Even though properties price is escalating a lot, the rental rate is not at the same pace with properties price, move like turtle speed only, some even hardly increase much.

It just means rental yield is not attractive anymore (for some properties), so for investment purposes, it is not favourable factor.

Previously, invest in properties, you have 2 front to "win" either good rental yield or capital appreciation, or both.
Now become solely rely on capital appreciation, without good rental yield.
Lose one winning chance. (although it doesn't mean you cannot win in capital appreciation).

It is about people expectation.

When 95% of people expect A item price will be going up, you buy, I buy. You jack up price, I also jack up price, everyone do it, price keep on escalating.

Just like people said, price keep on escalating, not buy now, tomorrow higher.
Tomorrow not buy, after tomorrow higher
So die die also buy.

Mass people expectation is a powerful force.

Only until one day, people get burnt and lose in speculation on the expectation, only then this fever can be slow down.

Developers have nothing to lose, by keep on launching new project, as all risk are with properties buyers side. (when the project is sold out)
Housing or real estate is a strange product.
Whenever we bought a thing, we only paid money when the product is ready to use. Just like buying car, you only paid money when you bought the ready to use car aka completed car.
But house, you need to pay even though the house is 10% completed. Do we see car manufacturers demand 10% or progressive payment when car is 50% completed?

Also, nowadays, developers are more clever in launching project, by adopting 1st phase, 2nd phase, 3rd phase, at the same area, and one common thing I noticed, 1st is always the cheapest, and being sold out quickly, which give good reason to hike on price on 2nd phase.
When similar house on 2nd phase is launched at higher price, it pushed up the 1st phase house. And when 1st phase buyer make good money, it tends to people "greedy", and people will said/see, hey must buy, see how 1st phase buyers make decent profit, which prompt people to buy or rush to the 2nd phase, and so on on 3rd phase.

The purpose of phase 2 is higher than phase 1, is to provide a step ladder for pricing increment.

If you know how valuation of properties being determined, then clearly, phase 1 valuation must match the phase 2 pricing.

For same location, same houses type.

Phase 1 RM 200K
Phase 2 Rm 220K

All people even professional valuer will say, now house here worth Rm220k.

Come in launching phase 3 Rm 250K, now phase 1 & 2 worth Rm250k.
Does anyone want to sell phase 1 at below Rm250K when adjacent phase is now sold at Rm250k?
Answer is obvious.

Phase 4, launch at Rm300K, now phase 1,2,3 worht Rm300k, now the market turns hot already, buy a house can earn 50%, in a few years time.

Phase 5, Rm400k, market even hotter now.
When market is hot, developers won't short of buyers coming, and for the same area of land, they can sell higher house price now.

So it is important they split out more phase and smaller quantity to be sold, so that each phase is sold out each time. As long as each phase is sold out, it provides another step ladder to higher pricing.

Above just my view, doesn't necessary must be true.

This I partly disagree.

Home doesn't mean you must own it.
Some may rent for 10 years or 20 years, which is their home as well.

I live in a same house since born until mid 20's, and this is a rented house since start, which I call it home.

Yup, this is always I keep on mentioning.

You don't hope bubble continue non-stop, as well as properties price plunge like no tomorrow.
Both got negative effect.

You never can predict anything.
Each crisis come with different "package" and condition.

Crisis?
What crisis?
2008 financial freeze no longer is there already after Fed QE of 1.x trillion being pumped to market.

Now we are facing inflation problem instead of crisis.

No, it is a wrong mindset to say you "untung" 100K with 350K, wrong concept.
You never "untung" anything.
You just paid less.

Another way to make money through properties is become "introducer" between sellers and buyers.

Commission is not bad. A few K up to 10K easily if successfully pulling the string, depended on properties price.
My family members did it twice.

But normally pre-requisite is having good vast social network.

For those hoping salaries increase 10~30% across, you are hoping the wrong thing.

If salaries increase across without productivity gain, the final result, inflation across, your salaries increment back to square one, or could be even worst.

Higher income, but higher goods price, do you want it?

Somemore, properties and finance is tightly related.

Properties plunged --> NPL rise, if severe could threaten the banking sector as a whole, just like subprime and financial crisis 2008.

That's why gov is always reluctantly to control it in a big way.
But I see RPGT is a good way to fence out excessive speculation and without affect the health of RE as a whole.

My view.
I would say the bolded part is wrong and unrealistic

Even it drops, it won't drop to dirt cheap until let you to buy cheap.
A 400k properties can drop to 350Kor 300K, it is still way beyond affordability mostly. (if one cannot afford 400K, likelyhood is not afford 350K as well)

It won't drop to 200k or 150K for you to buy.
If it does drop to 200k, then situation has changed which one might fear about getting employed or not.

Only for price between Rm100K to RM220k

Little on overall, except properties below Rm220k may be snapped up by speculators.

For prime area, or any prime adjacent, I can't see any property with RM250K below.

This post has been edited by cherroy: Mar 8 2011, 09:56 PM

Ya, have the same feeling...

Out of prime area, properties price is not escalating as in prime area.

My family members try to sell a corner terrace house in mainland Butterworth area, roughly 300K also little people interested and hard to find buyers.
They bought 200k+ decade ago, now only 300k, where got make money? if view it from investment pov.

But just over the sea, at Penang island, a 20 x 60 terrace house can fetch 700-800k.

Next generation loan?

Instead pay home loan 30 years, extended to 70 years....

May be 100 years loan also created.
Surely lot of people take up 100 years home loan.

This is more a new generation mindset. No offence, and not mean it is same across, just this kind of mindset is quite norm nowadays.
As long as installment payment is low, I can afford. Never care the interest charge nor long term perspective.
Only concern now, want to own now.
Just like car loan, more and more people choose 7 years loan instead less than 5 years.
All because of what? lower monthly payment.

If gov really care about house owner, please introduce RPGT.
RPGT is more effective to reduce speculation on properties, eventually properties price won't escalating like no tomorrow.

Introduce longer loan tenure or 100% loan is not going to help the low affordability group of people.
Preventing or reduce excessive speculation on properties is.
Preventing inflation is going to help the poor.

First step to help the poor, introduce RPGT.

Above just my view only.

If there is huge demand on properties below 220k, while those 500k properties lack of buyers, developers can always adjust their strategy.

Instead building 500K 1000sf. apartment, come out with 400sf 220k apartment...
or 500sf 220k but no car park given, need to pay 20K for it, and apartment has no tiles installed, need to add up 30k for it.
Selling price still 220k, but need to add on... for those facilities, give you the most basic.

Business is always flexible to demand.

This is cruel world.
No money, no convenience.
No money, stay in ululu place loh.

What I said is about hypothesis, if, one day, people don't mind to have 300sf 220k apartment, there is always possibility in the future developers may build it as well.
Provided those 500K apartment, little buyers around.
Until now, need to find at outskirt of town area, or just like what you said ululu one.

Don't buy a car. Take public transport, take train from Rawang,

I don't want to be harsh, 3K income, don't deserve a new car + a >220k house.

The solution is always build up your income.

No money, or income not high enough, no convenience.
Take harder route.

I have more confidence with 100k cash in bank, and use the 100k for investment and grow even more money, even a pathetic 3% FD rate, I get extra Rm250 every month, compared with you have to paid RM250 loan interest alone (not yet count the capital), every month, the difference is RM500, rich become richer, poor become poorer.
One year, difference already Rm6k.
If investment successful bring in more return like 10%, the gap even widen further.

More money, more confidence.

I can have even more gal with more money.
Your 100k car will getting old after 3-5 years, lot of money need to be spent again.

You have confidence in split second when getting the new car only. Once petrol bill, maintenance invoice, bank loan statement come in, all confidence can go down to the drain.

Having cash doesn't mean stay in cash, it gives you chance for investment, that yield return.


Typically new generation mindset, enjoy now.

Guarantee what?
Parent born a child, and give guarantee to the child to enjoy life?
Life is a journey one explore through, life is for enjoyment only?
Want to enjoy, work for it.

Economy is unpredictable, life is getting tougher?
Please compared with those after WWII, 70-80's, whereby people beg for job.

Life is getting tougher when you cannot have a job to feed.
Life is not getting tougher when one taking up car loan to buy 100K car, taking house loan to buy 250k house, buying IPhone with installment, clubbing every weekend.

No offence.