today or more like just then, the last day to submit 90% percent loan for citibank for 3rd loan

1 question...how does this move help 1 time house buyers if the price dun decrease?

The significance of this move is that it effectively gave a ceiling to the prices. Subject to market forces, it the price cannot go up, then naturally it ll come down

RPGT is a very effective tool.

Seller can add RPGT into selling price, but buyer willing to pay for it or not, is another question.

Don't assume buyer is desperate all the time.
A lot of buyer during properties boom time, is not the "real property owner", they are merely want to make profit from it.

So with RPGT introduced, the profit margin for flipping properties become lower, it become less incentive for people to flip properties.

Just like a restaurant, that current charge you 10% service day, one day, the service tax being hiked to 20%, you as consumer surely may think, don't want to go to the restaurant anymore.
No everyone willing to pay the 20%.
Properties market is not like seller put what price, buyer must buy.

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Added on December 12, 2010, 6:44 pmNot necessary, it may hold and consolidate for sometimes.

Not up, not necessary must down, price can stay at hold pattern one, partly could due to inflation that holding up the properties price.

Local properties market, loan is not too higher leveraged, desperate to sell is not as great as what happened in US RE bubble burst time, especially for middle range properties.

High end properties, yes, could fall, but low to mid range/cost one, don't think will drop.


This post has been edited by cherroy: Dec 12 2010, 06:44 PM

higher end means property price > ?

Very good points you have there for RPGT.
Now to elaborate a little on the ceiling - using your classification
1) High end condos
For this purpose of discussion, we shall simply define it as property above 350K.
Ceiling is set via LTV - should we agree on this then the issue much simpler.
Assume also LTV remains in force into perpetuity - though in real life may not be, just for discussion's sake.

Now imagine the force, ie momentum to go up is blocked by the ceiling.
Either it breaches the ceiling - but in this case, we assume it cannot be breached.
So it can consolidate for a while assuming there is still "force" to hold it there.
Then again, assuming the "force" dries up... then it ll come down.
The force here is money or to be exact, cheap and easy supply of credit.
With the impending BLR increase, soon it will not be cheap anymore.
Furthermore the gomen is bent on reducing subsidies - general prices for basic necessities will go up.
It puzzles me when my banker tells me that people who earns 6k per month are buying property worth 800K with minimum downpayment. This was before the introduction of the 40 yr loan.
Assume 30 yr loan, with interest rate of 4%, a loan of 800K (due to the 90+10 package), the monthly instalment will come to RM3820. I cannot see how it can be done with an income of 6k actually.

2) Low/medium end property
Ceiling is the 50% stamp duty waiver for property below 350K
However this is only in force for 2 yrs beginning 2011.
So yes, agree that low/medium end property may not fall much. Likely to consolidate here. Enough incentive including the 40 yr loan to sustain the market.

Another assumption into the points above is that the mentality of those who purchase high end property vs the low/medium end property - ie, one group dislike 40 yr loan, while the other will take advantage of it.

Well, its difficult to segregate high end - say
500K = high end?
800K?
1m?
2m?
So just for the heck of it, since the gomen did something about 350K, so I just use it as a basis.

Yeap, some banks offered up to 80% of salary - question is how to survive nia.

I think this max 70% will only stop the middle income from owning more than 2 houses....the big fishes....the ultra rich...do u think this will stop them? It actual benefit the wealthy...now less competition from the middle income to buy the strategic houses.....it they are really serious of stoping speculator just put a ban of 2 house per person..or in China..1 house per person...so it does not matter if ure rich or not..u just get to purchase 1 house...

RM3800 for RM6k owner is impossible.

Imagine that after deduction, u get only 5k, then after this you only have RM1200 for spend.

Unless u r already rich and cash free then u can hold it for a while.

but this kind of investor usually is flipper, and must flip within shortest period...

well.. if this cannot be done, the consequences are very deep for him..

All indications are rates will stay low for now, credit continues to be easy to keep things afloat.
Subsidies will be reduced, inflation accelerates.
Gomen will be forced to do what other gomens do - increase money supply. Already in action.
That's one reason why they are so hyped up over Sg Buluh/RRI land dev and the 100s tower - creating money at the stroke of a pen.
And print more money if required.

Daily items prices will go up, people will feel poor. Home prices will go up too - until a point where you need to decide - to upgrade to high price home and eat roti kosong everyday or stay put, forget upgrading to spend the stagnant income you have on better food and kids' schooling. Then, home prices will stagnate or ease.

One way or another, it will get nasty for the lower-mid income group. Unlike other countries with higher and increasing incomes, my with low-stagnant incomes and a large not-so-productive group employed by gomen will soon have a rough time. The world does not give a handicap to a poor and/or unproductive nation that spends a lot using credit.

This post has been edited by AVFAN: Dec 12 2010, 10:47 PM

I dont see the gomen as having tough times... only us... the non ultra rich...

Speaking of the ultra-rich, there are many ways to generate income, I do not think they d be interested in the property which you and I are interested in.

Rates for the general public looked like will stay stagnant though ppl in the finance line knows this will happen - at least 25 bps.


EDIT: "Money" in my previous refers to the money which you and I have, not the money supply as oftenly used in the statistics - those money supply got nothing much to do with you and me

This post has been edited by maxforce: Dec 12 2010, 10:57 PM

I think many ppl here give too little credit to the holding power of the flippers.

Many of the condo units around KLCC and Mont Kiara have been vacant for months, even 1-2 years ...... but there's no fire sales.

Of course, if interest rates rise substantially, things might be different.

But as they say, high risk, high gain. Or live by the sword, die by the sword.

Both of your posts highlight another issue on the properties.

Actually, the economy and RE market do not scare the ultra-rich to own 10 properties or speculator the properties using their own money.
If ultra-rich can buy 100 houses with cash, then let be it. It won't cause any systemic catastrophere effect even property market plunge.

The RE and economy most fear is people using leverage to "play" the properties market, which buyers do not have those kind of money in the first place, or not able to sustain from their own financial situation.
The ultimate evil is the leverage + speculative.

Speculative alone won't cause too much problem afterwards even market collapse.
It is the leverage part that can kill.

2008 financial crisis resulted from RE bubble bursting is all about leverage.

Ultra-rich can hold for years on those vacant house for years, it doesn't matter for them.
Why fire-sales the properties that bought 1 mil and sell it for 500k?
Might as well keep it like into freeze, after all, they are ultra-rich, doesn't urgent need the 500K, what if hold 10 years later on, it become 2 mil, by then only sell also not too late.


This post has been edited by cherroy: Dec 13 2010, 12:29 AM

+1
totally agree as i'm in this situation as well. work overtime and even took on a 2nd job, small car, using an E66, and etc just to save money to buy a home and start investing in properties.

Well said!

But that is assuming the ultra rich are good nice people...who would not sell even if there is a property crash...if there are many of these good nice rich people...the world would be much safer place to live in....less volatility

more often than not...they are the actual market movers....even when they enter the market..they already have an exit plan...they came in big...they will come out big....leaving all the small fishes to fry....

these are the speculators that caused havoc during financial crisis 1998....they came in stock market as well as the currency....push up the prices so high....when the small investors are attracted and buy high...thats the time they leave the market...

It is these ultra rich speculators that are entering markets and causing all the havoc...only they would have the funds to do it...some even say its a syndicate...who ever they are ....they are undetectable...u can only see the market movements to know their presence....

These are the people our ex PM was talking about the rogue speculators...of course the the West countered saying Malaysia suffered in the financial crisis 1998 due to cronyism, nepotism, mismanagement,etc,etc....because the West said it...we must believe what they say..Soros even said Tun Mahathir is menace to his country....since they know more about economics than Asians....so the good guys are the speculators because they help discipline the government...the bad guys are the government...when actual fact it is the speculators which is causing the bubble burst...

their trademark would be before the storm happens...prices of the target market would be increasing abnormal....I don't know if they have entered the property market...but prices are abnormally high...

Well said. It is a caution to:


The right to invest in anything does not entail a right to fair play and assessable risk info. This is how the big boys make their $ - from the smaller ones. One need to be very clear what one is doing at this time.

For stock market and currency, I do agree on the syndicates/speculators but property?
Then again, guessed it is possible, though really not much sign of them in the subsale. Now if, you re talking about the new launches, then yeah... know they re there though they re not labelled as syndicates (as of now)

at last got someone know the danger of power of leverage
but sadly got alot ppl still think i in positive cashflow from all the properties i have, so nothing can happen to me
let say if RE & rental adjustment down 10%, which one should sell first
the low rental income yield properties which normally located in not so good location(maybe need to sell at a lost), or
high rental income yield properties which you lose out the appreciation in future
both also can considered bad decision but if not cutting lost now, will investors able to top up those difference for years to come



This post has been edited by Iceman74: Dec 14 2010, 09:00 AM