THE BANKS AND THE HOUSING DEVELOPERS SCAM

THE BANKS AND HOUSING DEVELOPERS HOUSING SCAM

When one does not question much; situations take advantage of themselves to our detriment. Let’s take the banks and housing developers scam. Someone left us a system where banks are creators of money in a nation i.e numbers money which forms 95% of our money – paper notes and coins only 3%.

Then they dump on us an idea that risk is the worst possible plague in the world ; to be avoided like the beubonic plague. So being goody two shoes who equals asking questions to the height of terrorism we also adopt a hatred of risk in our daily work.

Heck we even have Islamic Risk Management. If the risk management is directed towards an equity transaction that’s fine ; that’s what our Prophet pbuh meant when he said tie the camel first. But when risk management is applied to a dubious debt transaction we are now tiptoeing on the abyss of riba. Sure we comfort ourselves with all those words but surely the Creator will see through us.

Anyway this is why banks love housing loans or housing financing. These to them is much less risky than lending to the real sector so they focus on this. Heck, nobody says they can’t! Even big brother Central bank approve.

Nobody advises the banks that it is their moral responsibility to direct their money creation ability to the real sector to create economic output and employment for the nation amongst other things. So left to fend for themselves they focus the nation’s money on housing loans.

This is a good business to them; they get interests from housing loans both ways. When they lend to people to buy houses, and when they give loans to housing developers to build houses.

Building houses is good right? So the people can own houses. Well yes, and no. Yes if the developers are honest and do not scam the buyers. No, if they are complicit with banks to scam people.

Oh by the way this a legit scam, all within the law. The banks do not break the law; the developers do not break the law. In fact the law supports them.

This is such a good business for the housing developers and the banks. How do they continue to milk the people? By ensuring there is a constant and increasing demand for houses.

A house is necessary for people; every family dreams of having one. People like to grow old in one; not a rented house where they can be booted out anytime. That is why Monetary Reformists propose the housing industry be de-privatised and given to the state.

(See our verbal explanation here https://internationalmoneyreform.org/news/2021/09/islamic-worldview-real-economics-immr-working-group-presentation/ )

So with this captured market what do the developers do? They ensure house prices zoom up every year so people will continue to buy houses. Why not? It makes sense- you put a roof over the head of your family ; a roof you own, and it goes up in value every year!

The government needs to check whether there isn’t an oligopolistic, underhand, illegal, market collusion and collaboration of housing developers to ensure house prices go up every year. Sure there is some natural supply and demand price increases because of increasing population and shortage of land nearer the city. But can that alone be the reason why house prices continue to rocket up exorbitantly, and house sizes continue to shrink steadily?!

If you bought a house in USJ in 1990s you’ll get one for RM160,000 for a size of 22 ft x 70 ft. Today it is RM 498,000 for a reduced size of 20 ft x 60 ft somewhere off the Elite Highway. Or if you fancy one a bit longer at 20 ft x 70 ft it is RM 790,000 in Elmina off the Guthrie Highway.

Someone cornered a builder a couple of years ago and asked what is the true cost of a house that size ie 20 ft x 60 ft, excluding land? He hesitantly whispered can easily be done for RM70,000!!

So are we or aren’t we scammed by the developers and the banks? They run laughing all the way to the bank while the people struggle to pay for houses and feed the family at the same time.

Monetary reformists say nationalize both the developers and the banks, in the manner we have described. If there are human issues with that are we that unintelligent that we cant find ways to overcome them?!!

So, are you with us or with them?

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