Free Market Competition Lowers The Cost Of Living

Yesterday was a happy day. We visited the sales launch of a property project where our architect son did the design and architecture of the superlink homes.

The project is nearing completion and the homes are almost fully sold.

The property market  is tough and the competition is stiff.  Of course when the competition is stiff developers are forced to be innovative to compete.

It is all about  saving costs, making things easier for the buyers to purchase the homes. 

In prime Old Klang Road 660 sf apartments (2 room 2 bath) are being offered for RM350,000. This is a very affordable price.  These are small units but popular with working singles and young families. Also for the rental market.

The superlinks my son designed are three storey, 2900 sf (spacious) and start at around RM785,000.  

Due to the stiff competition developers are also throwing in plenty of freebies.  Certain fittings, kitchen cabinets etc are becoming quite the norm.

Securing the house is also being made easier. One developer asks 3% deposit. Then they give a 7% discount. 

Assuming you get a 90% housing loan, you only pay 90% + 3% = 93% of the total  sale price.

Because the developer gives you that 7% discount, what this really means is that the developer has helped you get a 97% housing loan !! 90 / 93 = 97%.  Clever.

The consumer benefits.

This is what happens when there  is free market competition.  The consumer benefits. (And if developers do not deliver what they promise, some house buyers redecorate their houses with sledgehammers).

Too many people in this country do not understand the economic benefits of competition. With competition everyone becomes rich. Without competition the monopolies and oligopolies become rich - at the expense of the poor.

Take Proton.  For 30 years Proton cars were overpriced. They were too expensive for the type of quality that was offered.  But the prices of all other imported cars were artificially kept high.  Because all other car prices were pushed up Proton was able to sell their cars at  prices much higher than they deserved to get.

So who did Proton benefit?  Not many because eventually Proton became lazy and they went bust. Laziness is not good for business.

Now under new ownership (Geely of China) Proton is getting less protection. They have to compete more. So for the first time in 30 years the new owners of Proton have started cutting the prices of Proton cars.

The more competition we have the better it is for the economy and for the people.