QUOTE(twincharger07 @ Oct 19 2011, 01:37 AM)
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?
QUOTE(Apscen @ Oct 19 2011, 09:16 AM)
very good insight, that's the basic rules in property market, i tend to agreed!
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.
QUOTE(Fazab @ Oct 19 2011, 10:12 AM)
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.
QUOTE(Fazab @ Oct 19 2011, 11:49 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.
Most of you guys will counter the Malaysian property bubble by saying "Malaysia has a stricter rules on giving loans than US". When you look at the figures of our household debt vs GDP and disposable income, it shows that the industry will soon run out of ppl who is qualified for loans. Reasons? :
1) The total debt is at all-time high
2) BNM gonna make a stricter rules
3) Our income is not improving or can be said stagnant
Example: Let's just say since 2005, constantly the banks are approving 500 millions amount of loans per year. Every year it went smoothly and the developers will develop new areas in hoping that people will constantly taking that amount of loans to buy properties. Suddenly BNM realizes that the debt is getting high and the income is stagnant. What will happen? Instead of every year the banks are approving 500 mills loans it dwindles to 400 mills, 300 mills and so forth.
The developer's construction is nearly completed BUT suddenly the expected 500 mills loans aren't there and the demands for the houses automatically decreases. With the inclusion of the external factor of the global economy meltdown, the unemployment rate will increase, thousands can't pay their loans and baamm!
Conclusion:
Household debt getting high + GDP is not increasing + BNM making stricter rules + External influence of global economy meltdown = GG
Added on October 20, 2011, 12:39 amRead this:
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Of property overhang and mounting household debt — Dr Dzulkefly Ahmad
November 25, 2010
NOV 25 — Property Overhang as reported by Napic (National Property Informational Centre) for the third quarter of last year was supposedly a cause for alarm.
Then there was an overhang of 20,286 residential, 5,450 shop and 619 industrial units worth a whopping RM5.3 billion.
Of the 6,401 new residential units launched during the third quarter, which was a far cry from the 14,588 units launched in the previous corresponding quarter, only 20.2 per cent found buyers.
If the RM5.3 billion overhang failed to deter the enthusiasm of the NEM planners, let’s consider what is in the pipeline.
The Finance Ministry reported another 44,954 residential, 4,605 shop and 794 industrial units were under construction as of the third quarter. Projects approved but yet to be implemented comprised another 14,993 residential, 1,011 shop and 872 industrial units.
The massive overhang constitutes not just a financial burden to the developers and their financiers, most of whom are financial institutions, but is also a waste of resources, much worse, contrary to the 40 per cent carbon emission reduction as vouched by the Prime Minister in Copenhagen.
More recently, Napic’s Property Overhang reports show that unsold properties in Malaysia rose to 22.6 per cent of new launches in the second quarter of this year, from 19.5 per cent in the fourth quarter of last year.
For Kuala Lumpur, unsold properties rose to 16.1 per cent from 15.8 per cent, while for Selangor it rose to 14.6 per cent from 12.4 per cent.
Quite ironically while a glut is emerging, prices of residential property have surged by as much as 35 per cent in the past year, far above income growth and giving rise to concerns that the market is becoming unsustainable.
Napic’s Property Overhang reports show that unsold properties in Malaysia rose to 22.6 per cent of new launches in the second quarter of this year, from 19.5 per cent in the fourth quarter of last year.
For Kuala Lumpur, unsold properties rose to 16.1 per cent from 15.8 per cent, while for Selangor it rose to 14.6 per cent from 12.4 per cent.
Checks on developments completed this year also show that vacancy rates remain at 50 per cent or higher.
While the notion of property is usually resisted by developers and the KPKT, valuers and observers may have to nod when it come to property in Penang and Kuala Lumpur.
While prices keep going up, the economic returns decline. This, in return, contributes towards distorting the economy and plunging the country ever deeper into a frightening economic bubble.
On the back of the emerging property bubble, the revelation of a ballooning household debt, comprising mainly house mortgages, cars loans and personal financing such as credit cards, debit cards which stood at an all time high of RM560 billion as at Aug 31, 2010 from Bank Negara Malaysia data is surely a cause for alarm.
The rapid growth in household debts now poses a threat to the economy and exacerbates the vulnerability and instability to the financial sector.
It is worth noting that our household debt to GDP ratio shot up to 76 per cent between 2004 and 2009 and is the highest in Asia, except for Japan.
But as a reminder, Japan’s per capital income of US$32,700 or about RM8000 per month in 2009, while Malaysia’s average income per capital is less than RM2000 per month.
According to a note by CIMB Research, the ratio of household debt to personal disposal income hit 140.4 per cent in 2009- higher than Singapore 105.3 per cent and the US 123.3 per cent. This means Malaysians own double the amount they earn.
According to Credit Counselling and Debt Management Agency (AKPK) of the total 50,361 cases that enrolled in debt management program, 10.6 per cent could not pay their credit card debt while 74.3 per cent had repayment problem with housing loans, car loans and credit cards outstanding.
Credit Counselling and Debt Management Agency (AKPK) CEO Mohamed Akwal Sultan says some 44 per cent of the individuals who join the programme belong to the 30 to 40 age group. Some individuals start to have repayment issues when they are even younger because many of them do not have salaries that commensurate with their lifestyle. The problems worsen when they hit their 30s and beyond.
Since Malaysians tend to have short memories and have a penchant for the denial syndrome, it’s pertinent to remind our political leaders and planners of the costly deflation of the property bubble in the aftermath of the 1997/98 regional financial crisis.
When the property bubble burst, the banking system was left with RM51.8 billion worth of non-performing loans (NPLs), forcing the government of Tun Dr Mahathir Mohamad to form Danaharta Bhd to assume the NPLs and Danamodal to help recapitalise the banks.
Danaharta subsequently assumed NPLs worth over RM50 billion and overnight, became the largest real estate owner in the country with assets valued at RM3.63 billion while Danamodal injected RM11.7 billion to revitalize and recapitalise the banks.
Going by the orgy of real estate developments in recent years, it is clear that both the regulators and the developers have forgotten the 1997/98 lessons or have not learnt much. The government is discouraged to put a higher real property gains tax (RPGT) and restrictive loan-to-value (LTV) caps as it will be a deterrent to foreign direct investments and high net worth individuals. Besides, a higher LTV for second and third home buyers and in specific hotspots areas, of say
70:30, may not be complied with after all, by the financial institutions.
On the back of a burdening household debt, though arguably not-so-high NPL as yet (3.7 per cent of GDP), the oblivious attitude of the government, the prolonged low-interest rate regime, the ‘greedy’ developers and the less-than-prudent practices of the financial institutions, are
doubtless, ‘fodders’ that fuelled the formation of a ‘property bubble”.
Quite evidently, the property and construction sectors are again leveraged to the maximum as the top contributors to economic growth.
It is all so easy for the government to take a short-term approach to realize targeted growth numbers, visibly at the risk of jeopardizing and short-changing the long-term well-being of the economy.
Despite all the avowed big sounding slogans on performance and competitiveness, very unfortunately, nothing has changed in Malaysia Bolehland. — drdzul.wordpress.com
Let me summarize the news:
-unsold properties in Malaysia is increasing
-Checks on developments completed this year (2010) also show that vacancy rates remain at 50 per cent or higherBe prepared guys..
This post has been edited by hazairi: Oct 20 2011, 12:44 AM 
Oct 19 2011, 07:21 PM
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