imported goods incl food, construction mat and machines will be the first to cost a lot more.
keep in mind maresia imports most of its food and is net importer of fuel - big amounts.
here, some of the effects have been masked by subsidies but when they remove them like now, very painful, no escape.

Yes, goods price sky-rocketing.

Currency depreciated, it makes your property look even cheap from external, aka foreigner.

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Added on May 20, 2011, 5:06 pmWrong, both below 0.5%, roughly 0.1~0.2%

This post has been edited by cherroy: May 20 2011, 05:06 PM

0.1~0.2%
that one is interest ?? or BLR ?? or ?? sorry i get confused liao.. i tot it is BLR

When talk about interest rate, always use the central banks benchmark overnight rate, or rate policy set.
Like Malaysia OPR is 3% currently. So when we talk about interest rate, we said Malaysia current rate is 3%.
BLR is on top on the 3%, after adding cost of money, profit margin etc.
We don't use BLR as the indicator rate of a country.

Generally lending rate is above 2-3% the rate policy set.

here is not usa, not same. but if there really come a time when a good no. of speculated props go on default, the subsequent scenario may have some similarity.




This post has been edited by AVFAN: May 21 2011, 10:12 AM

thank u cherroy for the explanation

By Living Matters
By Angie Ng | May 21, 2011
Property remains hot investment instrument

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When it comes to what is the best investment instrument to leverage one’s savings on, invariably the subject on property will crop up. So, is it a wonder why the property market is so hot?

Rightly or wrongly so, more Malaysians and investors from around the world believe that investing in property is a better investment choice than others, and are putting more of their “eggs” in the property basket.

Although property investment is not a fool-proof investment, it has been seen many times over that one cannot go seriously wrong with property, unless its location is really poor – for example, it is inaccessible or the project is abandoned before its completion.

Compared with other big ticket items like automobiles which usually depreciate in value the moment the vehicle is driven out of the showroom, property is one of the more reliable in terms of investment return.

Most of the time, even average property developments have the potential to enjoy some form of capital appreciation and steady income streams (if they are leased out to good tenants).

The lack of other more reliable investment alternatives, given the volatile nature of the stock market and prevailing low savings rates, has certainly given an added edge to property investment.

Although Bank Negara has raised the overnight policy rate (OPR) a number of times since the onset of the global financial crisis, borrowing rates are still one of the lowest in recent times.

The easy (competitive or affordable) housing packages or financing schemes also make buying property a viable proposition. After a downpayment of 5% or 10%, a buyer need not make any more payment until the property is completed and this could be two or three years down the road. The delivery period for landed housing units is two years, while high-rise and commercial projects take three years.

To ease the heat in the market, it looks like it is timely to put a stop to these easy housing schemes, since the First Home Scheme (FHS) to promote home ownership among first time house buyers will take care of the needs of the critical group - those who have yet to buy their first home. Moreover, the purpose of the easy housing schemes promoted by the developers was to boost property buying as there was a sudden pullback among buyers when the global financial crisis first broke out in 2008. But, since early 2009, property sales and prices have surpassed the levels recorded before the crisis.

If the easy home ownership schemes are allowed to continue, they will dilute the effect of Bank Negara’s move in raising OPR to arrest speculative property buying and overheating in the market.

In fact, it has been found that persistent speculators are still undeterred by the imposition of the loan to value ratio of 70% for third mortgage borrowers. To circumvent this new ruling, some borrowers have resorted to using the names of their spouse or other family members when applying for loans.

For the FHS to be effective in promoting home ownership among first time buyers, the scheme needs to be fine-tuned with more workable guidelines.

Under the scheme, those earning RM3,000 or less could obtain 100% financing if they buy houses priced between RM100,000 and RM200,000, and the repayment period is stretched up to 30 years.

However, in the Klang Valley and Penang (especially), the land alone usually constitutes 20% to 25% of the cost of the property, and so it is important that the land for the FHS be provided by the Government.

If developers do not have to fork out a hefty sum for the land, they will be able to spend on better quality building materials, and the result will be better quality projects.

It is a well known fact that house prices, especially landed property, have increased beyond the RM200,000 mark.

To ensure homes built under the FHS will not turn into urban slums like many of the low-cost housing schemes in our vicinity, it is sensible to raise the prices of these homes to at least RM300,000.

We cannot assume that all first time buyers do not mind staying in high-rise dwellings, and so it is better to offer them the choice of landed property as well. Those who sign up for landed schemes should be prepared to pay a higher price.

It is necessary to draw up clear and specific guidelines for developers who are involved in the FHS to ensure they give due emphasis on quality in their projects and that includes location. Notably, many unsold housing units are those built in unfavourable and inaccessible areas.



Deputy news editor Angie Ng believes close public and private sector collaboration is needed to build a wholesome and holistic environment for the people.
http://www.starproperty.my/PropertyScene/P...Scene/12147/0/0

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Added on May 21, 2011, 5:14 pmfor streetmen like us, we only care what is the interest rate to be charged to us. obsolutely not OPR rate, right?



This post has been edited by kh8668: May 21 2011, 05:14 PM

has any investors here consider pulling out cash from (fully / partially paid) properties to stock precious metal, such as silver?

This post has been edited by property101: May 22 2011, 03:32 PM

Too insecure. People can steal, and not the mention the problem of storage..

I've heard from a banker that after the 70% LVT, many investor jump ship from goreng props to goreng shop lot

Now this part is what I don't understand. Economy is bad, prices goes sky-rocketing. Now economy is good, share market all time high, yet prices are still sky-rocketing. So, what gives?

for most seasoned investor, commercial is always better than residential. if one has the ability play the commercial game, generally he will not want to play residential game

in theory, price of goods fall when economy is bad, poor demand.
prices go up when demand is up in a vibrant economy.
however, it is incorrect to say local economy is good with prices going up now.
rising prices now is mainly due to inflation with incomes not rising fast enough due to stagnant production/productivity.
local share market high? check the smaller cos.! the index is high due to bulk of big cos. shares untraded, local finds selling each other, incl epf. little foreign money.
until and unless our gomen can reform to invest or attract investors into massive viable projects that raise incomes fast enough, we'll continue down this path - our litttle individual wealth dissipating with inflation leading to lower purchasing power - for the normal employee.
this was what happened to the philippines a few decades back.
so, now you can ask the question: what have they been doing all these years?!

This post has been edited by AVFAN: May 22 2011, 07:26 PM

food price high partially contributed from the service tax.. 10% + 6%. Because u eat frequently at shopping center or good looking shop. Calculate urself lah..

Commercial is lucrative compared to residential.

Commercial properties yield can easily fetch up 10% yield, for good location/demand.
Residential yield somehow below 5% is quite normal, some even considered at high end range of yield already.

High product prices does not just depend on strength of ringgit, subsidy, etc. it depends on many factors. One of which is property prices. The rental rates obviously goes up with property prices. Also, a home is a basic neccessity for many - inlcuding the noodle seller by the road side. A high ncome economy is also definitely going to drive property prices and food prices. But what you can hope for is better service and quality. How do we keep prices down? Have more competition and eliminate monopolistic practices. Why only have one or a few companies sell toyota in Malaysia, or mandarin oranges, etc. Remove these monopolies and have laws against price fixing practices.

Rental rate is not going up as same pace with properties price. Rental rate is going up at a tortoise pace, while properties price is sprinting like a rabbit.

Currently the major inflation problem mainly come from external (have to agree car price is high due to high taxes, but this has been there for long time,)
which if we talk about current inflation spike, it is mainly due to massive QE which drive up commodities price, which just means Malaysia (almost all Asian region across) has no control over it, aka inflation being imported, or someone said US export inflation to Asia also.

think so too. and this is a sign of trouble coming. when more of those high priced units come onto rental market, some will not be able to hold with weak rents.

to make matters worse, if more tenants find it hard to make ends meet, they'll run off without paying rent or utilities! been hearing a few more horror stories lately...

This post has been edited by AVFAN: May 22 2011, 10:37 PM

agreed,
nowadays, the investor always tot that rental income is easily can cover the installment,
new highrise in current market easily can be sold at 500k ,
but the installment is 2k++, if they are targeting the local market, who is the one willing to pay ??
if targeting foreigner, foreigner also will depends on area, and the supply is more than the demand.

over supply of the prop is main reason for the low rental... my population still cannot catch up with the over supply issue in the recent launching... crashing is matter of time... value ur prop with current market value and not future value, if not u will bankrupt b4 u able to get rich..