So, lets proceed with part 2, a much detailed analysis on our current property scenario.
Let's look at our house price index from the last 10 years:
House price index from 2000-2011 rose roughly about 50% on average for the whole nation. And let's look at just KL:
For just KL, house price increases about a whopping 70% from year 2000!
The media and the people especially from the property arena might say, 'Of course la it's getting higher, it's inflation maaa!!'. Okay then, let's look at our CPI (Consumer price index) for the past 10 years to analyst our inflation rate:
So, house price index rose around 50%, inflation rose around 24% from the 10 years period. Was it because we are getting richer? Let's look at the graphs below on our GDP per capita:
Our household debt rose from RM200 billion in 2000 to RM600 billion in 2010. That's about 300% increase! Now let's analyst the composition of the debt:
So, in summary, clearly we can see that we are not getting richer as our income increases at the same rate with inflation! How can we sustain the 300% increase on our household debt? It's either we increase our GDP or banks will have to stop or strictly restrict lending. We are at the top of a cliff. It's a matter of time the bubble will pop.