Were there any property development recently been sold out on launch day? I reckon this is maniac behaviour, when everyone rushes to one asset class and afraid of being left out, isn't a sign of bubble top?

I presume many property investors are on teaser/low introductory interest loans. They are hoping to flip the properties within the low interest period and make a handsome profits. When everyone thinks the same, do you still think you could find the next greater fool to get a mortgage he/she can't afford to buy your overpriced properties? I have a feeling the pool of greater fool is running out very soon. Any thoughts?

The US had just been downgraded to AA+ by S&P few days ago, who is going to buy their treasury bond? I think their central bank the FED will step in and announce another round of money printing QE3 very soon, and the European Central Bank is going to print money and buy the Italian/Spanish bonds as well in order to avoid debt default. It will be an inflationary depression. Petrol, corn, grain, cotton, everything will go up in price... and you think property could cope inflation? Yes, but not overpriced properties for sole investment purposes only. When people are struggling to get food on the table or fill their gas tank, do you think they will be interested in flipping houses, upgrade to a bigger mcmansion.

Eventually interest rate will have to go up to cope runaway inflation. I suppose your parents in 70s/80s would have experienced mortgage rate more than 10%. Ring your bell? Because we had runaway inflation in late 70s/early 80s due to high money supply expansion for the Vietnam War. When the mortgage rate goes up or teaser loan reset kicks in, how many flippers could service their mortgage debt when rate is at >10%?

I really hope our Boleh Land will not experience property wreckage similar to US, Ireland, Spain, Dubai, Japan... Folks, the storm is coming, the world reserve US dollar gonna collapse, high inflation will hit our shore very soon.

At the end of the day, median house price will have to match average household income in long run, without the matching income who is going to service the mortgage debt? When running out of greater fool to get a bigger mortgage to buy the property, the music stops, the property bubble will burst... because the flippers haven't got enough income in the economy to service the mortgage debt. Falling total housing loan size is a prelude of falling housing market. Did the size of total housing loan grow in the last few months?

That's right, we can't expect the mortgage rate to stay low forever.

These days, developers are offering zero down payment (simply jack up the house price and rebate you 10% for the required down payment so you can get your loan approved), zero percent interest during construction, free SPA/legal fees/stamp duty, and the government is talking about 105% loan, 5% for you to buy furniture? These are the recipe for housing disaster, we are repeating the mistakes that caused the US mortgage crisis.

I went to Puchong to enquire the Laman Grandview semi-d/bungalow the other day, what the sale person told me was "sir, you only have to pay RM10k to book a 1.3-1.5mil property, we will rebate you 10% for the down payment, and we expect the price will rise to 1.7-1.9mil next year, you have to be quick, only few units left, our next launch will be 1.7mil onwards!" Totally speechless. "Land scarcity, housing shortage, population boom, if you don't buy now you will be priced out of the market forever" sounds familiar with all these buyer friendly phrases? If people don't have the income to afford a house, how much a seller could ask? How much leverage the flippers could bear?

I think the time to flip houses and make handsome profit has gone. If you buy into their story now, you are very likely to get toast. When the pool of greater fool runs out, and the mortgages held by banks turn sour, our banks will go bust! Hopefully we will not see as many empty buildings on Boleh Land as in Dubai...

Latest news. The European Central Bank is printing money to buy Italian and Spanish bonds. The more paper money they create based on nothing, the higher the inflation will be. Japanese and Swiss central banks just "intervened" their currency exchange last week, with more money printing to keep their exchange rate competitive. Boleh Land will have to keep ringgit competitive to support export as well, which means more money printing... wait until Federal Reserve announces QE3, the temporary commodity price deflation will turn north and spike up. Look at crude oil, cotton, corn, grain...

The inflation storm if not hyperinflation is coming... we will have a currency crisis world wide. I would grab as much GOLD as possible!

For younger generation, it would be far better off to rent a place to live in this property frenzy situation. Think about the difference between servicing a mortgage and paying a rent, use the extra bucks in your pocket and buy other asset class, you don't have to be a housing debt slave. The property price will come back down to match average household income eventually. Some would say the property price will never go down, look at last decade, it went up and up and up...

This post has been edited by debtismoney: Aug 8 2011, 12:26 PM

The Desa Park City's Amelia terrace launched at about 1mil, and now asking 1.8mil for a double storey terrace! Only fool will pay 80% more than launch price in short 2 years, I suspect many insiders simply took up those units before launch and resale them once construction complete.

Anyone has data about the total housing loan size in Klang Valley? As far as I know, when the loan size in the previous months/quarters shrunk, the house price would fall after that period. This is a good indicator for when the tide will turn.

This post has been edited by debtismoney: Aug 8 2011, 08:02 PM

[quote=cranx,Aug 8 2011, 12:22 AM]Business man / companies went into properties because it 'was' a good place to park the excess cash. This category is not that risky.
The most risky is salaried worker, buying into the frenzy with maximum leverage. This group will be the catalyst for the coming crash.

[/quote]

Ironically, I think the main cause of our property frenzy was low/negative real interest rate during Badawi era, the rich didn't have to park their excess cash on properties if they could earn good interest return on term deposit.

In China, everyone knows that they got empty buildings everywhere, why? Because they got negative real interest rate for a long period of time (official inflation rate far higher than interest earn on savings), the Chinese would rather hold an empty property than cash that is losing purchasing power everyday.

Without good interest rate to encourage savings/capital, our capitalism system would create bubble after bubble...

---

Added on August 8, 2011, 8:13 pm

---

Added on August 7, 2011, 10:44 pm
I think everyone know this good indicator.
When uncle antie talk in passer to buy share, means it is bubble in share market. It happen in 1997.
When uncle antie talk in pasar to buy prop, means it is bubble in property market. It happen for the pass 1or 2 year.
Does not need a rocket scientic to tell.
All agreed?

Good luck to those that buy last year and this year. Those are waiting to bite the bullet. Still in construction type...
Especially have to wait until it hand out next year.. Like frog in the boiling water... Slowly slowly.... When notice, already burn.....

[/quote]

Totally agree! When everyone rushes to property investment, you better get out, the herd will get slaughtered.

People are queuing the night before property launch day, and snap up all units within hours, some properties are even fully taken up by insiders before launch. This maniac is a sigh of bubble top. Beware folks.

This post has been edited by debtismoney: Aug 8 2011, 08:13 PM

Take it this way, GOLD is money that the central banks can't dilute, they can't print GOLD, can't they? In this tough time ahead, GOLD should be a very good inflation hedge. All cash holders will lose a lot of their purchasing power, the only way the Eurozone/US to get out of the debt hole, is to devalue their currency in order to lower their debt load.

It is very likely the US Federal Reserve will announce QE3 (or call something else) tonight, they simply need a reason before they can print more money, what reason is better than the world stock markets plunge!

I suspect this round of market correction will not be more than 25%. Buy GOLD and SILVER before they steal/dilute your cash savings by inflation!

If the FED announces QE3 tonight, GOLD/SILVER will spike up, we'll see... hmm

Boleh Land is overbuilding, we will have property glut, just look at how many new housing projects on iProperty.com, at this price, how many of them could be rented or flipped to next greater fool.

It seems like the pool of buyers is drying up... I think many of these flippers will not be able to service their mortgages, wait until their teaser/low introductory interest loan reset, foreclosure will rise dramatically, if even bank fire sale doesn't attract buyers (like US, Dubai, Ireland, Spain and starting to see in Australia), many banks will go bust for sure, follow by credit dries up...

Don't forget many buildings are under construction now, when these properties hit the market = property glut, still expect to flip for profit?

I think we are entering the final phase of this GOLD bull run, it is likely to see exponential/parabolic move in GOLD price in short/medium term.

GOLD price hit another all time high USD1815 per troy ounce this morning. If not playing margin, probably still can get in the train before the final parabolic move.


Interesting speech from the former FED chairman "The United States can pay any debt it has because we can always print money to do that", which means devalue our paper savings in the bank into oblivion...

http://www.youtube.com/watch?v=-_N0Cwg5iN4..._embedded#at=12

The major export of the US is inflation!

The buyer's monthly household income would need to be between RM8k-RM10k to purchase a property priced above RM300,000! How many newly launched properties are priced below RM300k these days? We have a severe affordability issue, I guess it is less than 20% of household could earn more than RM8k of monthly income. In longer term, the median house price would have to correlate to average household income, simply people would have to be able to service their mortgage.

Does anyone know the size of our construction/property sectors in terms of percentage of GDP? I presume they play a very large part of GDP, If these sectors toast, the recession storm is definitely coming.

"as the workers would have to spend money on rentals and food" How much the foreign construction workers could earn, expect them to rent a 500k condo, or the food stalls owners to buy a million dollar property?

"On paper the number of new projects seems a lot" This is funny, which means in physical real world, the numbers of new projects seem adequate?

This is subprime mortgage, we are repeating the same mistakes that the US had...

when the property can't attract buyer + introductory low interest loan reset = default

I suppose the house prices keep going up is because the buyers take on more debt to inflate the housing bubble, at some point down the road, Malaysian will reach a debt saturated situation, they simply cannot take on more debt without matching income grow in order to keep inflating the bubble. The price would have to come down to earth eventually.

Bank Negara should raise interest rate to a more appropriate level, people are using this low rate to speculate in the housing sector. Government is kind of dilemma, if they raise rate now it will be damned (housing bubble burst) but not raising rate will be damned too (bubble keeps inflating to a greater level and eventually burst follow by a more severe recession).

SAVING = INVESTMENT CAPITAL = CAPITALISM, we simply cannot have sustainable grow based only on borrowed money.

So you expect the minority 5% foreigners could support the other majority 95% of housing market perpetually?

In reality, many home grown Malaysians have sucked into this euphoria and taken mortgages they can't service in long run.

When the music stops (don't tell me your logic is another 20% price appreciation per annum in this coming decade), they would default their loans, and you expect the foreigners/expats would step in and take up all the inventories which are empty and without generating yield, so the price would not drop?

"Properties in Malaysia still dirt cheap[" this is the typical propaganda created by developers/real estate agents! Can you compare house prices in Malaysia to Paris, they are earning 10 folds of a typical Malaysian does!

Historically, after property bubble burst, house prices would only bottom in 5-10 years. If you think your "holding power" for your empty properties is 1 or 2 years, you might need to have more capital to avoid default.

I'm just trying to share my information, and you make your own decision. I have friend in Australia who has few investment properties that couldn't be flipped out in a falling market, he is no longer able to service his underwater mortgages, he is going to file bankruptcy and lose everything he got!

This post has been edited by debtismoney: Aug 15 2011, 06:30 PM

Haha. No worries bro, none taken.

If the property sector toast, I suspect many banks will go under, maybe is time to get out of the banking stocks.

Found it interesting, your figure shows No.6 panic with $USD, does it mean buy USD or get out of dollar?

Guys, I got something important to share here.

The USD will collapse! I don't say this lightly. It is mathematically impossible for them to pay off their debt, they could either default their treasury bill or print money and inflate away their debt.

They will choose to print and cause runaway inflation if not hyperinflation (Zimbabwe in 2008, ring your bell?), and the worst part is, the whole world fiat currencies are backed by the reserve USD.

If the USD falls, our ringgit will not spare, unless our Bank Negara has tons of GOLD to peg our ringgit if hyperinflation really does happen.

For retirees, their paper savings will be worthless, for younger folks, they can start over again... I believe we are very near the tipping point.

I know this has nothing to do with property

Haha. don't tell me you own 20 properties and fully paid off

I'm not an expert in this, but as far as I know, hyperinflation does benefit debtor and harm creditor (as the country prints money to pay off its debt)

When your currency collapses, and loses a lot of its buying power, people in this country will struggling to buy daily necessities like food (USD500 for a roti canai), petrol, health care etc.

Nobody will flip/upgrade houses at that time I suppose (so less demand), the nominal house price will increase for sure (as you said 6mil to 200mil), but in terms of real house price (adjusted for inflation) it will decrease in price (decrease in buying power of your cash after you sold your props).

I'm not saying hyperinflation will occur, but have to be cautious, the western world is headed to this path...

This would be the most expensive experience if you chose to believe it.

If boleh land housing bubble burst, the price will not be plateau or stay flat, or "this is new "normal market" trend" as the developers/real estate agents like to say.

It will have a steep crash as everyone rushes out in panic mood, if history repeats itself.

The high end condos in KLCC/Mont Kiara are even more expensive than the luxury apartments in New York City where the wall street guys live in!

Don't you believe the propaganda created by the developers/real estate agents, they are in bed with the mainstream media, they control what "news" you will read on the newspapers.

well, in the west, it seems like there is no difference between condo and apartment. You won't see "condo" this word in Australia by the way.

If you had the same amount of money, if you were an international investor, would you park your cash in New York financial centre or our KLCC?