Every now and then we’re pretty sure everyone would like to dig into the past to size up the achievements and failures we’ve made. This issue is a major throwback to 20 years ago, when life was simpler and a cup of coffee was cheaper.

Back when even the notion of the word ‘hipster’ will get you some startling stares, the year 1999 was a mixed bag of gains and losses. Putrajaya started its administration in full swing fresh from the 1998 political debacle and most of the country’s prominent landmarks were officially opened for business like the Petronas Twin Towers, Sepang International Circuit and MSC Centre in Cyberjaya.

If shopping is your jam then do know that Mid Valley Megamall, Malaysia’s biggest mall, was officiated the same year.

Putrajaya, standing tall

Photo by StarProperty

Now despite the virtues, there were also a number of significant shortcomings the country had to endure. Metrovision ceased operations and the Japanese Encephalitis (JE) was discovered, leading to Acute Encephalitis or the Nipah virus that ravaged hundreds of lives with a death toll over 100 people. Lastly, and most grimly, that year also saw the Asian financial crisis, where Malaysia was hit hard and our people suffered the most.

And when it comes to a struggling economy, the property market would be most impaired. Buying power was scaled down and banks tighten up. The 1997/98 Financial Crisis resulted in one of the country’s earliest property gluts and 1999 was the same year the government decided to launch the HOC (read our previous article) to cushion the fall.

So let’s look at what actually went down 20 years ago in the property market, the year when a nonconformist-inspired, all-embracing, integrated serviced suite was just called a condominium:

The Great Migration No, we’re not talking about birds or dolphins here. From 1970 to 2010, a great number of kampung folks migrated to the city in the hopes of getting more promising careers. This has resulted in the city’s population rise to a steady 61% in 1999 from only 26% in 1970. The promised land for most back in the 70s

Photo by Pinterest This rise, however, also set a new precedent in the property market: it created home ownership demands, and when there’s demand, there will be supply. The real-world problem was that according to the Department of Statistics Malaysia (DOSM) and Economic Planning Unit (EPU), the average household income for city folks deteriorated from RM3,357 to RM3,103. And it didn’t help that Malaysia was still trying to crawl its way out of the Asian Financial Crisis.

Asian Financial Crisis The crisis that swept Asia in a swift

Photo by The Malaysian Times From 1997-98, the fall of the Thai Baht dragged other East and South East Asian countries down with it. Malaysia was one of its casualties. The Ringgit fell to RM4.80 against the Dollar before being pegged up to RM3.80 in 1998. The economy started to shrink, projects were dropped and foreign workers had to bail the country, with the construction industry suffering the worst hit. The PM pegged the Ringgit instead of reaching out to IMF

Photo by AP Photos



The Glut That Was Not Though the country was reeling from the 1997-98 crisis, there was indeed a property glut where the supply did not match those who could afford the units. This minor overhang, however, wasn’t as severe as the recent one. Back then owning property was easier. The home loan rejection rate was reportedly low and although the supply and demand formula was imbalanced, it was still under control. This, nevertheless, did not stop the government from launching the country’s second Home Ownership Campaign where Putrajaya offered stamp duty exemptions for properties priced at RM250,000 and below. But back in 1999, throw a rock into the air and it’ll still land on a property priced below that mark.

Make The World Dance, Forget The Price Tag We can’t help but agree that owning a landed property with a garage to fit your new Proton X70 is a dream for many but let’s face it, those don’t come cheap. But was it expensive back in 1999? Well, NAPIC reported a single-storey terrace (the one above with a sleek garage for that 4WD) back in the days would have set you back RM94,632 while a double-storey unit in the same category was priced at RM171,802. What about those modern, multi-storey high-rise properties with gyms and pools? The average selling price was RM178,239. But before you jump the gun on why didn’t your parents buy you one when the price was low, keep in mind that the average household income was just slightly above the RM3,000 mark. Property prices weren’t a major hurdle back in those days

Photo by The Malaysian Reserve



Back To The Now Fast forward 20 years and we now have places like Damansara West and Bangsar South with integrated serviced high-rises reaching staggering prices up to a few million Ringgits. What makes the situation unfriendly to purchasers is that the demands are hindered by tight lending rules. The Bank Negara Malaysia (BNM) guide released in 2013 forced banks to evaluate borrowers based on aggregate monthly repayments, not gauging each loan against gross income separately. This has culminated in very high loan rejections, resulting in many unsold properties and many more city folks left without a choice. In its defence, BNM has refuted this accusation, stating that the banking industry finds it hard to approve loans as the price itself is too high for average earnings. With Malaysian household debt being one of the highest in the region at 83.2% (52.8% from property purchases), this situation is a grave infraction of the Debt Service Ratio (DSR) we spoke about in February.