600k drop to 420k is not dramatic?

What do you expect?
Drop to 300K? 250k, 200k?

1997 could be the biggest crisis in our life time if look back.
And economy situation now is far better off the 1997 condition.

Something once go up may not go back to origin state anymore, although it may drop due to correction, over-shooting previously.
eg.
Do you expect to pump petrol at Rm1.10 per litre again like old day?
Factory operators get Rm500-600 per month?
A bowl of mee cost you Rm2 like 90's time?

The realistic expectation to see properties price drop more than 30%, while inflation threat looming around, is not a realistic expectation.
Unless we are heading to deflation, may be yes, but we are facing inflation problem now, instead of deflation.

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Added on June 28, 2011, 3:19 pmIt was not a economy slowdown, but economy crisis!
We were talking of potential banks went under at that time.

Do you know PBB share price was only Rm0.88?
CIMB was Rm1.80?

It was severe, not economy slowdown.


This post has been edited by cherroy: Jun 28 2011, 03:19 PM

a) Average Joe income might not increase rapidly, but it doesn't mean those above average one, rich one, or those can apply leverage one. Remember worldwide currently is under some historical low interest rate aka plenty of cheap money around.

b) Cost of leveraging is cheap as stated in a)

c) Properties is about buyers and seller, demand can come from money instead of real people migration in it. There are many rich person do not mind buying a property and collect little rent, because many view it as an inflation hedging tool, especially with inflation threat is quite serious lately.
KV may not facing huge influx of people, but KV is still facing population growth. Somemore new family new house. We are experiencing that a house now hold less and less people due to smaller family, and family members are not living together like last time that you can have brother and sister family living in the same roof.

d) This still need to ask?
Oil price was USD30-40 prior before 2003-2004. Now USD 95.
Palm oil was around RM2000, now >Rm3000
Timber price has 2x if compared to 10 years ago.
Go out and check how rubber price surging, how labour shortage, difficulty and wages around.

Ya, fact, developers and company registered healthy profit, because the inflation cost is passing to the consumer/customer.
Just because inflation then developers must facing profit drop?

There is no such thing of rumour of recession unless one has crystal ball that can see the future.

Bank are not too aggressive because they are concern of over-leveraging of household debt, as well as many leverage on rapid rise of properties price.

They just want to protect themselves or prevent themselves has too high NPL if there is slowdown in economy, also the SRR being raised which reduce liquidity of in banking system, which is expected to be raised further in the coming BNM policy meeting.

If SRR being raised, we can see BLR-1.x%, instead of -2.2%.

OPR is 50:50 chance being raised, but SRR is the one has the highest possibility being raised further.
SRR level is simply too low.

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Added on July 7, 2011, 2:22 pmMy view, around 7% or 7.+% should be peak.

Little possibility it being raised until exceed 8%, unless we have GDP 8-9% growth coupled with elevated inflation rate, which is unlikely at the moment situation or near future.

This post has been edited by cherroy: Jul 7 2011, 02:22 PM

Statutory Reserves Requirement, aka money that need to set aside by banks and hold on/by BNM SRR regulation.

It just means money that cannot be used to loan out.
For eg. bank has Rm100 deposit if SRR is 3%, only RM97 can be used to loan out to make money/profit.

So higher SRR means higher cost to bank, so they may not able to give more discount on BLR.

No increase likely on BLR.

But may be slight effect on BLR -x.x%.

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Added on July 7, 2011, 11:42 pmhttp://www.bnm.gov.my/guidelines/01_bankin...ry_20090701.pdf
EL is deposit that bank get aka money that bank hold or borrow from.

It has nothing to do with bank asset, aka loan out.

You want to loan ouy, you must have money to loan out.
Commercial bank cannot create money out of thin air.

If bank has RM100, they cannot loan out Rm5,000.
They need to borrow in RM4900, be it in the form of attracting more deposit in, or borrow from interbank.

What if SRR is 0%?
Can loan unlimited?
Commercial bank cannot create money out of thin air.


This post has been edited by cherroy: Jul 7 2011, 11:42 PM

Many think bank just create number, add a few zero, like add a few zero on your account, already can. No money print number only.
Reality cannot. This is not computer game.

Only central bank can create money out of nothing.

Yes, commercial bank is the process of money multiplier, but it must be from deposit or the bank go out to borrow from interbank or any source of money aka you circulating the money to multiply it.

When bank loan you home loan 500k, they need to pay the 500k to the developer or properties seller already.

SRR will affect the cost of money of bank.
Reduce SRR mean more money being "freed" out which in turn, allow bank make more loan, more profit.
Increasing mean reduce the liquidity aka reduce the amount can be lend out.

So that's why we see plenty of deposit/FD promotion lately after SRR being increased, while when SRR being reduced or to 1% time during height of global financial crisis, there is virtually none deposit promotion going on.
Bank needs to attract more deposit to make the same amount of loan like previous.

The actual situation, bank can lend much more than the capital they have.

A bank may have 1 billion capital, but the bank can loan out 20 billion, because the rest 19 billion come from deposit of customer, or borrow from various source, interbank, bonds etc.

Bank still can lend out more than the deposit they have, as long as they have other source of capital like above mentioned, from borrowing source or source of money to fund the borrowing.

Highly unlikely.
It may take at least a year for everyone to prepare.

GST affect every level of manufacturers.
It can be tedious from raw materials supplier to end of consumer.
It is not something like service tax, whereby tax only incurred at the bill of consumer.

There are stage of framework GST claims, lot of paper work, system need to be in order before a complete GST system can be running smoothly.

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Added on July 15, 2011, 4:59 pmYou hit the nail on the head.

That's why GST being delayed and delayed.

Implement GST will affect greatly on poor one.

Reduce income tax only benefit the rich. Nothing to do with poor one whom pay no tax currently.(below Rm3000 or Rm2xxx monthly)

This post has been edited by cherroy: Jul 15 2011, 04:59 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.

Please do a favour for all benefit.

Do not copy and paste entire article.
Please highlight certain points that one wants to highlight or willing to discuss upon, the rest please use spoiler.

Thank you for the cooperation

Malaysia has severe shortage of labour across.

Highly unlikely, it will happen.
If indeed happens, it just disastrous on the economy already.

Yes, high paid, goyang kaki one, no vacancy.
Skillful jobs, shortage situation is quite acute.

For sure, it will.

Landed property also has various class or location, which will be the ultimate factor determine how much degree it may be affected.

Ya, we may do not see price drop, but we did see properties being abandoned, nobody interest, empty shoplot/house, empty condo, empty mall.

Price never drop, because no transaction taking place...

I don't mean to be pessimistic.

Just to say properties price sure go up in the long run, hence property is safe to invested, somehow this statement somehow a bit overly.

Some will say buy right or prime location will eliminate this issue/problem, but prime location always at a premium or high price which many may not accessible to it due to cost, or opportunity.
And many resort to secondary location, outskirt of town which seem affordable but may expose to those kind of risk as mentioned.

I never view properties price will crash in the first place.
But immediate potential risk that can incurred is empty high end condo, empty mall, abandoned shoplot, or shoplot that little people interested and growing grass only. Not the price prach.

For own stay, it is all about own liking on the property, own affordability on the property.
Housing price high or not is never a major consideration at all.

Household debt is including credit card debt, personal loan and on top of housing loan.

Yes, it is a worrysome figure.
That's why you see BNM is keen on controlling this.
RM50 annual fee on CC
Less than 2 CC.
70% on third property.

and latest rumour is about net income used as based on housing loan affordability, instead of current gross income.

I always reiterated the best way to control housing price and excessive speculation is always RPGT.
This is the one of the best and effective tool.

Please use spoiler for "wall of text".
and this topic is not copy and paste section,

Ty.

I vote no for increase stamp duty.
This measure is killing off both genuine property buyers and speculators.
In normal circumstance, you wish to see property sector flourish, you don't want to kill off genuine property buyers out there. Instead you always welcomed every property buyers that afford and genuine want to buy and own.
As property sector is one of biggest sector and one of most important sector for the economy running and growing.
The target is to reduce speculative and flipping properties out there. So increasing stamp duty, you kill all together. Just like kill all good and bad bacteria in our body. Not a good idea.

I vote for RPGT, as if you make speculative gain, you paid off some, fair enough.
You make a loss, you don't need to pay.
While gov can generate extra revenue from the RPGT, and can reduce budget deficit (although it is small sum relative to overall budget).
RPGT can more and less reduce speculative activities out there although it won't deter people from flipping, at least it can reduce it a bit, which primary goal is to reduce flipping, not killing off the property sector.

This post has been edited by cherroy: Oct 4 2011, 09:58 PM

Wrong.
Economy is not about resources consumption only.
Economy can come from service provided, massage, service that make you happy also is an economy activities.

Please post this issue at TZM at RWI, here is about property issue.
Ty.