those looking property price drop are cash rich ppl...i hope that i can buy 2 or 3 units for my son while currently i can buy one

Nothing to do with optimism or pessimism but it's about the TRUTH.

When the tsunami is coming, you got to warn the others lest they are drown.

It's about concern and care, not personal gain.

Individual will die trying but a family man die trying will drag along the family, wife and children.

This post has been edited by GangHo: Nov 24 2011, 07:53 PM

Corporate cash rich?? are you kidding??? do you hv data to support your claim?

from BNM's data, outstanding Bonds (borrowings) issued by corporates (and these are big corporates, coz SME are too small to tap into the debt market) as of Sept 2011 was about RM300b , before the 1997 crisis, the corporate bond market is negligible. And we hv not talked about corporate borrowings with Banks, which can't be small, as Malaysian banks' balance sheets hv grown much bigger, how banks make money? from interest of the borrowings!!!

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Added on November 24, 2011, 9:15 pmLOL, how do you define "CAsh Rich" ???

Don't look at the Cash balance of a company pls, you must take into consideration their total borrowings, If the cash is more than total borrowings, yes, this is net cash position, but how much more is Cash Rich? enough to fund the company's expenses for one year? two years? define first, before you make any such statement, coz it could be misleading.

eg, a company can borrow RM100m from banks, and when the cash from borrowings reflected in the company's cash balance, its borrowings also increased by RM100m, get it?

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Added on November 24, 2011, 9:22 pmHi Gangho, i agreed with you 100%, especially the last part, but i just wanna shr with you what i know that cause the situation you mentioned in your last para.

In developed countries, Companies Disclosures are, i would say, every extensive, just grab a korean companies/US listed company's annual reports and compare to ours, you will see what i mean. Here, analysts depend very very much on information provided by the companies they cover, therefore you will notice anlayst most probably wud try not to offend those big bosses. I am NOT saying that our analysts are bias but really disclosures/transparency is lacking here and that somehow also restricted their ability to provide 100% independent analysis .

This post has been edited by godutch: Nov 24 2011, 09:28 PM

family man dragged??
if he/she doesnt do anything during this inflation rocket era...
what will happen??

if the property price drops, will the people really buy??
who are those buying??
how many buyers are there??

what kind of benefits or opportunities are actually available for us if the price does fall??

why dont we put it this way,

if the price didnt fall as many as people think it would...what are the chances that you could get your ideal property at a considered 'lower price'??

if the price didnt fall, it will be even more difficult to own a house in the near future....worth a wait??


property that you are likely to see a price dip is most probably gonna be high rise building only...

landed property, may be bukit beruntung....

so you, those who plans to invest during property bubble burst, are likely to pick either a RM 700 -800psf 400sf SOHO/SOFO/SOVO, or whatever it is, and bukit beruntung landed...

best of luck yeah.....

oh my gosh, bukit beruntung, whoever invest on it, diesssss

maybe price will rise another 5%-10%? less possibility...

but if price drop 10-20% (higher possibility), it is still a lot, consider a condo, 400k become 360-320k...

so worth to wait i think.

A kid is blowing a balloon.

He blow-blow-blow... we said becareful it will pop.
He blow blow blow somemore... we tell him, it will pop if he keep blowing.
He blow blow blow somemore.... We tell him, now seriously it will pop.

Boy replies, you said it will pop long time ago, still haven't pop, do you think if I blow somemore it will pop?

The balloon can stay elevated for years, and never pop, as long as the balloon is not overblown.

When the balloon seem too big, inflation pressure shrink it back.
5 years ago, 500k terrace house seems overblown, but the 500k balloon stay there, then inflation coming in shrink it back + income has risen (due to inflation pressure as well), eventually now seem cheap.
So can withstand second round of blowing, and so on and on.

make sense,

that is provided our salary increase.


In which case we have to ask ourselves, what's the value of money, if inflation is so high.

This post has been edited by TheDoer: Nov 25 2011, 02:25 PM

I did not say all corporate cash rich, but undeniable there are many cash rich company around.

I had seen cash rich company buying almost whole floor of apartment, for rent, for sell afterwards, as well as a series of shoplot for renting purposes.
Borrowing is not taboo thing to have, as long as cash generation is healthy to repay the interest.

100m loan vs 100 cash. This I fully aware, but cash rich is cash rich, those loan can be long term liabilities 3-5 years loan is very normal, but you cannot deny they are having cash rich position to do acquisition that can make profit to repay the long term loan or even refinancing.
Banks are not going demand company to pay in full whatever loan, as long as company has good record of servicing it.

Banks balance sheet always growing one, because multiply effect of loan, that why we have inflation, because money become more and more when economy grows, when money become more, property price tend to go up.

If use net cash position, individual is far worst, saving/FD a couple 10+k, while having loan 200-300K, net liabilities.
So cannot buy property or better not to buy property?
Save enough net cash before buying?

If company cannot generate cashflow from borrowing, we had already seen NPL rise long time ago, especially during 2008-2009 time.

Yes, in term of corporate disclosures, it is lacking behind here, but the issue discuss here is about property sector.

income cannot catch up with property price lah, has your income doubled since 2008?

We are also the culprit making it happen.
When we work, we always demand salary increase over the time, despite we are working the same and same output.
This is a source of inflation in mini-scale, which then bring it to macro scale.

Salary is keep on increasing one only exceptional during recession, which normally won't last 1-2 year.
Try not to give salary pay rise to your employee, see how they react, and pressure by employee to the employers.
Even contractual workers, in contract, it is very norm to see pay rise x% after 1 year or when renewing time.

Gov salary pay rise
Private salary pay rise.
While this pay rise never related to productivity, this is a root source of inflation already.

Yes, I knew.
But nobody said property price rise must be the same with income rise.
Income rise will give a source of fuel for property to rise.

At lower end, income grow may be slow, not matching up the property rise pace.
But for upper ranking people or rich one, it can be different story all together.
Rich one can easily using cheap leverage (as we have low and zero interest worldwide), to make more money, and income rise even quickly for them and exponentially.

Ordinary people cannot easy get loan or funding.
But rich one can using banks money to leverage at funding rate of 1.x~2% and use the money to buy stocks, invest that can give then 4-5% yield stock/investment.

Somemore, with lower interest rate, it drives up a lot of previously sitting money in FD one and shift out to look for investment due to pathetic interest they are getting, to hedge inflation etc, and what they can aim for?
Hard asset, obvious target is property.

Income rise + cheap funding + more money + speculation --> property price rise.

i think these, we also already knew.

you still dont get the point.
but i malas to explain further.

if a company whose business is not property investments instead of investing to grow its core business buying up properties, something is just not right.

I see, pay rise for staff as being normal. because they become more and more proficient at their work.

What is not normal is pay rise because of inflation and not because of performance. This would not be a remedy, but rather like a dog chasing its tail.

We are avoiding the real problem, hate to say this but "scarcity".

yes, to key point here is "salary" and to increasing inflation.

we should not be proud of able to borrow up to 40years of loan from the bank just to buy an overvalued property.
it means we need to ensure we have stable income for the next 40 years. anything happens in between, everything is gone.

prices hv been stagnant for the past few months, 2012-2013 will be interesting time.

my advise to genuine buyers is to wait for 1-2 years while saving as much as you can to ensure you hv good buffer. overleveraging will cause tense in the family during bad time, too many familier broken off due to financial reasons.

No need to rush, renting in the meantime could be more worth it.

Imagine this:

you need to borrow RM500K to buy a condo/house, the bank interest, say 4%, S&P legal fees and renovation, furniture, appliances can easily coz you another 50K, 550K at 4% = 22,000 INTEREST to the bank a year, roughly RM1.8K a month, this does not include your assessment, quit rent, property insurance, indah water etc etc expenses and if it's a condo, maintenance fees (if you own the property, these are the expenses you need to pay), end up payment for all these fees is abt RM2000 or worst, more than RM2K a month, and this does not include your repayment of principal. If you can rent at below RM2K, your financial position is better off. so renting temporary is a better option.

This post has been edited by godutch: Nov 25 2011, 03:06 PM

correction: Income rise + cheap funding + more money + speculation + fear factor --> property price rise.

5 years ago:
A fresh grad earning RM1800/month planning to buy a 300k property in future.

Monthly installment for 90% of RM300k loan (35 years) is around RM1250.

He know that he need to have at least RM4200 income per month to get the bank to approve his loan for a 300k property.

So, he work very hard, hoping to get the increment until he achieve the amount of income.

5 years later:
He had achieved RM4200/month income (Not bad right?) . But the same property in the area had increased to RM600k.

Monthly installment for 90% of RM600k loan (35 years) is around RM2500.

Now, he need to have at least RM8300 (net income) to get his loan approved for the same property.

5 year later (let say property price keep increasing):....
He achieved RM8400 net income... but this time he need to have RM16800 income to get the property in same area..

.............
.............

This post has been edited by omyfish: Nov 25 2011, 03:17 PM

Yes for those who is capable and has found their dream home, they should go ahead with their purchase.

But for those who is not capable and trying to push the limit, becareful. There are so many signs out there that the economy is slowing down. Keep your money for survival first, investment should be secondary.