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Will the Property Market Crash in Malaysia Damage the Economy?

 

The upcoming coming of the “BDK” or the Malaysian Property (BDK) Property is predicted to be the biggest property market crash in years. In the coming year, property values will crash by up to 60%. This is a huge blow for those who are holding onto their properties and waiting for a better time. Those that own some property in Singapore, will be greatly affected, as they will be the ones first affected by the property market crash. Below are some reasons why you should sell your properties before the “BDK” comes.

The “BDK” will greatly affect the tourism industry in Malaysia. The country will become very uneconomical. Tourism will suffer, leading to a sharp fall in income for the Malaysian government. Once this happens, there will be no fund generated to maintain or develop tourist attractions. As a result, visitors will stop coming to Malaysia and its natural resources will be depleted.

 

The declining housing prices will have a huge negative impact on the national income. It will become impossible for the Malaysian government to pay for its expenditures. When this happens, the money will be redirected to other essential investments, like the national security. This will result in a severe shortage of funds for projects such as education, healthcare and other essential public needs. Consequently, inflation will skyrocket, leading to a currency devaluation which will make the currency useless.

 

The declining property market will also have a significant impact on the foreign exchange market. Forex trading and lending will be severely affected. As inflation rises and becomes unmanageable, the banking crisis will lead to a hyper-inflation, which will in turn result to a currency collapse. This will lead to capital flight from Malaysia and will greatly affect the foreign exchange markets worldwide. Thus, this will further worsen the economic downturn in many countries around the world.

 

All these factors will have a very negative impact on the Malaysian economy, and the currency will depreciate rapidly. As a result, we can expect an increase in import duties and a sharp depreciation of the rupiah. In addition, the increased trade deficit will negatively affect the budget of the country. On the other hand, the weakening of the ruble will increase the currency rates and will stimulate more investment in the property market.

 

Due to the above mentioned negative effects of the property market on the Malaysian economy, it is predicted that the country’s economy will experience more recession and turbulence in the near future. The effects of the market crash will be felt in different sectors of the economy. Consumer price index (CPI) will increase for the third consecutive time, causing a severe inflation, which will make it impossible for the banks to lend money. This will result to a slowing down of the banking sector, and will compel the government to take harsh measures to stabilise the economy. On the contrary, the increasing number of tourists will also cause an increase in the demand for property, leading to more property developers being formed in Kuala Lumpur, Singapore, and other cities in the country.

 

On the other hand, there will be a shortage of property for sale after the market crash, and the government has to do something to reduce the glut. Auctions are one of the ways that the government uses to solve this problem. However, the auctioning process will become more difficult due to the large number of bidders, and the lack of suitable properties. Another effect of the property market crash will be the rise in property prices, which will force many low-earners to opt for a home loan or a mortgage loan, thereby reducing the available supply of properties on the market.

 

After looking at all the possible impacts of the property market on the Malaysian economy, it can be seen that the damages caused by the crash will cost the economy more than the benefits that could have been gained out of it. The effects of the property market crash on Malaysia, Singapore, and the other countries affected by it will have a profound impact on the people who live and work in the urban areas. Property values will decrease, forcing low-earners to opt for loans that will charge them higher interest rates. Another effect will be an increase in the number of foreclosure cases, which will push up the price of properties on the market. In short, the impact of the property market crash will vary from one country to another, depending on the specific circumstances of each.

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