I will be back to comment on this topic and my prediction will be stagna and more DDD. Good bargain in the future.

Thursday, 28 November 2013 08:43
OMINOUS TURN: Najib's brother's bank downgraded to 'NEGATIVE' amid asset bubble fears


UPDATED KUALA LUMPUR - SHARES in CIMB Group Holdings fell in early trade after international rating agency Standard & Poor's revised its rating outlook on several local banks to "negative" from "stable". The stock, however, managed to contain losses by midday as investors focused on buoyant news out of the US and regional markets.

S&P had a day ago revised its rating outlook on four banks, namely CIMB Group Holdings Bhd, AmBank (M) Bhd, RHB Bank Bhd and RHB Investment Bank Bhd (RHBIB) to "negative" from "stable", on rising economic risk due to a prolonged run-up in housing prices and household debt in the country.

S&P also lowered its long-term Asean regional scale rating on CIMB Group to 'axBBB+' from 'axA-' and affirmed its 'axA-2' short-term rating.

Of the four that ended up on the S&P 'hit list', CIMB Group is the largest with the capability to rock Malaysia's financial system in the event of any default or crises.

It is umbrella holding company for the sprawling banking group headed by Nazir Razak, the youngest brother of Prime Minister Najib Razak who is also the country's finance minister.

CIMB is also the fifth largest banking group by assets in Southeast Asia and at the end of June 2013 had over 40,000 staff and approximately 13 million customers.

Others were spared but for how long?

The ratings action was taken even as S&P reaffirmed the ratings and kept the stable outlook on four other banks, namely Malayan Banking Bhd, Public Bank Bhd, CIMB Bank Bhd and CIMB Investment Bank Bhd for their potential for receiving exceptional government support.

S&P said the negative outlook on CIMB Group, RHB Bank, AMBank and RHBIB recognises the potential for deterioration in the banks' asset quality and financial profile, if the consumer debt burden proves excessive in an unfavorable economic scenario.

The ratings agency opined that successive government efforts since 2010 to counteract the stimulatory effect of low interest rates on consumer borrowing and home prices have not been as effective as expected. It however expects more stringent measures in its recent Budget 2014 to curb property speculation to rein in prices moderately.

In assessing Malaysia's potential exposure to economic imbalances associated with household debt and the property market, S&P looks for consistent indications that housing price escalation and consumer debt are moderating. In particular, S&P will continue to consider the impact of recent government and regulatory policy initiatives to curtail potential systemic risk arising from the household sector.

It said if the rise in housing prices in Malaysia slows substantially, the negative outlooks on the four Malaysian institutions may be revised back to stable.

CIMB shares traded unchanged at RM7.60 by the end of the morning session while Maybank gained 7 cents to RM9.62.


Full article: http://www.malaysia-chronicle.com/index.ph...2#ixzz2lzixuZeB
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What do you think cause this mismatch between new launches and secondary markets? If buying from new launches is dangerous, when market corrects, do you think subsales will be spared? In other words, which is more likely: Subsales catching up with new launches prices in 2 to 3 years(of course, new launches prices are assumed to be even higher then) OR new launch prices coming down to subsale levels upon VP ( meaning subsales are quite OK even if there is a correction)?

bcoz when you really have a crunch...there is no inflation, if you truly know what "inflation" means...

no harm of getting subsale if you can hold it...jz u might paying more loan than your property worth...hurt bad for flipper...jz unfair for own-stayer...

Isnt it a dilemma for banks? Cooling down the market = reducing borrowings = no business for banks.
Continue status quo = market getting hotter = risk of bubble = market affected (if) = business borrowings reduced = no business for banks...

Economy on thin ice with household and national debt at high levels, says Rafizi
http://www.themalaysianinsider.com/malaysi...-levels-says-ra

I do have one or two people around me having to resort to renovating their unit to hope to rent out.  I thought it is just isolated cases.  Obviously, it is not.  Maybe you and I are just a small sub-group?  Anybody else have friends or families having the same situation ? This maybe a chance to gain more concrete info ?

3 of my friends bought a new SD each with the intention of renting out. The SD will be completed soon and from what I know, it is difficult to get tenants now.

Also, there is this 10 floors building competed some 2 years ago near one of the main shopping areas in town. Since then it has been sitting there empty. There is now a For Sale / Rent sign there. 

Do you know any real life cases ?

I am actually not so worried, just considering my next move.  Worry also no use.  Better take action (if to offload) or don't take action (If to buy)!

I am tracking a few properties (subsales) on propwall and iproperties.  Some are dropping a bit.  Some, nobody buys, still raise price.  Propwall has better price for now. 

How about you, do you know any real cases around you ?

What I intend to do here is actually to gauge the real picture, and everyone here benefits.  Let's do a good deed.  All of us may have changed somebody's destiny!

In fact, I hv a relative who is an property agent.  He said, i hv house, I hv customer, but I hv no sales. Either price can't match or customer can't get loan.  After talking to him, I said "wah! Being agent is taugh!" I will pay for his drink any time.

Can stay far away if budget is limited. It is a choice, not a constraint.

2 mil bungalows subsale of course will take forever to find buyer wanlah...
You wanna play multi million props you betta have the holding power...
Flip is for less than 500K props...hence studios is always hot buys whenever developer launch wanlah....

Foreigner buying makes up to 16% of KL properties transactions in 2012. Most are from china and japan. Singapore rank no 3. With 1 million cap, anybody think it will come down ?

“So far, the results are very promising especially for property in hot states such as Penang, Johor, Kuala Lumpur and Selangor,” she said. However, in Penang, the percentage of foreign property buyers decreased from 10% in 2010 to 6.7% in 2012.

Kuala Lumpur is still the location of choice for foreign property investors who made up 16% of property buyers in 2012 compared to 10% in 2010.

Johor has also seen an increase in foreign buyers from 12% in 2010 to 14% in 2012 due to the emerging Iskandar Malaysia project whereby Selangor remained at 2%.

Property market is slow. Not much choices that are value for money. Am still waiting to grab one good one.

In economics, demand is a buyer's willingness and ability to pay a price for a specific quantity of a good or service. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship.[1] (see also supply and demand). The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time.

M'sians holding back on the purchase of property

Posted on 05/01/2014 - 17:05

Joseph Wong

PETALING JAYA: Malaysians appear to be holding back on the purchase of property while owners are hesitating to sell, instead taking a wait-and-observe stance that is reminiscent of the period prior to the general election in May last year.

The cooling-down measures announced in Budget 2014 and those taken by Bank Negara Malaysia to end special schemes offered by developers like the developer interest-bearing scheme (DIBS) appear to have slowed down the market.

And, in the wake of the recent revision of real property gains tax (RPGT) under the Budget, there is a substantial leap in tax rates which will drastically affect sellers if they dispose of their property within five years from the purchase date.

As for new property – what developers noticed last month was that while buyers were willing to place a refundable booking fee of RM10,000 for a property, they were not too concerned about rushing their loan approvals to meet the DIBS deadline of Dec 31, 2013.

This move has struck developers as unusual because it was assumed that buyers would make the last-minute dash to secure the DIBS.

Bukit Kiara Properties Sdn Bhd co-founder and group MD Datuk NK Tong says home buyers appear to be holding back due to uncertainty in the property market.

This market sentiment, coupled with the government’s cooling measures, will stall sales for at least until Chinese New Year, he says.

“The buying mood is not there for the time being. There is a lot of uncertainty,” says Tong, adding that in every dark cloud, there is a silver lining.

“Buyers become more discerning in times of uncertainty and that is good for us,” he says.

And that is because of the many value-added features to Bukit Kiara Properties’ offerings like that of Verve Suites – which comprise four towers, namely Viva, Vibe, Vogue and Vox – that will make the developer’s property more appealing to others.

Buyers will make comparisons in uncertain times and Bukit Kiara Properties already has a good reputation with its many value-added features, he says, citing Verve Suites’ Sky Beach.

Tropicana Corp Bhd’s sales team has also noted the cautious trend. A source close to the property developer admits that buying interest is there but getting would-be buyers to commit to the purchase is another story.

During the launch of its latest property, the Paloma service residences and courtyard villas, which is phase two of the 37.2ha Tropicana Metropark, over a third of the property was booked by buyers.

“However, we do not consider it a sale until the sale and purchase (S&P) agreement has been signed,” says the source.

“It could be the coming holidays. With Christmas, New Year’s Day and school holidays, many buyers are away on vacation so it is hard to get them to commit to the sale at the moment,” he adds.

For sub-sales, a property agent says owners who are selling their property right now are those who have owned it for more than five years, so they are unaffected by the RPGT.

“Those whose properties are under five years are hesitant to sell right now for fear that they will lose a substantial amount of their investment,” he says.

From Jan 1, 2014, for property sold within three years of purchase, the RPGT is raised to 30%. Until Dec 31, property disposed of within the first two years are subject to 15% tax and those disposed of during the third year, a 10% tax.

For property sold during the fourth year, the rate has been increased to 20% and for those sold in the fifth year, 15%. Only disposals in the sixth year and beyond are RPGT-free. Companies will still be required to pay a RPGT of 5% even after the fifth year.

However, interest in owning a home is still strong despite buyers’ concern over rising prices.

The property agent believes that the slowdown in the property market is short term.

“Some buyers are waiting to see if price will drop or to see what will replace the DIBS, whether it is in terms of add-ons like free furnishings and appliances or other attractive measures,” he says.

Bukit Kiara Properties’ Tong says property prices will continue to rise despite the measures to curb speculation because demand still outstrips supply.

“The measures will slow down the property sector, which is not good when increasing the supply of property should be encouraged,” he says.

By slowing down the property market, the likely scenario is a sharp spike in prices once the market rebounds, he warns.

Property prices will always rise but it would be better if the rise is steady rather than the sharp spikes that Malaysia has been experiencing, he says.

The property agent predicts the possibility that owners may hike up the selling price of their property to offset the higher RPGT that they would have to pay.

If this happens, it will further push up property prices, he says, adding that the government measures are meant to stop speculation and slow the hike in prices but it appears that it may have the reverse effect.

“This will hurt the market and the buyers as they may be forced to bear the brunt of the increase in the RPGT,” he says.
http://www.theantdaily.com/news/2014/01/05...rchase-property

More Malaysians to be declared bankrupt, says daily

January 09, 2014

Malaysians are paying more for food and are struggling to balance their household budgets. – The Malaysian Insider pic by Nazir Sufari, January 9, 2014.The number of bankrupts in Malaysia is expected to rise following the recent price hikes in electricity tariffs and other household goods, as well as the removal of sugar and fuel subsidies.

Singapore's Straits Times reported today that last year, more than 60 people were declared bankrupt daily until September, with the figures up from 53 people a day in 2012.

RAM Holdings chief economist Dr Yeah Kim Leng told the daily that following the government's subsidy rationalisation to address the budget deficit, the number of bankrupts would continue to rise.

"We expect the number of delinquencies to rise, especially among young workers in the private sector who have access to excessive credit via credit cards and personal loans, but may not earn enough that it would be commensurate with their lifestyles.

"The question is, by how much, and that is the worrying part," he was quoted.

Economists, however, said unserviced loans were at a “manageable level” for the time being. But there are signs of this worsening.

Credit card debt has gone up. The amount owed to banks for longer than six months to November last year stood at RM426.4 million, compared with RM402 million in the same period in 2012, the daily said.

Credit Counselling and Debt Management Agency (AKPK) chief executive officer Koid Swee Lian said credit card users also “have themselves to blame”.

"In Malaysia, only about half of the credit cardholders pay above the minimum required amount of 5% of total owed to banks each month, whereas in Japan and Korea, it is 89% and 87% respectively," she said.

The daily also highlighted that Malaysia's household debt, which now stands at 83.5% of gross domestic product, is one of the highest in the region as Malaysians “rely heavily on borrowing to purchase homes and cars and for household spending”.
http://www.themalaysianinsider.com/malaysi...rupt-says-daily

If there is a bubble coming, what is our best strategy? If you believe the housing market is at the edge of a cliff, ready to plunge into free fall, what would you do? If you really wanted to protect yourself, would you sell your property now and rent? If home prices do come crashing down, some people said it could come down as much as 50% , that is an opportunity for you to go back in...for a better property. Is it worth the trouble?

Due to current Inflation in Malaysia, i believe the price won't drop anytime soon

Malaysian government 10 year bond yield is 4.2%, a big jump from just six months ago. So certainly the current interest rate for housing loan does not make sense, because as a lender, there is no reason to loan to house buyers at the same rate as loaning to Malaysia government (house buyers should pay a higher interest). I am not sure what is the difference in yield in Malaysia historically, but in the US, the gap is 1.0% to 1.5%.