is not about arguing the truth or what is the outcome.. is about how you label terms such as subprime and associate it to our local context.. we might have our own version of financial n housing collapse, probably of different causes and different to other countries..

Actually its all about the outcome.

Old but interesting read.

http://www.nst.com.my/red/property-bubble-...antasy-1.143376

1. I knew of a banker told me that this can be done. Once loan approve, you can do reconversion to another property subjected to the new property valuation is ok.

2. I knew of bankers did help investors/flippers do the above.

3. A lot banker/mortgage sales people will do their best even to "clean & spruce" up their customer documentations to get the loan approval.

4. I knew few investors/flippers who use fake income documentation to get the loan approve.

Based on what I knew above, I knew it's a matter of time before things will get ugly. It shall be sooner than much later. We just have to wait a see lar. No point arguing who is right or who is wrong. Everyone shall just know the consequences if things move either way. If prices continues to go up, then congratulation to the flippers. If price came comes down, I would love to congratulate all the bankrupt flippers as well. That's my take.

Anyway no one will foresee the future so any decision is very personal. Also what I know is, if buyers cannot afford to buy from developer, then they are worst off buying in secondary market. Bank valuation is not on par with the asking price, the transfer duty which is expensive, legal fees as well and others.



Based on my own analysis, I assume the following scenario:-

A person regardless of age, which is still single and working in the city and have a monthly income of RM 5000. Below is my assumptions:-

Calculation of gross income:-
Average Gross Income: RM 5000/month
Nett Income: 5000 - 550 (EPF) - 191.70 (PCB Tax) - 14.75 (SOCSO) = 4243.55

Calculation of car installment:-
Car is essential for city living, so I assume any working person will own a car. For simplicity let's assume Myvi Standard Auto which cost retail price of RM 44,924.30.

Loan Tenure: 9 years
Downpayment: 10%
Interest: 2.8%
Monthly Installment: RM 469

Calculation of Available Margin for Home Loan:-
Debt Service Ratio of 70% of Nett Income: 4243.55 x 70% = 2970.485
Balance Available for House Loan: 2970.485 - 469 (Car Installment) = RM 2501.485

Therefore assuming the following for home loan:-
Loan Tenure: 35 years
Interest: 4.6% (BLR-2%)
Downpayment: 10%
Monthly Installment: RM 2500 (Round to full figure from 2501.485)

Based on the monthly installment of RM 2500, the maximum loan amount is RM 521,411; therefore this individual can only afford to buy a property that cost a maximum of RM 579,345.56

So to conclude:-
Monthly Nett Salary: 4243.55
Car Installment: 469
House Installment: 2500
Balance of Salary after commitment: RM 1274.55 for everything else (Car insurance, medical insurance, petrol, toll, food, contigencies, and etc)


Another problem is Property Valuation is not on par on what is the asking price of properties. I personally knew of a property that has an asking price of RM 450,000 but the bank only valuated that particular property at RM 380,000. So for buyer to buy that property:

90% Loan of the Valuation price: 380,000 x 90% = RM 342,000
Therefore the buyer has to fork up 450000-342000(Loan Amount) = RM 108,000 (Downpayment amount)
Other fees (Based on 450,000 S&P price):-
S&P Legal Fees: 3600
S&P Stamp Duty: 8000
Loan Agreement Stamp Duty: 2250
Loan Agreement Legal Fees: 3600

So total cash upfront to buy that property would be RM 125,450. For just RM 450k property, the buyer has to fork out 125k cash; if this person can pay 125k, he/she will be able to buy RM 646,861 (521,411 Loan Amount + 125,450 Cash) from developer directly. If he can't buy from developer at this price, then he definately won't be able to buy a 450k subsale property.

So with all new property above 750,000 now, the person has to have atleast a minimum of RM 8000/month which I doubt many average Malaysian can earn that amount.

This post has been edited by KChan: Jan 26 2014, 03:27 PM

My calculations came out with the same conclusion! I went on further,. To buy his first home, Mr. A saved RM2000 per month, and RM24k per year since age 25. So, on top of 125K, he estimated another 75K for renovation and furnitures, etc, total of 200K. So, when he saves enough at age 30+ for this first house, he found that there is no decent house at this price range!

yes.. i agreed.. once the owner know bank wan to buy the shop/property from them.. the asking price will be as high as sky... bank also investor, they won't buy any above their evaluation price.

This post has been edited by sampool: Jan 26 2014, 04:06 PM

good to hear that.. high income nation liao...

diff co diff strategy to focus on core biz. For financial ind, certain BNM guildline has to comply ... and investment bank's roi/roe is farrrrrr higher than property investment. Gd ex is CxxB sold and lased back the HQ near Sogo.

Do you believe that MBSB's main business is not in property loans ? (Although its name is Malaysia Building Society Berhad). Based on 2012, its weighing of its property loans to total loan portfolio is only 20%. Its main business is now personal loans which accounted for ~60%. Please refer link here http://www.theedgemalaysia.com/first/25026...d-for-mbsb.html

About MBSB Non-performing loan, from google results, MBSB's NPL has reduced actually :

"In addition, MBSB has also been reducing its total net NPL ratios over the years to 4.5% in FY12 from a high of 19.54% in 2009."

http://www.thestar.com.my/Business/Busines...nder-spotlight/

Sometimes there are some "inexperience" property investors asking me to look for corner shop which rented to bank.
Investor : "I like corner shop, shop can rent to bank"
Me : "ya, good. Everyone also knows that"
Investor : "Find for me good corner which rented to bank"
Me : "wats yr target gross ROI"
Investor : "6%-8%"
Me : "Good, if I found one, probably I will be the purchaser"

A corner shoplot facing main road which rented to bank for 15K/mth wd probably asking for > 5.4 mil easily

Agent who advertises shoplot which achieves 8% return are 99% bullshxx! Must be careful

This post has been edited by UFO-ET: Jan 26 2014, 04:24 PM

Yes.. each year hav to justify to investment committee on the usage of capex and opex.. businesses these days try to own as least as possible, turning to opex so that they can expand more..

To justify for rapid expansion, opex make more sense, concentrate on their respective core business..

Digi earn 4bil revenue and 1bil clean profit.. thats 25% of revenue .. they did this by renting premises..

Big business want to do it fast and make it big, not by get cash tied down with too much assets. No wonder not all ppl hav entrepreneur spirit..

This post has been edited by twincharger07: Jan 26 2014, 04:39 PM

+1.
Btw... still able to get one.. but not thru the normal channel... and u must very GOOD LUCK at that moment!

Bro, first I must say that like you, I expect the property price to come down starting 2014. At the very least, property price should stay stagnant. It wouldn't increase like in the past few years

And from your replies, I notice that you have dead set your sight to see a Property Armageddon. As such, whatever you think, your lines of thought are set to justify a popping property bubble. Whatever you see, there is a link to property bubble. Your ends is now justifying your means

While I wanted to see property prices to go down by 30%-50% (so that I can pick up dead chicken), I must be realistic at the same time. Malaysian property loan is nowhere similar to USA sub-prime loans. If ever there is a property bubble bursting, it would not be caused by something similar to sub-prime. Instead, it could be due to other factors such as economic crisis which leads to high employment rate, or some other causes.

Let's be realistic. Until today, there is still no signs of an all out property bubble burst, which honestly I am somewhat disappointed. We could be witnessing a soft landing instead

we hv huge mid class support the rental... how to drop.

+1

Can't deny there are some fish that escape from the fishing net. The last paragraph of my posting you quoted I acknowledged that. #1 - #4 are illegal acts to the flippers in respect of BAFIA. For the bankers who help the flipper, it constitutes criminal breach of trust. If there are people who could risk their life to commit drug trafficking, the deceit on banks and BNM is small matter in comparison

Thank you very detail elobration.. planning to do this but thank you.. agent and investors know THIS LONG TIME.. but they just dun care..

affordability never dies as long as the market is targeting them previously working low middle vlass now uppet middle classs... I tink in bank.. manager level only get how much 6k.. lawyer of 6 years pracyice with very good skill only maybe can get 8 k.. these agent will humiliate u.. say so many ppl eatn more money.. just u cant afford ( part of the commission contribiuted by us)

God bless we are not the lone ranger after all

Many lawyers are jobless indeed

oh lapsap agent .. english non fluent agents... here alot keep talking still on BBB mode.. some just come address on the issue of bank ownership only the rest treat them as invisible.. some township owners diam diam see.. dun dare vomment waiting the weak point then talk non stop..

Bribe lahh... loan officet got target lehh.. bo target.. basic also no.. chinese majority.. and owayls leading to 1 university that one just discharge from PKFZ...documents can settle one..

btw BAFIA repealled.. now FSAMA.. is not just a some.. is many...

This post has been edited by bearbearwong: Jan 26 2014, 05:09 PM