This is a continuation from V7:
https://forum.lowyat.net/topic/3259380

This is a continuation from V6:
https://forum.lowyat.net/topic/3212945

The collapse of the US housing market bubble emphasizes how important it is to figure out what property is really worth, from a fundamental perspective. Make sure you’re not over-paying!

There are 4 yardsticks of bubble markets:

•Price to Rent Ratio (or Yield)
•Relative Prices
•Affordability
•Price of new builds


VALUATION TOOL 1: THE PRICE TO RENT RATIO

The gross rental yield) is the housing parallel to the price/earnings ratio. Here is a set of rules of thumb for the housing market:

VALUATION YARDSTICKS FOR THE HOUSING MARKET

PRICE/RENT RATIO GROSS RENTAL YIELD (%)

5 20 Very undervalued
6.7 15 Very undervalued
8.3 12 Undervalued
10 10 Undervalued
12.5 8 Borderline undervalued
14.2 7 Fairly priced
16.7 6 Fairly priced
20 5 Borderline overvalued
25 4 Overvalued
33.3 3 Overvalued
40 2.5 Very overvalued
50 2 Very overvalued

But there are exceptions to this. When strong future growth in value is expected e.g in areas where transport infrastructure is being upgraded then relatively weak present earnings can be acceptable.

There are several good reasons why people should pay attention to the 'valuation parameters':

Higher rental yields push the housing market higher

If rental yield levels are high, this will tend to mean that the interest cost of buying a house is low, compared to the cost of renting a house:

•Potential buyers will pay less to borrow from the bank (in order to buy) than they pay when renting a house. Many will move from being renters to buyers.
•Entrepreneurs will find it makes sense to buy houses to make money, i.e., buy in order to rent them out.

Both these factors put upward pressure on house prices.

Lower rental yields put downward pressure house prices

If rental yield levels are low, this will tend to mean that the interest cost of buying a house is high, compared to the cost of renting a house:

•Potential buyers will find that to buy a house involves paying much more to the bank, than it costs to rent a house. Buyers, especially first-time buyers, may have difficulty financing housing. Banks will be worried about over-lending at loan-to-income ratios which mean that a slight increase in interest rates will mean financial crisis for the borrower.
•Entrepreneurs will find that buying-to-let won't pay.

The house price can be viewed as a kind of circle, with houses prices moving from yields of (say) 4% to 11%

•Yields shifting down to 4% would represent danger.
•Yields rising to 11% would signal opportunity.


VALUATION TOOL 2: RELATIVE PRICES

People tend to actively look for cheaper and better alternatives. Where houses are very highly priced, people will seek more affordable alternatives. So if you’re buying property that’s amazingly expensive on a sqaure foot basis compared to its surrounding developments – BEWARE!


VALUATION TOOL 3: AFFORDABILITY

If house prices are so high that few people can actually afford to buy them, then their value will likely fall in future. A reasonable measure of value is a country’s GDP per capita. In a country where the ratio of house prices to GDP/capita is high, it’s a fair bet that houses are overvalued.

Relative to GDP/Capita levels:
•House prices in Luxembourg, Belgium, Norway, Denmark and Austria seem cheap.
•House prices in the UK, Italy, France and the Netherlands seem comparatively expensive.


VALUATION TOOL 4: PRICE OF NEW BUILDS

If house prices are much higher than the cost of building (construction costs), developers are motivated to put up buildings. So when you see a rush by developers to build, that’s a danger sign. As new supply comes into the housing market, that tends to put pressure on prices. So when house prices are far greater than new-build costs, it's a very clear signal that prices are likely to come down.

This post has been edited by gogo2: Aug 9 2014, 02:50 PM

1st!!!

Continuation from last thread:-



Construction of a typical condo is between rm120/ft2 to rm150/ft2, even 10% increased is marginal to selling price.

Property game is not new, if this could work out, people in property trade (i.e. developers, contractors, suppliers) would have practice it years ago. Why developers need to have pre-launch, soft launch, launch in phases, dibs, low entry, etc?


No, I don't believe him, he is just another over stretched flippers. His real game will start when his properties become vp, starting to pay installments.

Back to work

This post has been edited by TheRoadRunner: Jul 30 2014, 09:04 AM

To lyn student mr iceman




Lol seem that u r property expert as well le..by the way which stock counter n property that u have invested before since u like to give comment?i would like to listen your ' expert' opinion?

Ok ok all joke aside, how u know I over stretched flipper? U sleep under my bed ?

One things u r right that my real game will start after VP because I will be so bz renovate my asset

Talk here no use, let's yum cha and don't hide behind keyboard and I show U my card..may be I can learn something that I don't know from u leh

This post has been edited by Jliew168: Jul 30 2014, 12:03 PM

Deleted

This post has been edited by Jliew168: Jul 30 2014, 12:03 PM

Gogo2 why not in Property Talk ??

Then all these joker cannot simply post nonsense.

Manugidds
Zuiko407
Appreciativeman
Jliew168
Tigerr
Jolokia



This post has been edited by jolokia: Jul 30 2014, 03:19 PM

Post human organs n coitus n sodomy action is ok?

so obsess with bubble?
obviously no other suggestions are accepted here and people with objections are all jokers for sure...

OK your name been added as well.

http://www.zaobao.com.sg/consumer/property...20140730-371613

http://www.zaobao.com.sg/consumer/property...20140730-371399

http://www.zaobao.com.sg/consumer/property...20140730-371615

Aiyoh....lets come out yum cha n I teach u how to spell my nick....

Mod banish my thread to here.

bubble sudah happen you guys keepign war and post comments putting the threads on top of the list.. other ppl/sponsors see also tulan sopil market, i think they thought too shallow, we comment more on the threads itself.. more damage

You are an employee, bought a number of units to flip.

I am only a student, have nothing and dare not teach property taikor here. Hence, it will be a waste of time and $ to yum cha with me.

Betui betui

Now property begin to sounds like Gold investment already.. Just read those Singapore news i attached, developer very cautious to launch, if disaster project mean domino effect.

Even Zuiko407 downgrade to Korean car & Japanese watch liao,,



This post has been edited by jolokia: Jul 30 2014, 06:31 PM

R u a retire grandpa ? U seem quite free looking for people to teman u yum cha.. :cheer:

Singapore property now really entering glaciations liao,,

Sincerely, all tai kor's , is it really not a good time to buy property now, I mean those double storey link houses that cost abt 700~900K bracket ?

My fear is that one the bubble burst, my 700k props will be reduced to only 400k and still have to service the loan like hell.

Thank you all

first thing first, no one can predict the future..

question is did you bought property at 700k-800k or bought at 400k and hoping for 700k-800k profit?

my opinion is if property was bought at 700k to 800k it wont drop below 400k like that, if you speculate to go up to 700k to 800k and drop back to 500k possible.. unless economy collapse (which Malaysia a lot of potential)

i see your worries too, forgive me for being daring to speculate that you are in for investment. if the said property was bought 700k to 800k, for own stay, there should be no problem, coz irregardless how the market goes, surely you will service the loans, unless for flipping..

this category of flipping is dangerous, means financially bo stability and harping on capital appreciation... depending on areas, normally those price for a DSL are either new Rawang, Kajang, Semenyih, seri kembangan, Puchong, Putrajaya, Bangi and etc and outskirt areas in KV, if old subsales then there possibility could be a lot.

actually if long run leh property goes up, but if you bought an overpriced property which was mostly the case unless subsales, you bought expensive stocks, in 5 years time appreciation shall be not so good and the buyers will opt for other prop..

if you bought at 700k to 800k and hoping for some 1 million or 900k profit, then you can forget about it on the next 5 years..

berapa biji you sapu di at KLCC areas?

Can't answer u coz your question is too wide..it have to depend on a lots of factor and timing is just one of it..
Your own financial capability, property location, financial goal , purpose of purchase , market valuation and many more that u need to consider before commit..
It will be very irresponsible if I simple tell u buy or property price will hit bottom or forever go up..
Difference location have difference difficulty and factor to consider