Property prices do not go up without reason, and at the same time does not drop without reason.

For the past few years, property price has been going up due to:

1. Low interest rate
2. Low unemployment rate
3. Most business doing well (Both SME & PLC)
4. Growing economy
5. Interest from overseas investors
6. General positive and confident outlook for the future

As long as the above is maintained, property prices will continue to go up.

Property price will drop when the above factors turn around, i.e:

A. Interest rate goes up
B. People start losing their jobs
C. SMEs start to close shop, PLC start reporting losses, share prices drop
D. Economy shrinks
E. Overseas investors dump our real estate
F. General negative and pessimistic outlook for the future

So when A-F happens, will those people who have been complaining about high property prices rejoice and start picking up bargain real-estate?

Or are they unrealistically hoping for property prices to drop while 1-6 still applies? You cant have one without the other.

There are always attenuating situations. In economics, everything's a double-edged sword

1. Low interest rate
- but people over-leverage, or bank tighten lending criteria to avoid overexposure

2. Low unemployment rate - but wages also low and does not match inflation etc.

3. Most business doing well (Both SME & PLC) - but wealth distribution not even, income gap widens

4. Growing economy - depends, if growth is domestic driven, may not be creating real value. If due to pump priming, may lead to loss of value.

5. Interest from overseas investors - may only be concentrated in certain classes of props, hotspots.

6. General positive and confident outlook for the future - may shift funds to other investment vehicle with faster return rates. If confidence return to the stock market, a lot of money will flow to there.

All these will influence market movement. Never say never like the US did. They got all 6 going, yet subprime happened.


Those who are waiting to buy are generally for own stay. Usually steady income, well planned for recession and ready to go.

So yes, they can and will pounce even if A-F happen.

The difference between bolehland and US is that in US, loan are given to unqualified owners without assessing their repayment capability...
US government start giving guarantee to lenders to lend money to any tom dxck and harry..
Investment products are marketed as AAA rating and sold to other countries to fund their citizen's home loan...
Since the citizen has no obligation and just default when they cant repay..
When owners start defaulting their loan, it creates a ripple effect from US to other countries who bought their bad assets..

Americans are always live in debts, much more higher debt ratio compare to us.. it is shocking to see they willing to default their homeloan 1st but maintaining other debts to fund their lifestyle..

It is very different compare to Asians who position our home as the center of our life.. we can sell our cars but not our house, but the American did the other way round..

No doubt job opportunity in US is alarming.. a major factor is that all the manufacturing and outsourcing are done in low cost country which are asian countries.. Malaysia is a good example... there are plenty of jobs here bcos all this giant MNC set up their company in this low cost country, those are American companies, but majority of their emplyees are non-Americans..

Another factor that set us apart from the US is that Bolehland's bank are still being strictly ruled, credit profiles are still strictly examined, unlike the yankee's practising cowboy style...

so is Msia going into subprime?

fully agree.

america is knowing their weakness, but they unable to do much due to globalization effect... us currency rally is another tools to fund their living, they manage to buy cheap products with their bigger us value... so less $$ will be expected to consume... this make the supply over demand in commodity... u will see the effect is global...

pulling back the investment back to their home country could be another way to solve jobs issue... as stronger us value will encourage hot$$/fdi flow back... this is what we can see during my currency rally last 2 yrs..

how severe, only god know.

very good insight, that's the basic rules in property market, i tend to agreed!

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Added on October 19, 2011, 9:31 amto be honest, i still have the bank assessing my loan strict and tight as before, really can't see anything similar to US happening here. maybe anyone can share which bank has start given loan without asking your salary slip, your epf statement, didn't check your CCRIS, than we know bank is doing monkey stuffs, else for those still looking a home, please go ahead, expensive is only on those new launching, there is still so much affordable subsales house around.

IMO, regret one time is enough, dun regret second time.

This post has been edited by Apscen: Oct 19 2011, 09:31 AM

The best scenario for all is that property price remain stable

If you go back and read Post #2084 Page 105 of this Thread you will find that I have given my opinion on this, and I agree with your analysis.
Full blown subprime won't happen here, or for the matter, any other country, they will be real stupid to repeat such a clear mistake.

I merely want to share with the writer that attenuations to Factor 1, 2 and 6, at least, are already happening.

So there is a possibility of a short term mini subprime, where overleveraged people are forced to offload property they can't hold.
No offense to the younger generation, but I do see a lot of them use 'creative borrowing' to buy props for flipping.

because i dont care that time when property market drops like every1 else said here..

the problem now is if the price remain stable, can those overleverage flippers absorb the instalment fully on longer terms if they do not reduce the asking price. Maybe a very short duration drop in properties price will do good things more then bad.

How come so many of us are speculating that the flippers are definitely taking a home loan? haha

There are a couple of person whom i know of who are buying house with cash under other ppl's name? I do believe there are quite a number of people who whom are cash load free.

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Added on October 19, 2011, 10:39 amP.S: the housing which i am staying now in setia alam, there is so many empty slots!!! Owners do not even want to rent it out, most of them just put there and waiting for the new shopping mall completion. If they do not have the holding power i guess no one would ever want to do that.

This post has been edited by kidmad: Oct 19 2011, 10:39 AM

Repeat : market is moved by the MASSES. Not one or two people.

(just like what we say here is unlikely to affect market. how many people read LYN anyway. so no need to get excited)

Repeat : what is VP last/this year was purchased in 2007/2009 - these are the 'first wave' purchasers.
Yes, they have holding power, and we do not expect problem from them.
What is worrying are the 'second wave' purchasers, who jumps in later to flip when they see opportunity 'that must not be missed'.
These are the 'creative borrowers' who may or may not get burn.

repeat : I am hoping there is soft landing, and no one gets burn too badly.

repeat : until someone can provide data that there are no or insignificant number of such reckless borrowers,
perhaps we should not choose to ignore this factor, just because it does not fit our thinking.

We believe what we want. I believe there are many such people that's why I worry.

You can be optimistic. I still respect your stand.

lol, because it would be damn stupid to buy a property with cash and hoping for appreciation, taking so much of risk with their own money. and return isn't great either.

50,000 / 350,000 = 14% profit

50,000 / 30,000 (downpayment + interest) = 160% profit

It may be different but I feel Malaysia lending is still quite lax.

I had previously mentioned, that I know a 2K earner, disqualified for a 300K loan.

But then got someone to help "massage" his application. then it got approved.

Secondly, it's pretty ridiculous, because the loan they offer are up til you're way pass your retirement. It assumes, that you 're either still working, you've got a good pencen fund, or you manage to flip the house before you retire.

Which are all unrealistic.

You are wrong, Malaysia economy is controlled by a handful of people. Let's talk about Land itself and not more at this point. Myself i am borrowing but those whom i know from my parents generation... Most of them are cash load free. Maybe the community which i am in which gives me a different point of view i guess.

.... I'm speechless with the way you calculated. haha i really gotta LOL hard. Where da hell you find 160% profit? hahaha Pay the bank back the money la. and now you have to fork up additional 10% if you are borrowing from the bank.

One example : The US subprime crisis.
A lot of people believe that it was cause by a small group of very powerful money-makers. Can certainly be true.
But subprime would not have happen if the MASSES did not provide the market and willingly fall for it.

(OK repeat : Subpime won't happen here. Just example)

Repeat : No worries about yours and mine parents' generation. They are careful savers and savvy investors. If you say they have cash I belip.
The you and mine and younger generations of flippers out for quick money is what to watch out for.

OK. I think I have said my piece for healthy debate here. Better move off before overstay welcome.
Am beginning to sound too much like Lee KY oredi.

Cheers guys n gals.

i think econ cycle is oni benefit to the rich. they will accumulate more $ and push up prices and rental. our barang will oni be more expensive due to higher rental. eg mix rice, drinks etc.
of coz the developers will be happy to folow suit.

we normal ppl can opni forced to follow their game.

I think keith_hjinhoh is putting forward the point that buying cash will generate less return % compared to buying with minimum d/p. If purely from flipping p.o.v, i agree he got the point. If total capital invested is rm30k (for d/p and other related cost) and there is a gain of rm50k upon VP or when he sell (provided he can sell quick quick lar...), his return is 160%, it's technically correct, isn't?

Maybe the figure seems not convincing that for a rm350k property just need to fork out rm30k total capital but hey...dun disc. the fact that dev. often give rebate 5-10% and dibs too. If he can secure 90% loan and with the 5-10% rebate, rm30k investment capital is possible too.

Just m2c.





This post has been edited by macho dog: Oct 19 2011, 12:46 PM

Well, i gotta agree with you to a certain point. But do you know any flippers who are at around our age? On my end no matter i look left or right i don't see any of them. Most of us would have 1 or 2 property and we are not those kind of people who go goreng goreng. We borrow and we pay back.

Unless you are mixing around with lotta flippers which at the end will give you the assumption that there are loads of flippers around else you would not be thinking so.

PS: stop quoting US la what's happening in US is not happening here. Until the Congress decided they should stop protecting the rich arses.. i don't see any significant improvement could happen. We are grabbing their job like no body business i can't comment much on the US folks but i bet they would hate us until a certain degree.

+1 yeah. That is the thing. In MY:
Petrol controlled by?
Telecommunication controlled by?
Land acquisition controlled by?
Electricity controlled by?
Water controlled by?
CAR AP controlled by?
.... and the list goes on.

Until we fix this issues, the economy will still belong to that few person. You know who i am talking about. in some countries the top 20% of the people would be ripping 80% of the wealth of the people but in malaysia. the 10% of the people is ripping the wealth of 90% of the people.

i dun think so... now u can get 60sen teh tarik and 40sen roti cenai = RM1.. things become cheaper...... deflation. Rental rally mainly depend on the prop value increase..

This post has been edited by sampool: Oct 19 2011, 12:47 PM