Wrong assumption.
It is not the like everyone earn 2.5k.
There are people earn 10k, 5k, 1k.
2.5k is just an average.

China has even lower GDP per capital than Malaysia, but properties price in urban area is way more expensive than Malaysia.
Because at there, rich is extremely rich, poor extremely poor.

If there is enough people earn 5-6k, then it is enough to support the properties price at 300k.
You don't need everyone to earn 5k to have a 300k property.

Remember price escalating the most and high at urban and prime location, those rural area, price of property is not gaining and as higher price.

Recession is never forever.
2008 we had severe recession due to global crisis, yet 2009-2010 time, with plenty of stimulus program worldwide, many factories found previous retrenchment was wrong one, because many cannot cope with order coming in, and struggle to hire back.

Also, retrenchment is not across, it is not the like everyone being retrenched, it mostly done selectively, and particular hit hard on lower ranking, production workers.

There is nothing to fear about recession, boom and burst is nature cycle of economy.

Yes, for sure, property price will undergo correction when recession kick in.
But it doesn't mean we must totally fear about recession.
In fact recession can provide opportunity to buy good property, invest even new business start up.

We had experienced the severity of global recession 80's, 90's, 2000-2002, and still go through and property price is higher than before (for prime location).

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Added on November 24, 2011, 2:08 pmThe day will come, but it will go away in the future as well.


This post has been edited by cherroy: Nov 24 2011, 02:08 PM

Every economy crisis, we faced different kind of problem and challenge.
Yes, household debt is alarming high, and BNM has been monitoring on it and keen on lowering down.

If now enjoy future money, mean need to pay back in the future, so probably having slower growth or even recession, but it doesn't mean forever.
Recession happened always is to correct previous over or unsustainable issue.

In the future, household income can rise to offset, or no more debt can be built further resulted slower and or economy recession, once this get over, the economy will be bouncing back, and property price will rise again.
Yes, near term seem correction of house price can come in, but it doesn't mean it must crash.

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Added on November 24, 2011, 3:41 pmThe current problem is household debt.

Back before 97, it is high corporate debt across, high leveraged.
But now corporate mostly are cash rich.

At least at corporate front, situation is more healthy.


This post has been edited by cherroy: Nov 24 2011, 03:41 PM

Only those poor fundamental stocks disappear, while those indeed good stocks, their price is now 2x, 3x or even more than prior 1997 crisis.
So it can be the same for properties.
The correction, can correct unsustainable high price on some property area, but on the other hand, prime and good location properties may also correct due to overall sentiment and trend, but longer term, it may rise even higher after experienced the correction phase.

We need to remember, money will become more only, population will become more only, not less.
So demand for limited land/space property in high concentrated area (Not all property) will become more over the long term future.
So those area properties will tend to skew and creep to the upside over the long term.
Yes, for sometimes, like recession kicking in time, can have a dip/correction, but over the long term, it always tend to go up. It is just a simple demand and supply theory.

Majority well run listed company are cash rich, you can see many from audited financial report of listed company.
It is totally different situation vs prior 1997, whereby most company under significant leveraged.
Dividend yield is reasonable high for most well run listed company.

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Added on November 24, 2011, 4:52 pmNot only this, a lot of company here are earning foreign money, through export, and take in money from overseas.
You can see from the foreign currency reserves of BNM, keep on escalating now already exceed USD100 billion.

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Added on November 24, 2011, 4:56 pmOne can have pessimistic view based on whatever reason etc, but reality is that the demand out there is still rather strong.
Even in the latest GDP report, does state this.

May be many cash rich person/company fear about inflation?
I don't know.

But logically sense tell me, you cannot have one front worry on inflation, and another front expect to see property price crash.

This post has been edited by cherroy: Nov 24 2011, 04:57 PM

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.

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.

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.

1) unrealistic, there is no such thing of property price should at what price. If there are people buying at that price and enough people buy at that price, it will stay at that price.
One may forever wait, and only see price keep on up and up.
Last time, 500k, unrealistic high, wait, then 600K, wait again, then 700k, wait again, now 850k, even price crash afterwards or plunge, it may from 850k, to 600k, still higher than 500k initially.

2) Unrealistic, like waiting rabbit to hit the tree. It is not the like only one enter the bidding for the auction.

3) Yes, there is realistic, what you can earn, what you can buy or afford to buy. Alternative, increase one's income level.

Don't need to complain, don't need criticise, don't need hope price to crash, when seeing price keep on going up.
If see it too high cannot afford, just let it be, just let go and just like (3). That's all.

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Added on November 25, 2011, 4:19 pmDon't get me wrong, I am not saying buyers should or shouldn't continue bbb mode.
In fact, current pricing is somehow elevated, my personal opinion, just nobody has the crystal ball to predict how property market may be heading for in near term.

This post has been edited by cherroy: Nov 25 2011, 04:19 PM

It is not the material price alone, yes, materials price has escalating 20%, 50%, but also, it is the land the matter and demand that matter.
See no developers interested to buy land at rural area to build houses, but all rush and concentrated on urban area or prime area.
It is the concentrated demand the push up the prices.

Rental market is not as good as property price.

Last time a condo price that was 500k, now may be selling at 800k, but rental still around 3k+ only (fully furnished), may be notch up a few hundred buck only in this period of time.

1) Irrelevant, property price is more about economy situation and property market itself. Before GE or not GE generally has not much influence, except if there is huge chance of gov policy after GE that is different story which I don't see it is likely.

2) Yes, it can happen, but demand can go up as well. Wages go up, inflation factor drive more people go into property etc.
Nobody knows, this still remain a big question mark there. People said the same during 2009-2010. Now we are end of 2011.

3) Economy no good now, but it is not totally bad all together. BNM may tighten here and there, but the move seems quite mild, and real killer of property come from interest rate level, which I don't see BNM will hike further, due to economy is slowing down a bit and with Euro crisis threatening the global growth (which affecting the export industries)

4) PR or not, they still have family here, if they earned in overseas, they might use overseas money to buy property here, even more affordable/cheaper for them.

Retire doesn't mean must cash out, even migrating, some are hanging on the property as well.
People here have a mindset of hanging on the property they owned as it is viewed as a valuable asset, and more "value" than cash.

What for cash out a 500k house then put in the bank?
Hang on the 500k house and rent out, to earn passive income is better. Who know 500k can become 1 million after 10 years later?
FD rate is low and inflation can slowly eat it.

5) Not much related to overall property market trend. This is to build affordable home for middle income people, and this is not going to be build at prime location area.
It is similar to low cost flat that to cater for low income people, and not much influence on the overall prime location property market direction.
Wait and see?
I believe it will be snatched up once it is clear where is the location, and criteria to own it.

The one that can change the property market trend is property start the vicious cycle of down trend, which prompt people stop buy for speculation, fear of losing value in their property or there is alternative better investment or FD can offer much better return rate than property.
So far, it is difficult to see this happening.
A correction of too steep pace of rise can be expected, especially at high end level one, but to say property market crash with inflation threat around us, chance is rather slim at least until now.

Somehow I fail to understand why many people said election is a big risk to the property market.
As we know, a major shift of gov policy on property issue is seems unlikely whether pre or after, why property market need to worry about the election then?

Sadly to say, we may face inflation threat again.

See how oil price movement lately, sitting comfortably around USD100.

In normal day, when inflation rises, central bank will raise interest rate to cool down the inflation.

But at the moment, we have extra-ordinary circumstance, as we can have both inflation and economy stalling.
Most central banks willing to risk inflation and prefer grow by opt for lower rate to prop up economy.

If economy collapse, surely rate cut across, ain't we see, almost zero interest across for Japan, US and many more developed countries.

Only new loan application affected.

Why blame the developers?

If buyers walk away when feel too expensive, how can developer set at those price?

It is seller - buyer willingness all the while. Nobody force the buyers to buy.
The willingness buyers to buy can be because too much money, greed, or whatever reason, and it is buyers that dictate the pricing.

It is the buyer call what price it should be, developers just follow the "wind" only.

As you said, developers can adjust price as they see fit.
Why they see fit?
Because everyone queueing up to buy, selling like hotcake. Once launch, all snap up already within days.

If previous project take considerable long time to sell and buyers are not flipping, rush to buy, developers also not dare to jack up the price.

It is not the like only 1 developer in a town, or only 1 place people can live.
If KLCC area is too expensive, people still have a choice to live elsewhere.
But everyone want KLCC area until it sells like hotcake, if you were the developers, you still selling as same as the old pricing?

Price surge and expensive mainly at prime area, there are still plenty of property that are affordable, from low cost house to house at outskirt of town or non-prime area.

Property market supply is always like that, no profit no build, market no good, no build, the supply and demand side of story is already skewed from the start, the game is always like that since long long time ago.

Home is a basic need, but owning/buying property is not.
It is not a must to buy a property to be a home.
Nobody pointing gun on anyone to buy.

In fact, with such low rental yield, (property price surge but rental rate is not), rent can be good alternative.

Myself live in a house that rent for more than 20 years since I was kid, and it was called HOME for more than 20+ years.
In fact, rent can beneficial and free up cashflow and liabilities issue as well.

Yes, I can agree and understand excessive speculation can cause bubble, which can be worrysome, but nobody knows those buyers are buying for flipping or actually genuine buyers, or just for the sake of invest, keep (there are many fall in this group, but you can call them speculators, but they do have holding power)

Unless you want to control the property market as well aka like controlled item, which by then kill the economy as well in the process, because property is one of biggest sector that contributing to the economy, as it involved hundred of small sub sector across.

Some control need to be in place, no doubt, I also strongly support, like RPGT, (you profit you pay) to discourage people from speculate too much, and should abolish no downpayment or little downpayment, aka a law insist at less 10% or more down payment is a must for any S&P etc.
But you cannot control it like controlled item goods.

No matter how, the market is still about buyer-seller willingness all the while.

This post has been edited by cherroy: Dec 18 2011, 01:32 AM

Yes, they have a choice, use public transport, bike, even bicycle.

Earn not enough money, no convenience, need to do it hard way.
Do not use excuse of public transport is not good etc as justify to buy a car.
If earn not enough, then if need to wait for buses for an hour to work, you also need to wait.

Buy car until bankrupt, and say do not have a choice...

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Added on December 20, 2011, 2:49 pmYou earn how much, then how much you deserved.

This post has been edited by cherroy: Dec 20 2011, 02:49 PM