Interesting quotes to share ...

I think the one in red is particularly interesting.

HuiChyr, I agree with you.

Those who can afford definitely has already bought. Those cannot afford will never be able to afford anyway no matter up or down.

And my guess is that a lot of investor's already have their mindset lock and the keys thrown away. They rather make claims and statement to reaffirm themselves that everything is great.

Interesting article on Mindset

Assuming property never ever will crash and assuming as well the trend of 20% appreciation year-on-year:-
Below is a chart of how much a 600,000 property will worth in 20 years:-
2013 600,000.00
2014 720,000.00
2015 864,000.00
2016 1,036,800.00
2017 1,244,160.00
2018 1,492,992.00
2019 1,791,590.40
2020 2,149,908.48
2021 2,579,890.18
2022 3,095,868.21
2023 3,715,041.85
2024 4,458,050.22
2025 5,349,660.27
2026 6,419,592.32
2027 7,703,510.79
2028 9,244,212.94
2029 11,093,055.53
2030 13,311,666.64
2031 15,973,999.97
2032 19,168,799.96

Yay!!! All property investors is multimillionaire!!!! Based on that figure, in 10 years I can retire as well!!! (Sarcasm intended)

This post has been edited by KChan: Jan 28 2014, 02:56 PM

Yes it's theory based on my post below:-


Yup. But forget to add a disclaimer.

*Disclaimer*
This is based on few property that I tracked within Klang Valley. Prices from 2007 to 2013 which average out about slightly less than 20%. I used the 20% as round up figures. That chart based on hypothetical scenario of upward trend that we are currently witnessing.

Again, just to provoke some thoughts if this would continue based on past trend.

This post has been edited by KChan: Jan 28 2014, 03:39 PM

Hi Rabel,

I'm interested to know your investment strategy as well. I like to know what is the main point to look for in property investment.

I understand in general that property is very good investment for long term. But with current new launches getting higher and higher on their pricing, do you still think that it is still a good investment? If yes, may I know why you think so. I'm still trying to figure out on what basis that this price will continue to sustain its upward climb. I would love to hear some insight and opinion, and learn as well. Because based on my analysis many many post back, I'm quite sceptical in the up trend.

I feel it is better that this thread shall have more debate and point of view with well articulate logics. Shall not be flaming by just giving each other thoughts without some explanation. Thank.

Everyone has their own strategy and risk profile and risk appetite. Therefore, I only generalise on the majority based on the EPF report and statistics.

5.3 million active contributors with salary below 5000 to benefits 1% increment for employer portion

Based on the same year 2011 report there is about 6.2 million active EPF contributors

Although based on old report for 2011 which I can only find online right now, there is 6,262,832 active EPF contributor. Based on the news report that there is 5.3 million contributor which will benefits 1% EPF increase in contribution by employer for 5000 and below salary. Therefore I conclude that there is only:-

(6,262,832 - 5,300,000) / 6,262,832 * 100 = 15.37% who is making above 5000 per month

Generally assume that there is increment and adjustment within the last 2 years and therefore there is 20% of active contributor to EPF which is making 5000 and above per month. So based on this figure alone, the affordability for property beyond 500-600k is only within the reach of 20% of salary earner.

I do not have the statistic on how many self-employed, business man and so on. Even there is lets say the figure is 10%. (This part is purely speculation by me)

So in the end, based on that statistic, I truly felt that that property (residential) has now gone beyond the threshold of general public. I also felt that the upside to the trend is limited right now based what I mentioned above.

I have yet to mentioned that those who is rich, super rich or mega rich which usually form 5% of the top tier of the population which has tons of money to buy cash for any luxury property and any property they want which I felt (personal opinion) that they won't even bother with property that we are looking at.

Also there is a lot other factors like external economy, currency performance, FDI, inflation and so on.

Although what I said sounds negative to general UUU investor, but please do acknowledge that this is some facts that we shall look at as well. I will not say there is overall bubble in property investment, there is some indicators that the uptrend might not last long enough especially for those who enter into the market within the last 2 years.

This is based on my own analysis. I welcome feedback by anyone on this as I want to get some insights on what is the factor which they think otherwise.

If you refer back to the few post that I posted, I'm mentioned mostly on new properties prices within the last 2-3 years and the trend of it. If buy 10 years ago, then no problem la. Even combined income for those below 5k salary, how much can they afford for the instalment portion? That is assuming both husband and wife is working. What about kids expenses? Travel expenses? Car expenses?

Rental play? Rental against property price is at all time low lar.

Yes demand is there. And demand has pent up quite a lot. Demand will only remain as demand if no one can afford. Problem is most developer is profit oriented and they only prefer building high end condo's with nice concept for luxury living. How many property project which is cater towards medium cost? There is huge demand for medium cost but every new projects is now catered to high cost. And do you know why developer prefer high end condo? Take a guess on their profit margin after every single cent they spend. Margin for high end units is the most profitable.

*This is strictly my personal opinion* Anyway I'm not eligible for PR1MA


Well, it goes 2 ways. Either I lament of miss opportunity and I wont make so much, or you lament with financial difficulties if bubble pops.

This post has been edited by KChan: Jan 29 2014, 11:45 AM

Yes there is too many factors. Anyway let's see if BNM will raise the rates today as their Policy Meeting is in progress. Announcement shall be after 6pm.

Yes I agree with this. I know a few businessman/high income earner that earns between 80k-300k per month. They are not interested to play properties. It's too much hassle for them. That's what they says and it's their word. Cause of all the paper work, running around to look at properties and things like that. They also don't like the hassle of renting and chasing after rental. Those is this group bought property is just to keep for their children and holiday homes. They are not flipping it instantly for 100-200k profit as they don't need that.

Then those flippers that made 80-150k a year or two in flipping properties few years ago got greedy. Cause they thought they can continue doing that by hoping that the price trend keep going up. Those in this group feel that those 80-150k is good profit compared to take home salary less than 10k per month. So they continue to try to leverage the system of low interest, low upfront to play this game.

So by and when the market slows down. Try to take a guess who get hurts? Property is illiquid. One cannot cash out property instantly when you detect the market is going down. Typically property transaction takes from 3 months to 6 months. By the time anyone realised that economy and property price is stagnant or going down, by the time only want to start selling, and if a lot of people is selling as well, then this is where things get bad. Too many seller and less buyer. Supply more than demand. Then it's buyers market, they can shop around and wait for the best deal. Those who cannot afford to continue to hold will probably gone into foreclosure. I think foreclosure will take longer time from the point of when the market gets bad. Perhaps after 1 year when the market turns bad, then only foreclosure property will be available in the market for auction. Foreclosure procedure is pretty long and tedious.

So in future only flippers can sell to pool of flippers or rich people. Also provided that those flippers who make money and save all the money lar. But easy money tend to be spend easily as well. Ends of the day it boils down to affordability. Demand for real estate is always there, but how many will be able to afford it is another matter.

Everyone wants to drive a luxury car, but how many can actually afford to do that?

The problem I felt is that since around 2009 with the DIBS scheme being introduced by the developer during that time as the primary reason why property is getting so high today. With DIBS and 5% down payment, that time almost every tom, d*** and harry can buy property. Property prices that time was about 300k and with all the easy entry. Buyers only need to fork out 15k to own a property and doesn't need to spend another cent until VP. So by now that property probably in the region of 500k in secondary market but the valuation is probably around 430k. So now a second hand buyer need to fork out atleast 113k cash to just buy that property and that is not even counting the legal fees and etc.

So if 1 million ringgit property but with bank valuation of say 850k, the buyer has to fork out 235k cash excluding legal and etc. How many person can fork out almost quarter million to buy a property?

Why RM goes down then properties go up? Based on what logic? Care to explain?

I do own properties and I don't have balls to buy any more based on current market prices. All of my properties bought before 2010. And I also expect price will DDD based on many factors.

Well, if that's the case then please sapu as much as you can. Buy a few units more before the GST kicks in as GST will cause property price to go up as well. I'll be happy to be proven wrong this time.

If there is any changes, we will only know by March when BNM made another round of policy meeting. If the currency is continuously depreciating, then I expect they would raise the rate slightly. Or perhaps not until after the Kajang election.

Phew finally finish reading 20 pages after just a few days of absent. I think most of the post is way out of topic.

It's human nature to be greedy. Similar mindset to gambler. Once tasted easy money, then "assume" that they can reap the same so call "formula" to make even more. I knew quite a number of people that sold their existing stocks and pour all into the new stock hoping to gain even more.

Yes some went through 1997 and a lot of them that gone bust that time is still quite broke now to worry whether property is going UUU or DDD. What I see now is that a lot "investors" these days did not personally went through that 1997 era and they don't really have much idea of how it is.

Try stepping in new launch venue and you will find most of the "visitors" is usually in their mid 20s to mid 30s to 40. This is of course from my own observation lar.

Well, IF this time did really bust, then it's just another economy cycle. There are bound to have people who will be hurt by that. There are winners and there are losers as well to balance out. For me, I think it is very risky this moment. I'm not a hardcore DDD but the risk to reward ratio is not worthwhile any more for me. The indicators and fundamentals have show signs of weakness and if look into the bigger picture of the whole system, it does looks bleaks to me.

An old article on Jan. Interesting to read some of the perspective and the outlook.

http://www.thestar.com.my/Business/Busines...s-than-answers/

Excerpt from the article:-



This post has been edited by KChan: Feb 10 2014, 03:43 PM

Ok. I know of this case. Let's see the scenarios yeah.

"Investor A" assuming staying with parents so no need spend $$$ on his/her own housing. His/Her salary is gross RM 6,000 which after deduction shall be around (RM 6000-348.35-14.75-660=) RM 4976.90

He/She bought a property say in 2010 for RM 450,000. Mortgage repayment is RM 1941.85 (Base on 90% loan, 35 years tenure, 4.6% interest).

So now, the his/her Debt Service Ratio (DSR) is 1941.85/4976.90*100=39%

Then he/she rents it out at RM 1,500 (4% yield).

That would be negative cashflow of RM 441.85 per month. Ok la. No big deal.

--------------------

Now he/she use the tenancy agreement of RM 1500 as income documents to bank. So basically his/her nett income is now RM 4976.90+1500= 6476.90

Based on RM 6476.90, and assume DSR is at 70%, he/she is eligible to take a loan with monthly instalment of (6476.90 x 70%)-1941.85= RM 2591.98 which the loan amount comes to RM 540,594

So now with a new property, his/her monthly instalment will be RM 4533.83 for 2 properties.

--------------------

Imagine this particular person with nett salary income of RM 4976.90 have a repayment of RM 4533.83 which left RM 443.07 monthly if the rental income suddenly stop coming in. Just think and see if this person can survive any probability of interest rate hike, vacant unit without tenant or market slightly crash?

There are people like this out there.

And I have not even talk about how genuine is their tenancy agreement (there are chances some of them using fake agreement or inflated rental price). Also imagine those people who leverage on multiple more tenancy agreement to max out their capability. I'm not saying there is a lot of people like this, but I'm very aware that there is a lot people using their tenancy agreement to take higher loan amount.

LowYat.Net

I'm not loan officer but I do know a lot of bankers doing loan and "investors" teaching me this particular tactics. They even boasted to me a lot people is doing it and it's the way to do property investment. Of course this is mere news from their mouth lar. How rampant this happen, I seriously have no idea and I can't be bother with it anyway. If this group of "investors" style is like that, then good luck to them when their units VP in next 1-2 years.

Well the party ended 31st Dec 2013. Not sure this year still can or not as I never came across any ruling by BNM not to consider tenancy agreement as income statement. I might be wrong.