUR SYAFIQAH BINTI NAZNI
HISTORY
Beginning in 1998, the real price of houses
began to rise at an accelerating and historically unprecedented rate. This price trend turned into an asset bubble which houses were bought at prices that made sense only if houses prices continued to rise. INTRODUCTION
A run-up in housing prices fueled by demand,
speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices and the bubble bursts. WHAT IS PROPERTY BUBBLE?
It is a type of economic bubble that occurs periodically
in local or global real estate markets. It is characterized by rapid increases in valuations of real property until they reach unsustainable levels, followed by a reduction in price levels. Rise like air balloon is growing.
Situation in which asset prices appear to be based on
inconsistent view about the future. WHEN DOES PROPERTY BUBBLE OCCUR? WHAT WILL HAPPEN WHEN PROPERTY BUBBLE BURST? HOW DOES PROPERTY BUBBLE AFFECT ECONOMICS? WHY DO PROPERTY PRICES KEEP CLIMBING AND DOES IT MEAN A PROPERTY BUBBLE? EXAMPLE OF PROPERTY BUBBLE
Mainly in high developed cities, since more buildings
are built, causing the value of land to increase. EXAMPLE OF PROPERTY BUBBLE (CONTD) EXAMPLE OF PROPERTY BUBBLE (CONTD) SOLUTION TO PROPERTY BUBBLE
1 Malaysia People Housing Program (PR1MA)
- A middle-income households in key urban centers, ranging from RM100,000-RM400,000 - Opens to all Malaysians who are 21 years and above with a minimum monthly income of RM2,500 Housing Project for the Hardcore Poor- (PPRT) - A government program for resettlement of slum dwellings and meet the needs of low- income earners. SOLUTION TO PROPERTY BUBBLE (CONTD) Improvise stricter guidelines on loans The eligibility for applying loan at banks should be strict. For example, the banker must take account of the borrowers background, job status etc. CONCLUSION
Property prices have taken an unhealthy climb
due to speculation and cheap credit. Comparing the Housing Price Index (HPI) to inflation over the last 11 years, it is evident that residential property prices have grown at a rate faster than inflation. THE END