of course, it wont fall back to 1973
reason being is because assets are measured in currency (dollar / ringgit) and not REAL money as in value. The number of dollars are printed out increases every year. Thanks to QE1 and QE2, suddenly trillion of dollar exist out of thin air. When US prints, the whole would HAVE TO follow to print, else it would be too expensive for US to consume the products / services. Now there are more ringgit chasing the exact same item. There is only one direction for the 'value' measured in currency , which is UP.
Whether price would fall back to affordability level, it depends on demand and supply. Assuming that we now have more higher income Generation-Y, very unlikely the price would have a big fall. The moments the market has a 5%-10% correction, people would start jumping in for the 'good deal'. On the flip side of the coin, if our Generation-Y does not earn an income that matches with the property affordability level, then....

I'm agree with you but the current property price is definite having bubble existed. I do agree with the chart line that a semi D should be price arounf 5xx - 600k in 2011 but with this current price now, you will probably get a double storey house with this price. lol

KLSE not doing well, perhaps it is time to SSS now.

prop price is closely associated with klse???
so if one day klse shoots 10 points, you are going to purchase props?
and if klse downs 10 points you sell your props??

No la. Still a long way to go. Stocks are just a reflection of investors' confidence in the property sector on a short term outlook. Stocks can go down today and go up 3 months later. But it is an indicator cause you can't see prop stocks going up while the prop market is bad, both are correlated directly proportional.

Normally property is the last asset that people will dispose of in a bad financial situation. Everyone wants to own a piece of that pie. This idea is rooted deeply inside everybody's mind, especially Chinese.

Prop stocks are the first indicator, and there are many indicators to check before you actually see prices dropping. As of now, people still dancing, dining and buying like before, means the economy is still good, it won't affect property prices any time soon.

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Added on July 19, 2011, 2:34 pmThis is true in the US. Dow sell down actually contribute to the property bubble bursting in 2008. Lehman Brothers

In US, people can use stocks holdings' value as a collateral to borrow money from banks. Due to property boom, many actually borrow through this way to buy property. So when the Dow drops due to Lehman, the collateral value of the loan drops, so banks ask for more collateral in cash or in assets. Many are forced to either sell their stocks or their properties to protect their positions. The chain effect started and the rest is history.......

This post has been edited by lch78: Jul 19 2011, 02:34 PM

It is the other way round.

It is subprime loan and properties bubble bursting that send stock market plunging.
Banks have lot of subprime loan, which being defaulted causing bank losing money on the loan as well as through underwriting CDS.

It is unsustainable bubble of properties burst itself, not stock market causing it.
In fact, when the properties bubble burst time, stock market still hold up relative well, until Bear Stern and Lehman issue unfold, only then people realise it is more serious than most people think, because most people even banks themselves may no fully aware how deep the hole they had digged.

Recently we have properties stock plunging here, is more on new accounting standard which is proposed to be adopted in near future, whereby sales/revenue only can be registered after the project is completed, compared to current accounting practice which can take in progressive payment or stage of project completed as revenue.
So we may see some properties company registered huge loss when the project is not yet completed time.

Thank you for clearing up the misconception.

So the fundamentals are intact. However another round of interest rate hike is around the corner, that might change things.

what!! ?? another interest rate hike ?
i thought BNM baru saja increases the SRR ?? i thought no more surprise from BNM ??

For reading:

http://www.btimes.com.my/Current_News/BTIM...rup060/Article/

http://www.bloomberg.com/news/2011-07-15/r...t-concerns.html

http://www.btimes.com.my/Current_News/BTIM...icle/index_html

http://biz.thestar.com.my/news/story.asp?f...71&sec=business

Note: thestar and NST title is dubiously phrased in such a way that gives you the perception that inflation has peaked, so no need to worry anymore. Then the contents actually talked about the inflationary pressure still there and need to be contained by another round of interest rate hike.

Despite the prediction that inflation has peaked in June, but the fact is, it has not. If we are to look at how the Government calculate inflation rate, the bulk of that weightage is hinged on petrol prices. We all know the petrol price is subsidized, artificial in another word. Therefore any small hike in petrol prices will move the inflation rate higher by a large margin. We all know by heart the Government can't hold this petrol price for long...... Somewhere need to give in to the global economic changes...

This post has been edited by lch78: Jul 20 2011, 12:38 AM

changed face... dun want to see... hehe...

if we look at the forex trading... the forex level now is similar in 2007/2008... W

This post has been edited by sampool: Jul 20 2011, 10:18 AM

lucky bulk of my sgd is still park in Sg. the exhcange now >2.47. soon will touch 2.5-2.6, same as USD, 15 years ago (1997 b4 crisis). another 15 years MYR will become Vietnam Dong. anopther 15 years--> Zimbabwe??

Not so bad la. M'sia is stuck now at current level, cannot move up or move down. Another 15 years maybe Vietnam moves up to Malaysia level now..

hows the bank interest? I heard its almost 0% in SG

anyway some small condos 900-1100 has risen about 400k now, I wonder how those who bought at 400k sustain. and with a few new launch here and there.

Wont the condo market be hit hard when the interest rates goes up?

today so boring and quiet....

The Calm Before the Storm...

US & EU got more interesting news... let's see how it goes...

Short-term impact on property sales
By EUGENE MAHALINGAM
eugenicz@thestar.com.my


PETALING JAYA: CIMB Research expects the proposal by Bank Negara to modify the mode of calculation for household loans to curb domestic speculation in the local property sector to have only a short-term impact.

“We think that any measures to curb domestic speculation are likely to have only a short-lived impact on physical property sales, as was the case when a flat 5% RPGT (real property gains tax) was levied in October 2009 and an LTV (loan-to-value) ratio of 70% was imposed on the third-property purchase in November 2010.

“In both cases, the impact on the real property market was a wait-and-see attitude by buyers for two to three months before they rushed back into the market when they realised that house prices were firm and still rising,” it said yesterday.

The research report was in reference to a recent local news story which reported that the central bank had issued a white paper to obtain feedback on the possibility of basing the calculation of household loans (mortgage and hire purchase) on net pay instead of gross pay.

“The report is yet to be confirmed and even if the measure is implemented, we believe it could be mild as the intention is to curb speculation, not hammer overall sentiment.

“Even if we assume the worst-case scenario where a change in the calculation results in a 26% fall in affordability, in line with the maximum personal tax rate, the affordability ratio is still very healthy,” said CIMB.

CIMB noted that a share prices of property stocks had been on a downtrend since the news report, which also spilled over to construction companies with significant property exposure.

The research house believes that the Government would be careful not to implement measures that would have too negative an impact on the property sector as it would still want to encourage home ownership, and restrictions would have the opposite effect.

“The Government hopes to unlock the value of its idle land in the Klang Valley and measures that would hurt the sector could result in lower bids for the land, and the performance of the property sector affects other key sectors of the economy and property restrictions in the run-up to general elections may not be popular,” it said.

If loan affordability is calculated based on net pay, it will be people like me, the "cukup makan" type that will suffer. Speculators are rich, net pay just means that they buy one less house. But for the average malaysian, net pay means diminished affordability.

Sigh, there goes my big dreams of buying landed property. Guess I'll be staying in my pigeon hole apartment for decades to come

Short term impact. More or less of my expectation. The reason being that Msia property market is supported by REAL demand. The majority of Msia population just entering buying property age.

The reason speculators can fester are due to there are huge demands for property still.

Actually I think it is good to calculate based on net pay, for the actual buyers and to the stability of the property market in the long run. Some buyers tend to over-stretch their limit based on gross pay which cause problems later on.

Pigeon hole apartment got its benefits as well, at least it is easier to maintain.

actually the prop jump about 30% is not just in malaysia... can said in majority of Asia country due to hot $$...
there are still many many pigeon hole without a pigeon...

Hot $$ can only jump to stock market and million++ properties. It won't jump to a few 100K properties.

IMO, majority of Asia countries property goes up is more due to inflation affecting the cost of building. The cost of building is mostly consisted of 3 major things, cement, steel and labour (maybe petrol also). Only cement is locally source, the other 2 are imported.

Ok, hot $$ might have contribute to inflation. But IMO the effect of hot $$ inflation is more negative to properties value. Why? Because hot $$ tends to generate more money supply into the population, so people have more cash to spend causing essential goods prices to rise, BNM then force to increase interest rate to counter inflation, thus causing people to have less desirable to buy property.