It is stated clearly, 3rd properties loan

LVT -->> loan issue.

This post has been edited by cherroy: Nov 8 2010, 03:29 PM

Yes.

The measure is targetting on the loan issue only. They are not bother you have 3 properties or 30 properties.

They just don't want bank give excessive loan to people which being used as speculation purpose.

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Added on November 8, 2010, 4:46 pmBNM press statement.
They only mention about financing facilities, aka loan.




This post has been edited by cherroy: Nov 8 2010, 04:46 PM

I don't think they will so strict on this.
They welcomed any buyer that able to pay off the properties.

If you pay off the loan, mean in the banking system, your name "under loan" is not there anymore.
It is troublesome for banks to check this properties is the No. how many you have as banks do not have data on those paid off one or those you bought with cash one.

Anyway, this is more a temporary measure, so whether affect the paid off or not, doesn't cause major concern. As most housing loan is long tenure one, so the new measure has little impact on those issue.

If the properties buyers have lot of cash, whether they invest/stay/flip or not, generally BNM won't care.

The fear is flipper/speculators use the properties for speculation purpose, he/she is not able to service the loan in the first place and rely on properties price appreciation afterwards to get rid of the properties, or solely rely on tenants to service the loan for short term. Or just hold for few month, the loan is temporary financing only.
The buyers don't need to fork out a single cent or as little as possible already can own several properties to play around.

If everyone doing it, then just a minor shock can lead to the system collapse, as there is little room for error, just like what had happened on US subprime crisis.

If one has lot of cash, at least those properties won't be fire-sale, foreclose as easily as one doesn't afford in the first place, if anything happened.

The measure doesn't prevent flipper or speculation, it just mean sending warning message to flippers whom are or want to over-commit themselves.
If BNM want to clamp down speculation or flippers, RPGT is the tool,

Company cannot get a loan without directors personal guarantee or having some collateral for the loan. You need either one.

If can, everyone just open up a sdn. bhd. then take a few milllion loan, then tapau the company, viola got a few million already.

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

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