I could imagine how a under 30 middle exec getting easily tangled up in the 70% LTV restriction. He could have purchased his first investment prop for rental & a second apartment in which he's staying now. And he wants to buy a landed prop now as he anticipates starting a family. So effectively this is his 3rd purchase! So unless if he disposes of one, most likely the one he's occupying in, as the other (1st prop) makes for a better investment play both in caps & yields. So what is this chap supposed to do if he doesn't want to fork out 30% d/p?? He has to sell the apartment he's staying in to qualify, which also means he has to wait for his 2nd loan to be fully redeemed for the records, by which time he would probably has lost the opportunity of buying the 3rd (landed prop) he's been eyeing! Or at least he would he would lost the opportunity to lock in the purchase at the earlier asking price (that's assuming ceteris paribus that prices are on the constant uptrend). It would also mean that he has to move out of his 2nd prop to facillitate its sale before he purchases his 3rd!! Phew! What a cock up of the whole chain of events for that young exec! He'll probably just give up & settle for his 2nd tiny apartment at the end of the day despite planning for a growing family. Think the policy would have made more sense if the LTV cap would have been on the 4th prop purchase or at least clearcut guidelines are made between investment props or props meant for self occupation!

I may have been referring to genuine upgraders & not margin punters. Don't u think a valuation approach to the limit of the 1st two purchases would have made more sense than a dismissive LTV cap on the 3rd? On 1st time purchasers the govt has already stepped in with provisions for purchases made under the 220k beltline. Here the measure is to curb speculative activities on the 3rd purchase not, if everyone has read correctly, to aid the 1st time purchaser. It is very common among many young msians to have bought their first starter home, usually an apartment & then later another for investment, who now wants to upgrade to a landed prop. Policy could have less dismissive to address the concerns of this group of genuine upgraders. Otherwise usisng the bank's internal vetting of the individual current debt gearing & limiting it no more than 40% of their income would have been more effective in curbing speculation & keeping household debts in check.

great, that's 1 of the way to stop rich gets richer and poor gets poorer.

can't they just sell off the 1st house and upgrade?

heh heh

I think there are other more effective mechanisms as i have mentioned earlier than just capping the 3rd prop like debt gearing ratio or even NAV using a valuation approach than to dismiss everyone on their 3rd purchase as fueling speculation. A good policy have to make provisions for the interests of all affected groups not just the popular considerations. Your first proposition for "genuine upgrader" sounds plausible. Your 2nd scenario is not pertinent to the 3rd prop cap discussion.

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Added on November 4, 2010, 2:26 pm

I like u. U've a great investor's mindset & have read the situation correctly.

Third property onwards per household or third property onwards per individual ? If per individual, then haha, no effect, 'cos Msians are smart - can use the wife's name.

That is why in a neighbouring country, it's always tied to per household, say for a HDB flat.

But I applaud the Financial Capability Program - to raise the financial literacy level of our people in Malaysia. Singapore has had that for many years, even private individuals are chipping-in to help in this effort.

Then no more blaming the Gov't if non-authorised deposit-taking organizations run away with our money, or blaming the Gov't when housing projects are abandoned, etc.

Stupid policy, it only affect low & medium income people... rich people care the 10% or 30%??? My property investors told me it is good chance for them. they are cash rich & borrow from bank at the same time. It is good for them because those low & medium income people cannot afford to buy more, but they can~!~!~! My low & medium income customers complain even they want to buy something below RM200k also hard now due to this new policy. What a good policy huh???

that's right ! the rich will become richer. just imagine this. the rich is used to afford to buy a property cost 1mil. they can fork out 100k downpayment. but because of LTV 70% for 3rd property, they will swift to medium cost house as they can now fork out 90k to buy a house cost 300k. if more rich investors buy medium cost houses, this will push up the price for properties in the category of 220k to 500k price range and make these properties very unaffordable and speculative. lower income group still cannot find a dream home !

Power to the ppl i would like to think. But i wonder what are the actual makeup of the buying demographs. Wonder how many of those who hasn't bought earlier are really interested or actually capable of buying now. Think the govt should have left the prop market & banks internal credit evaluations to free float instead of capping. Instead it should have gone the way of HDB housing with controlled prices & strict criterias to be met to qualify for state housing & leave those who wants to buy in the open market to the dictates of free market forces.

Wonder how many of those who hasn't bought earlier are really interested or actually capable of buying now.

it seems you refuse to accept the fact that the price for medium price range properties will be pushed up further. previously those had a bigger appetite for high end properties will still buy properties, but this time the focus will be lower price properties. this policy will only help to curb speculation in high end properties, but not mid range properties.
last time they had more options. but this time the target is mid range properties. this policy in fact can encourage speculation in mid price properties, especially those below 500k.

Well if the market hit crisis levels & crisis occurs, so be it. Then the market will correct itself & the prop market will adjust itself accordingly. In Msia we don't practice non-recourse loans for properties & if the banks saw it fit to pander out loans willy nilly, so be it. Why should public policy pander to a big brother syndrome of regulating a free market. Get away from a spoon fed mentality & expect crutches in any form if we were to mature past a parochialistic society. Our prop market is nowhere near a bubble situation at any levels, putting on the clamps will only stem its growth.

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Added on November 6, 2010, 12:24 am

U have a point & have been able to see past surface superficialities masking much deeper repercussions on the market & its growth, so i'm inclined to agree with u. TQ.

i've got one small, overpriced apartment that i bought purely for investment and renting it with a very good return..i'm myself renting in another condo...however, i fully support this measure and topping it with 30% RPGT will surely make this a very good policy....

for me...house is a basic necessity first and investment tool second...we must prioritize to protect the buyer that buy a house to live in it..not buyer that buy a house purely for short term gain...

the news that have been quoted above was for 80% loan only..it doesn't mention about 3rd loan...if that's the case, yes i would be worried...but this is for 3rd loan? Malaysian normal non-investment buyer will normally only buy 1 house and be done with it...they will rather buy a 2nd car or make-up their car kaw2...

the only reason i got into property investment in the first place was because i'm seeing the price of property in Malaysia escalated to the unthinkable...imagine..4 years ago, 2-storey terrace house in bandar kinrara only cost 300k+...now the new launch cost more than 1 million??? ....i don't think 2010 should be the year we are seeing 2-storey house reach 1 million...heck i even thing 600k is overpriced for double storey terrace house..that should be semi-d price house..so the only way for me is just join in the game..rather than cursing without any effect....

i think the argument that the rich are the one that will benefit from this one is a valid but weak argument...yes they can switch from high-end market to middle-end market..but they'll now have smaller pool of buyer and might need to wait longer for a really good ROI...as they said...time is money...so for the rich that want a quick gain..they need look for other investment tool that can give them better return in quicker time than property investment...

yes...there could be loophole...eg: flipper that will use brother/sister/father/mother/wife name but at least, this move will prevent those flippers that have no siblings/parents/single...

@cherroy,
Lol.. looks like U been doing all the reading.  So, assuming I've a total of 3 properties but 0 loans, it means this new ruling shouldn't affect me?  And it will only affect me after my 3rd loan with the bank?

@cranx,
No.. the objective of the rule was so that people don't buy properties for speculations.  If, so as long as I don't have 3 concurrent housing loans at the same time, this new rule doesn't affect me, then what's the point?

Then again, i'm not complaining! MUahAHaahAHAh We need some loop holes

@kok_pun,
So meaning, as long as U don't have con-current more than 3 loans at a time, U can still take 90% loan, is it?!

As in, this new rule won't come into affect?  Ah well.. in that case, property flippers who's got loads of cash will still be able to do what they do

Similarly, i also wonder why people keep on thinking this is not possible...if your father/children doesn't have income, doesn't mean other people father/children doesn't have income as well...same as if your father/children not willing to use their name, doesn't mean other people father/children not willing too..well let's look at it using other way.. if relatives/family can be persuaded into some shitty MLM scam..why they can't be persuaded into lucrative, real and legitimate way to make quick money (flipping)

I thought it's obvious...if you want to apply for a loan:

A : you must qualify before you can get a loan....if you earn 3k/month, you can't qualify for 2million loan

if you use your son name, which mean your son is applying for the loan, just change you here to your son:

B: your son must qualify before your son can get a loan....if your son earn 3k/month, your son can't qualify for 2million loan 

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...

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

investors probably work overtime, take a 2nd job,drive a piece of junk, using nokia 3210 to save money in order to improve their future. Think of that before categorizing those hardworking ppl affected by this move as GREEDY/PADAN MUKA/etc.