I really think I am the odd one out here. Most of the threads here agree with the real-estate-bubble article while I was already disagreeing after reading the first paragraph. No bubble burst? Either he was away in a calm country while the bubble burst in 2007/8 or we have a very different definition of bubble.

No offence intended. Just airing my odd-man view. Ha.

Cheerio.

Finally, some foreign writing is relevant to local market.

This article was probably written for the U.S property market before 2007


This post has been edited by icemanfx: Dec 17 2013, 11:40 AM

Read more: I would like a huge dose of whatever the author above is smoking.

Lelong cases up, petrol up, ringgit weakened, gst incoming, household debt to disposable income @ a staggering 140%, one of the highest in the world, further subsidised reductions, a 35% sharp drop in Q4 2013 in job vacancies in a nation that isn't able to separate state from religion...

Do i own any properties? Yes, the one i'm staying in supposedly valued at RM900K. For the past 2 years that figure has been so unbelievable it's not funny anymore.

Sorry, just that i managed to somewhat learn to distinguish between optimism, pessimism and realism.

Aiyo, this is an article from before US bubble burst. At that time there are a lot of bubble deniers, as to be expected (otherwise there would not have been a bubble in the first place!).

The author he criticized in the article, Robert Shiller - "Irrational Exuberance", turned out to be correct about the US property market. The second edition of the book in 2005 basically said the US bubble will burst soon (by looking at things such as ratio of median house price to median income). In 2006 bubble in the US did burst as we all know. By the way, Robert Shiller won the Nobel Prize for Economics this year.

This post has been edited by Balrog: Dec 17 2013, 12:22 PM

[quote=Balrog,Dec 17 2013, 12:19 PM]
Good read with simple logic101

[/quote]

Aiyo, this is an article from before US bubble burst. At that time there are a lot of bubble deniers, as to be expected (otherwise there would not have been a bubble in the first place!).

The author he criticized in the article, Robert Shiller - "Irrational Exuberance", turned out to be correct about the US property market. The second edition of the book in 2005 basically said the US bubble will burst soon (by looking at things such as ratio of median house price to median income). In 2006 bubble in the US did burst as we all know. By the way, Robert Shiller won the Nobel Prize for Economics this year.

[/quote]

Bubble bursting also have to see area.

In places like las vegas, California and Florida badly effected.

In places like new York city it kept on going up

When the sentiment floats abit, it sinks deeper with the subsequent posts!
It is like bubble is poke burst in this thread! Lol

NY also dropped during the US bubble burst - http://research.stlouisfed.org/fred2/series/NYSTHPI, but nowhere near as severe as others, perhaps only 20%.

But yes, agreed that it will strongly depend on locale. Surely most at risk in Malaysia at the moment is Klang Valley, Penang, Iskandar

This post has been edited by Balrog: Dec 17 2013, 12:42 PM

I have seen many variations of these arguments.

The thing to consider is the average income of urban households in Malaysia (public info, available for example in http://www.statistics.gov.my/portal/downlo...PIR_KA_2012.pdf - TABLE 1.3).

URBAN HOUSEHOLD INCOME
Top 20% 13,654
Middle 40% 5,294
Bottom 40% 2,263

You can translate these to house prices, by making some reasonable assumptions. Say for example, downpayment 10%, effective interest rate of 4.5%, and one third of household income goes towards loan repayment.

ESTIMATED URBAN AFFORDABLE HOUSE PRICE
Top 20% 1,000,000
Middle 40% 290,000
Bottom 40% 165,000

Now, I think we can all agree that there is no way developers are building urban properties of those prices in those percentages for the past several years. Even if you change the parameters to extreme numbers, like for example 50% of household income goes towards home loan repayment, the numbers are still very far from lining up. What we have is an extremely distorted "top heavy" house prices. So while certainly there is significant urban migration, marriage, people joining workforce etc, the upwards pressure on house prices is not coming from there.

The only explanation is speculative buying, multiple properties bought by the top income earners, foreigners, parents paying down-payment to support young workers to "invest" in properties etc driving up the prices. Some amount of this is normal and can be supported, but my opinion is that this have reach crazy levels. Developers will cater for this, because this is highest margin for them (as opposed to building properties to cater to the real demand from urban migration/marriage). This is not sustainable, and is bound to correct. The degree and timing of correction of course is open to debate.

The below was my personal guess from a post some time back (I had already acted on it). Let's see how accurate



This post has been edited by Balrog: Dec 17 2013, 01:39 PM

And NY now is one of the most expensive places to live now.

KV has plenty of demand for its properties, again, you have to see where....

If u were 2 survey a newbie such as me, I'll tell u truthfully I'll wait until a unit has gone down at least 30%+ in KL area. D math is simple. 5% untung, 25%+give gomen/agent/lawyer fee/misc expenses etc. Yet still have to hold at least 4 years. Anything less than 5% untung, I rather go share market. Faster n easier to sell,zero maintenance fee, no bank interest, no holding costs n risk of no buyer/tenant. I'm referring 2 properties in d region of 750k-1.25m max. in klang valley only. 1m property, only gain 50k, really no big deal.Penny stock 10sen, goes up 5 sen that's 50% profit already. Noticed properties shares going south these days?

What about u guys?

That's why you calling urself newbie, waiting for Klang valley property to depreciate 30% is like asking BN not to barang naik. The property price in Klang valley will only halt after the recent policies imposed by gomen. Those will go down are the rural overprice properties. Prime area's demand will be there whether you like it or not.

This post has been edited by yeelong: Dec 17 2013, 02:23 PM

-30% can only come during recession. That's what I was hinting. Anyway, come what may. I've no rush to invest if the price keep shooting up like rocket. See who buy! What goes up, must come down. Anyway, just HMO. Just a newbie ma.. Also to share, I've picked up properties 5 yrs after cf at developers original prices before. Good developer, good location some more. Cerita Benar. Maybe just lucky....

Will be careful. Thank you for your advice.

yup, luck also play big part of investment, 5 yrs ago, price still good and affordable, and regretted for not gut to invest due to conservative mindset of me. Managed to pick up 2 property to rent and 1 property to stay. But will see how it goes after this year.

This post has been edited by yeelong: Dec 17 2013, 02:44 PM

U optimistic towards what type of other investments? What's yr reason?

Not many units one can buy if use loans. You know how much interests if u take a few millions $ loans. Come recessions, it's like kamikaze! Recession coming already. My friend closed 7 retail branches in klang valley this yr alone! The first to kena is usually retail, then slowly spread ...... Good to stay conservative, in fact!

This post has been edited by TiramisuCoffee: Dec 17 2013, 02:58 PM

Retail has been dying since 5 yrs ago as i came from that industry. It's that BAD. And currently the last straw i grapping is hoping BLR not to increase otherwise. i will considering selling off 1 of the apartment liao.

[quote=Balrog,Dec 17 2013, 12:19 PM]
Good read with simple logic101

[/quote]

Aiyo, this is an article from before US bubble burst. At that time there are a lot of bubble deniers, as to be expected (otherwise there would not have been a bubble in the first place!).

The author he criticized in the article, Robert Shiller - "Irrational Exuberance", turned out to be correct about the US property market. The second edition of the book in 2005 basically said the US bubble will burst soon (by looking at things such as ratio of median house price to median income). In 2006 bubble in the US did burst as we all know. By the way, Robert Shiller won the Nobel Prize for Economics this year.

[/quote]

aiyo that is intro 101 with simple logic101, use your judgement la whether applicable to you or not. What theory people read or choose to believe in and how they practice it or oppose it is subject to their own portfolio. Even if a perfect guide existed and is given to a screwed up person, it is worthless anyway.

BLR will sure go up one. How many yrs have u been holding that apartment? Don't wait till price tsunami hit then only u let it go! Rugi besar! Normally apartment, not much untung, if u take into consideration d maintenance fee etc

6 plus years already. waiting for it to appreciate more coz it's nearby the MRT project.