this is a little funny to me. in the past, banks observed rule instalment <1/3 of monthly gross pay. then it went to 1/2, even 2/3 in some cases.
if net pay is used to calculate, what's the difference if banks apply 100%. 120% of monthly net pay?
really, gomen has little heart to slow household lending or slow construction since that's the only big tool they have to keep gdp going.
at the expense of massive future debt problems, of course. gomen of the day does not always care about gomen of the future.

You just nail it in the coffin. When corruption is rampant, it is a sign of downfall of any governments, past or present.

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Added on July 21, 2011, 10:56 ami dun think the issue is about foreign hot money. there is plenty of hot money in singapore, hongkong and shanghai, not maresia.
foreign funds hot or cold have long shunned local market be it stocks or props due to reasons well known.
bnm probably have increased money supply; gomen bonds and sukuks have been quite a lot.
increase in domestic debt incl household debt riding on top of inflation from subsidy cuts and rising world food+commodty prices is the issue.
the thing that will bring disaster here is debt - not that different from greece, the other pigs and now suspected, italy.

This post has been edited by AVFAN: Jul 21 2011, 10:57 AM

By EUGENE MAHALINGAM
eugenicz@thestar.com.my | Jul 21, 2011
Short-term impact on property sales

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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.

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Added on July 21, 2011, 12:45 pmThe Star Online > Central
Thursday July 21, 2011

Residents cry foul over steep quit rent increase

By YIP YOKE TENG
teng@thestar.com.my

RESIDENTS of Kelana D’Putera Condominium had a rude shock over the almost 200% increase in the quit rent.

They claimed that the quit rent has been increased from RM12,406 to RM34,128 within a year.

In a written reply to their official complaint, the Selangor Land and Mines Office explained that the hike was due to a conversion in land status from residential to a mixed development of residential and commercial approved in May 2008, which resulted in the higher rate.

The department also highlighted the quit rent was calculated based on the city rate of RM1.69 per sq m for residential and commercial buildings instead of the previous district rate as the area had been upgraded from Damansara district to Petaling Jaya City.

“Based on the revised rate, the quit rent for our condominium has been increased by a whopping 175% or RM21,722,” said condominium residents association committee member Datin Nor Aziah Sulaiman at a press conference chaired by Seri Setia assemblyman Nik Nazmi Nik Ahmad yesterday.

The residents claimed that the drastic increase in quit rent was due to three shop units in the clubhouse, which had been there for the past 10 years as a common facility for occupants of the 625 residential units.

“The residents had objected to having individual strata titles for the three shoplots, we did not apply for these three units to be converted for commercial use, why should we bear the high cost?” asked resident Francis Koh.

Nik Nazmi said the increase in quit rent was too drastic to be introduced at one go even if there was a change in policy. He had appealed to the Land and Mines Office to meet the residents to review the matter.

“We have heard that residents of some other condominiums also face the problem of paying high quit rent as a building that also houses shop units is categorised as mixed development. We will look into this,” he said.

Also at the press conference were representatives from Tiara Kelana Condominiums in Kelana Jaya, who highlighted that the Petaling Jaya City Council (MBPJ) had yet to take over garbage collection for high-rise residential buildings as promised in February.

Resident Peggy Liu said the residents were still paying a private company RM2,300 per month for garbage collection, in addition to the high assessment of about RM1,200 they had to pay compared with about RM600 paid by bungalow dwellers.

“MBPJ had promised they would take over garbage collection for all condominiums in PJ so the maintenance fees we pay can be put to better use.

“But five months have passed now and we still have not seen MBPJ doing what they have promised,” she said.

MBPJ public relations officer Zainun Zakaria said the residents could have misunderstood the message as the council had never promised to take over garbage collection for high-rise residential buildings.

“Garbage collection for high-rise residential buildings still falls under their joint management bodies, MBPJ has never said it would take over the job,” she said.

Zainun added local councils had only been directed by the state government to take over the cleaning of an area while garbage collection was still under Alam Flora.

“In PJ, we are still in the final stage of getting contractors for the cleaning exercise and we should be able to get it started by August,” she said.



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© 1995-2011 Star Publications (Malaysia) Bhd (Co No 10894-D)

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Added on July 21, 2011, 1:00 pmBy DAVID TAN
davidtan@thestar.com.my | Jul 20, 2011
A preferred choice

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Senior executive: Law posing outside Henry Butcher's office in George Town.


Penangites working in China and Singapore are taking up property in Penang, thus providing a stable demand to drive the growth of the local property market this year.

Henry Butcher Malaysia (Penang) Sdn Bhd senior business development manager Law Beng Yeow said that Penang’s residential properties would continue to be attractive despite a slowing GDP forecast, which was expected to be around 5.5% to 6%, compared to about 7% a year ago.

“Penang is on the map of many overseas Penangites, especially those working in China and Singapore, who want to leverage the strong foreign currencies they are earning to invest in local properties, which are still priced competitively in the Asian region,” Law said.

“They go for landed and high rise in choice locations such as properties in Pulau Tikus, Tanjong Tokong, Tanjung Bungah, Batu Ferringhi and Green Lane.

“The demand is reflected in the increase in the selling prices of such properties in the secondary market,” Law said in an interview held in conjunction with tomorrow’s ninth Star Property Fair 2011 in Penang, which will be held at Gurney Plaza and the adjoining G Hotel from Thursday to Sunday.

Law said landed property in these neighbourhoods transacted in the secondary market have risen by about 10% compared to last year, while high-rise properties have risen between 5% and 10%, all depending on the location, size and specifications.

“For example, an average size landed terraced unit with a built-up area of approximately 2,000sq ft to 3,000sq ft is now priced between RM1mil and RM1.5mil, up from about 10% from last year,” said Law.

“For a semi-detached unit with a built around 3,000sq ft to 4,000sq ft, the current price ranges from RM1.8mil to RM2.8mil, up from about 10% from last year.

“A condominium unit with a built-up area of about 2,500sq ft to 5,000sq ft is priced between RM700,000 to RM3mil, about an increase of 5% to 10% growth from last year’s pricing.”

He said new landed and high rise property in these areas to be launched soon were expected to be priced slightly higher from the present price levels in the secondary market.

“The local property market is expected to continue to grow but at a slower pace this year, as we have already seen a big rush to take up properties in 2010,” Law added.

On the high prices of Penang property, Henry Butcher Malaysia (Penang) vice-president Shawn Ong said the cap on the third property loan to 70% had deterred speculators from coming into the property scene.

“Those coming in now are genuine investors with the cash to hold to the property.

“High commodity prices and the volatile stock market overseas are continuing to prompt medium and long-term investors to take up properties, which are considered to be lower-risk,” he said.

Ong added that the trend forward was towards medium market properties, as developers were taking into consideration the affordability level of home purchasers.

“This is why we are seeing more recent developments in the past 12 months of high-rise units on the island, with built-up of over 1,000sq ft, priced between the RM300,000 and RM500,000 range, which have received overwhelming response.

“Such property are now being developed in Bayan Baru, Bayan Lepas, and Air Itam townships,” he said.

The Star Property Fair 2011, organised by The Star in collaboration with Henry Butcher, will be open to the public from 10am to 10pm daily, and admission is free.

To date, 28 major developers — representing almost all the big boys in the industry — along with several financial institutions, have taken up booths at the Star Property Fair.

The fair will also see RM30,000 worth of prizes to be won for the ‘Surf, Click & Win’ contest which is sponsored by IJM Land.


This post has been edited by kh8668: Jul 21 2011, 01:00 PM

is Kelana Puteri affected? Kelana also have a few shops inside eg mini market, cafeteria, salon, laundry etc.
so the quit rent will increase after they obtain the strata title??

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Added on July 21, 2011, 2:12 pmreally dun understand why MPPJ is so stupid, they can just divide the commercial and residential prop la. hope DBKL is smarter.

This post has been edited by lucerne: Jul 21 2011, 02:12 PM

http://www.cbre.com.hk/asia/eng/document/m..._mv_q1_2011.pdf

Malaysia high end condo price still the lowest in the region...




Attached thumbnail(s)

good info.
important to note that both thailand and vietnam yield is even worse than ours.
would have love to see jakarta added in the survey.
i'd been stressing this endless time. malaysia price is dirt cheap compared to our neighbours.
st regis at rm1.6k - 2k psf is dirt cheap compared to their name marketed in overseas. no wonder it is a sellout.
foreigners would not hesitate to buy up the brand at a fraction of their original price in thier home country.
on a crude scale, imagine this.
say a coach handbag in malaysia selling at RM3k.
u go say US and the exact same handbag or slight variation of it but still a coach handbag is selling at say USD300. no doubt most people will grab it, right?

just had breakfast with a hongkie today.
told me the highest currently is either HKD60kpsf or HKD30kpsf (i cannot remember).
an average university grad entering the workforce is around HKD12k/mth.
they also crying about affordability of property purchasing.
furthermore their minimum downpayment is 30% and goes higher if property price is higher.

hongkong reli cham.. what to do.. their land so little..

how is taiwan? i m more interested to this country or city (sorry lah)...?

Not that they are stupid but pretend to be stupid lah.

Remember just few yrs ago we wrote complaint letter to MBPJ abt the high assessment charges of 8% tax from council. They info us last min like 1 wk to attend the council meeting to raise any complaint. Noticed more than 20 complaint letters on the list but only 3 people attended. WTF last min notice, working hour, 3 hrs waiting, then during the council meeting chairman said it all, kena told off some more by the the idiot chairman. Remember told the chairman: 'over here we got nearly 1000 units, each unit paying >$1000 per annum to MBPJ, you got RM1 mil, what did you do with our money? How come still so many potholes and traffic light not working properly, narrow lane, jam? Still remember vividly the arrogant chaimeh said 'You Talk Rubbish!' Should have walked out but decided to stay put just to give face. Regretted for not doing tat caused in the end, wasted my time, they didn't reduce even 1 cent. But glad after 308, bye bye bloody blood suckers! Assessment fees dropped by nearly 30% from 8% tax to 6% tax. Council chairman talked rubbish saying need to go thru Parliament debate, Cabinet approval blah blah. Good riddance

But of course next step is to support council election. Still plenty of rubbish inside. Need time to clean up. Think dbkl worst seeing the way they work. Rubbish trucks spilling smelly water everyday along major roads and cbd areas like Sultan Ismail. Tons of rubbish behind back lanes of Bukit Bintang. Wow, what a way to welcome foreign tourists. Also pvc broken drain covers all around the city, may be try to booby trap some tourists. 1Malaysia culture lah. Only solution is to sack the idiots

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Added on July 21, 2011, 4:00 pmRemember correctly Jakarta higher cost than KL but ROI also higher like nearly 10%.

More 10yrs ago my hongki fren said I stayed in jungle when visited my hometown. I was laughing in my heart thinking he was so ignorant didn't know how comfortable life in My.

Yup, actually Malaysia is a wonderful country. Good life and cheap. But a lot of folks tot foreign moon is rounder. But of course our currency screwed up, thks to the cronies lah for screwing country natural resource for the past 30 yrs, building white elephants aft white elephants rather than building human resource. Another 10yrs down the road when natural resources depleted guess thing will be worst here.

But looking at positive side, looking at Indo, no matter how bad things become in future, we will survive. With Air Asia, export of cheap labor oversea will be a growing trend. High speed train to Sg ... when going to start? Sporeans be prepared to lose more jobs

This post has been edited by Bobby C: Jul 21 2011, 04:07 PM

Loan-deposit ratio at 7½-year high
Written by Joyce Goh
Thursday, 21 July 2011 11:37

KUALA LUMPUR: The banking industry’s loan-to-deposit (LD) ratio recently hit a 7½-year high, which could likely spur further competition for deposits, slow the pace of loan growth and raise borrowing costs.

In February, the LD ratio rose to 81.9% and remained at 81.8% in May, according to data by ECM Libra Research.

Its previous high was 82.8% in October 2003 and dropped to a low of 68.9% in March 2007.

A high LD ratio shows a diminishing source of funding avenue for loan growth from deposits, as loan growth has outpaced that of deposits in recent years.

Analysts also attribute the slower growth in deposits to alternative — and higher yielding — investments available to the public, such as equities and properties. These classes of assets are seen as offering higher yields and providing a better hedge against inflation compared with fixed deposits.

As such, banking analysts believe that competition for deposits among banks will likely continue to intensify. This could increase higher funding costs for banks, which in turn could result in either narrower margins or higher lending rates, likely through larger spreads over the base lending rate (BLR).

“It’s easier to grow loans given the strong demand in the property sector, the primary engine of loan growth. In the past, banks have lazy balance sheets compared to now. The (previously low) LD ratio then provided room to grow loans, even when deposit growth lagged behind.

“But today, the competition landscape has changed as banks are competing not just for loans but also deposits. While fixed deposits still form the major source of retail deposits, competition is also heating up for CASA (current account savings account) deposits,” ECM Libra’s head of research Bernard Ching told The Edge Financial Daily.



“Besides retail deposits, other funding avenues for loans include interbank deposits, term funding and equity. However, these types of funding are more expensive than retail deposits. As such, should retail deposit growth continue to lag behind loan growth, banks may have to look for more expensive sources of funding. This will add further pressure to NIM (net interest margin) which has been depressed by intense competition in the mortgage market,” he added.

Indeed, the rush for deposits is highlighted by some aggressive campaigns for deposits in the last few months, which include lucky draw prizes, free gifts and step-up tiered interest rates. Public Bank, for instance, is offering 10 prizes each month for six months up to September for new customers who open a savings or current account. Each winner will get between RM6,800 and RM36,800.

While the LD ratio has climbed, the financing-deposit ratio also recently touched a multi-year high.

The financing-deposit ratio includes the financing and deposits of the Islamic banking industry, apart from the conventional banks.

Since mid 2010, the financing-deposit ratio has hovered around 88%, which is an almost 7-year high. The last it was at that level was in November 2004, when it was at 88.7%.

“The financing-deposit ratio gives a more complete picture as it includes financing and deposits from Islamic banking activities,” said Ching.

He added that the recent hike in the SRR (statutory reserve requirement) would have an impact on the cost of funding, but would not affect the competition for deposits as much.

Bank Negara Malaysia (BNM) recently raised the SRR by 100 basis points (bps) to 4%. This 100bps increase is seen as normalising the SRR to the pre-2009 financial crisis level of 4%. The SRR was maintained at this level for 10 years — from September 1998 to November 2008.

Despite the SRR’s increase from 1% to the current 4%, it is still significantly below its 13.5% peak in June 1996, as well as the post-1997 financial crisis’ 12-year average of 4.9%.

Meanwhile, Lim Sue Lin from HwangDBS Vickers believes banks will also be pushing for deposits to fulfil the Basel III requirements for liquidity purposes.

“There are no minimum requirements for now, but it is subject to an announcement later. It’s some buckets of liquidity that they have to maintain,” the senior banking analyst told The Edge Financial Daily.

BNM statistics show that loans expanded 13.7% year-on-year to RM934.5 billion in May this year while deposits grew 11.3% to RM1.19 trillion. According to the central bank’s 2010 financial stability and payment systems report, some 31% of household financial asset comprises deposits with banking institutions and development financial institutions.

Another analyst noted that the fact that loan growth is outpacing deposit growth shows that Malaysian households are borrowing more than they save, which is also reflected in the country’s high household debt-to-GDP ratio.

“Household debt has increased but salaries for most of the general population have not grown in tandem,” he said, explaining that a large amount of a person’s income currently goes towards servicing housing and car loans. “With rising inflation, households’ disposable income will fall and there is less money to save,” he added.

The household debt-to-GDP ratio in Malaysia has risen since 2008, hitting 75.9% in 2010. Meanwhile, the household debt service ratio – the ratio of household debt payments to disposable income – was 47.8% last year. This means that Malaysians spend nearly half of their pay on servicing loans.


This article appeared in The Edge Financial Daily, July 21, 2011.

agree.
the hongkie said the same thing and also acknowledge it.
he said hk life is no life. small unit apartment. worse if there's more occupants in it. they may have a lot of high tech stuff in it like large 3d led tv bcos they afford it. latest gizmo and gadget. latest clothing and all. but not much enjoyment from their dwellings. due to prop expensiveness, most units are shared with a lot of family member. they feel cramped and stuff. daily wait for bathroom is also intolerable. therefore hk business is thriving bcos nobody likes going home so they just stayed at the streets most of the time. they just go home to shower and sleep only.
and business also suffer because prop too expensive and 80% of the revenue goes to rental.
we advise him if he quit anytime, he can afford any of the luxury klcc condo liao. no need work.
that's why hongkie 'must' go for trips every now or then to 'escape' from their jail.
luckily they can afford it else most of them will have gone bonkers.

Haha... On case to case, we are no where near the conditions of what experienced in HK. It may be more relevant to relates to Singapore but no where near to us

The reasons our property is affordable has to do with our low populations per acres and lower foreign investment

Therefore it's unjustifiable for our property price match their's.

Btw, it maybe wrong to says 80% of the revenue of a shop in HK goes to rental. You have to understand, what experienced in HK is different from our's.

What they have is high density, in which a street shops may have 50,000 ppl passing by your shops within a day. If 10% of them visit your shops, that could contribute a healthy amount of sales volume and income already.

But look back @ Malaysia, it would be awesome for a shop in shopping complex to have that much of people.

ya..human traffic flow is very important to retail sales.

also, purchasing power should be factored in as well.

I happened to be at HK on July 1st, which is HK handover to China holiday. There was mass protest ala Bersih2.0 (protesters got permit to rally) on that day. HK ppl mostly protesting about high property prices that goes beyond the affordability level of majority want-to-be house buyers.

What happens in HK property is a catch-22 situation. If HK government lowers the prop prices, house owners won't be happy, and if continue with high prop price policy, want-to-buy house ppl won't be happy. Last time Tung Chee Hwa tries to change HK policy of maintaining high property prices and he got ousted in the end.

HK actually has twice as much land than Singapore, but most land is controlled by the government. I think HK only developed around 10% of their total land area. It is HK government policy to create high land value, thus translate to high property prices, since the days of the British rule.

The land cost for building an apartment building in HK is around 60% of the total cost, whilst in Msia, the max is only 30%. It is actually the high land cost that causing the high property prices in HK.

Therefore now HK ppl are pressuring their Government to release more land for building houses, in order to bring down house prices. Right now, HK government also mulling having a social housing scheme like HDB in order to cool down their over-heated property prices. However, the HK leader is hesitating to think about how not to end up like Tung Chee Hwa shall he proceeds with such plan.

But then it is difficult for HK to lower their house prices in a free market. Every millionaires in China will like to own a piece of prop there given HK is still a better place for living (if you can afford it). And millionaires in China can easily out-number HK population.

go watch this documentary. produced during the peak of UK housing bubble and see how similar the situation compared to ours today.

Channel4.Dispatches..The.Housing.Trap.pdtv.XviD.mp3.Remax

i believe purchasing power is one thing and mentality is another.

2000 - 2010 -alot of young ppl rather buy a new car , e.g HONDA CITY compared to a condo when they start working.
2011 - ??? - young ppl cannot afford to buy condo, so they keep on buying new cars, e.g HONDA CITY
Future - we will have trailer parks with family staying in old HONDA CITY with 4 years repayment left.

Lets use GDP. Price of a property in Malaysia is 3x more than Malaysia's average GDP. That is the same as in the United States (3x average GDP). Hong Kong average price is 10x average GDP. Ofcourse Hong Kong is another story all together. They need 10 generations to save money just to pay for downpayment. Above HK$10m, they have to pay 50% deposit.
Im not sure about the GDP figures i read it somewhere last time.

This post has been edited by koopa: Jul 22 2011, 12:21 AM

I lived in HK for 3-4 years.

I find it funny when ppl tried to compare HK prop with bolehland....2 diff worlds and like durian vs apple

Magazines, investment books, etc is comparing Malaysia to HongKong.

I would like to recommend to Malaysia to do it like HongKong, Property above say RM3m, need to pay 40% deposit etc. Instead of 3rd property loan 70% only. Just to curb bubble. I realise its bad for investor.

I myself have 5 property when im 24 but im staying with parents. Then when i finally wanna buy the 5th one for my OWN STAY, put booking free on monday, i kena pay 30% deposit because they announce it last friday. Its a good move to curb bubble i kinda support it but its not well taught of.

1. Say Person A got 2 property costing RM1.5mil each. Renting out for RM16k for both. Then he need to pay 30% deposit for a RM200,000 house which is RM60k only.

2. But Person B got 2 RM200k apartment then he wants to buy 1 RM1.0mil only, he needs to fork out RM300k just for the deposit.

Assuming both still servicing the loan for all property. Its unfair.

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Added on July 22, 2011, 12:38 amIm quite happy with the increase in BLR and 70%LTV thing. Everything seems to be running normally to keep inflation in check...

THEN SUDDENLY!!!
1st property 105% loan for people earning RM6000 and below. The intention is good but i think this move is a weird one because it will introduce further speculation for property below RM300k. Developers will use this as a guide to set a price their property and in the end, speculation will start again..



This post has been edited by koopa: Jul 22 2011, 12:38 AM