‘Property prices to keep rising’
By SHAREN - 1 August 2014 @ 12:11 AM
http://www.nst.com.my/node/19012

REAL Estate and Housing Developers Association (Rehda) president Datuk Seri FD Iskandar Mansor says property prices will continue to rise because of the supply and demand factor and high land cost.

According to National Property Information Centre, the average annual housing completion was 100,000 units against the average annual household formation of 140,000.

Iskandar, who is Glomac Bhd managing director and chief executive officer, said the public still have the misconception that developers are to blame for escalating property prices.

He said it is not possible for developers to reduce or maintain the selling price for new launches because of land cost, coupled with high conversion premium which has risen by up to 300 per cent recently.

“Glomac bought 80ha in 2009 in Puchong and paid almost RM15 million premium for conversion. In 2011, we bought an additional 80ha to expand the development and paid almost RM49 million,” Iskandar told Property Times.

On the cost of doing business, Iskandar said it has been increasing every year and developers are not enjoying the 30 per cent profit margin like before.

According to him, developers make around 15 per cent profit margin now because of high compliance cost, development and infrastructure charges, quit rent and stamp duty.

“Some 20 years ago, when we develop a piece of land, water and electricity is supplied to the area. All we need to do is connect the supply to the development. Today, we have to get water and electricity from the main source and this is costing us more.”

He said for landed properties, utility cost in terms of gross development cost (GDC) has risen by five per cent to 19 per cent in the past two years.

For strata title properties, the cost has increased by six per cent, and or townships, between nine and 25 per cent.

“The public should not blame developers for the increase in house prices.

Utility companies are making money from both consumers and developers.”

Iskandar said Rehda has been engaging with the government and companies like Tenaga Nasional Bhd, Telekom Malaysia and Indah Water Konsortium Sdn Bhd, among others, to find ways to resolve the matter.

He also said land is also getting scarce and more expensive.

“In early 2007, when Glomac bought land nearby the Petronas Twin Towers, the seller asked for RM1,000 per square feet (psf) but we wanted to pay only RM600 psf. I knew what we wanted to build on it so we paid RM1,000 psf.

“A few research houses downgraded Glomac because of that. Now, that same piece of land is worth RM3,500 psf and the value of the building has risen. Land cost has tripled in the last seven years.”

Iskandar said there are many issues that need resolving soon in the local property market, which is one of the pillars of growth for Malaysia.

“We are in an industry which is highly regulated. We are governed by three different authorities, namely the state government, the Federal Government and the local authorities. If we don’t comply, we won’t be able to get development approvals.

“Rehda has around 1,200 members, who directly and indirectly employ close to one million people. Last year, total loans given to the real estate industry was 40 per cent. It was the highest on record.

“In terms of compliance cost, the contribution to the local authorities is between four per cent and 18 per cent for landed properties, around five per cent for strata title properties, and as much as 20 per cent for townships.

“If we keep having issues such as rising cost of doing business, delays in approvals and more cooling measures, the sector will become stagnant,” Iskandar added.

This post has been edited by accetera: Aug 1 2014, 10:33 AM

Don't worry. Next year after GST is implement, price crash will happen. Just wait for next year.





This post has been edited by gogo2: Aug 1 2014, 10:39 AM

2014 - Property cool
2015 - Property price crash
2016 - ???

I agree that property prices will keep going up due to to rising developemen tcost , construction costs, rising land prices etc, greedy developers, greedy property owners... But will the normal consumer be able to cope with the rising prices and continue to buy buy buy when their income are not increasing in tandem with the rising cost of living and property prices?

This post has been edited by TOMEI-R: Aug 1 2014, 10:43 AM

Btw the article says Government and Authorities is actually increasing the costs for property developers not developers want to suka2 increase.

I agree compliance costs is SOOOO CRAZY now.

Of course not. That's why in 2014 now, we have downturn (transaction fall).

So in 2015, due to unable to sell for 1 year, price will keep falling which we note it as Property Price Crash.

In 2016, what will happen?

as long as there is a demand. there would be a supply. But I dont agree with recent hike in blr.

previous rate is moderate and current rate is slightly high which is not acceptable in a developed country.

Who cares? If buyer unable to buy, seller need to sell lower or building cheaper condo.

Yeah, but unfortunately there's no demand now. That's why transaction drop.

Developers are required to make more contributions to Utilities and Infrastructure today.

And best of all, Conversion Premium whack everybody.

I think prices will not simply drop because ppl are so creative in getting fund to support their monthly installment if can't sell upon VP for those flippers, renting based investor will not have problem, premium grade owner will not have problem as well as they are loaded. In short, It's a rich man world...

Government doesn't care. It was mentioned that we need to increase Supply many more times!

True. Hahaha

Good luck to all DDD & WWW...wait longer n you shall be rewarded...

my point of view, price wont be drop.
If i am a business man. I would rather no to do this business and doing it cheap.
I rather can use my money to venture other businesses.
So if people hoping market to drop in near future, chances is low. But if crisis happens. Everything is gone cheap.

I see a lot of high value properties, Semi Ds, bangalows, high end teracces, condos are still up for sale after a long time on the market. I dont think the buying mood in there or there is no such demand like previous which I think its not good for the property market.

Simple economics, because the goverment wants the public to cut down on spending and loans, that is why the increase in BLR. It is also called the Deflationery Monetary Policy. Don't you notice that many Malaysians generally overspend beyond their means and are only depending on loans, credit cards etc to continue feeding their greed and glutony?

BBB turn DDD

If demand reduced, developer will not build because they cannot sell at prices which they can make money. So supply also reduced. Lesser new launch, hence buyers have to go for sub-sale. All about supply and demand curve and equilibrium shift. If at a certain point, demand < supply, then price will fall. If supply < demand, then price will increase

The Rehda chairman is just telling people the developer's margin is very thin now that if price decrease instead of increase, they will not build and the supply will decrease

True or not, depends on different individual lah

spending is good for economy.
If you want to be developed. You may be active in the market.
Well, we have a vision 2020. just mere less than 6 years from now.

People who are willing to take up loans and spent the future money would strike more chance to be successful like American thinking compared to the traditional Chinese thinking of use whatever money you have in your pocket only and continuing saving for the seek of unintentionally depreciating the value of your money day by day...

Of course money must be well spent and good loan instead of bad debt like credit card!

I would also agree that prices wont drop much, except that maybe some owners who cannot afford to continue to service their loans or need cash or some other reasons and are desperate to sell. Most important right now would be the willingness of financial institutions on willing to give out loans to new customers as these are the main people contributing to the overall buying mood on the property scene. But the issue is right now, bankers are being very careful and selective in giving out loans which will in turn affect buying of properties which in turn will definately affect property prices in the near future.

Well, I thought all indication point point to market slow down? Then we should expect price crash and then we can BBB more!!! I don't think you want to BBB a lot now with current developer price. What you think?

Spending yes. But if household debt is 86.6% from GDP, means its overspending.

Also strike more chance to be bankrupt. If American thinking means a lot of them are not buying house now because scared of Property Price Crash.

then stop giving discount, rebate, free reno, air cond, etc etc la...

[quote=gogo2,Aug 1 2014, 11:02 AM]
Well, I thought all indication point point to market slow down? Then we should expect price crash and then we can BBB more!!! I don't think you want to BBB a lot now with current developer price. What you think?


Yes, you have a point there. But there would only be a price crash if there is a MARKET CRASH. This will see our ringgit value plumetting, sky high inflation rates, costs of living and also loss of business opportuinities. This will also affect our buying power unless of course you have millions of cash stack in your savings. Banks also will decline to give out loans then, how to buy?

prices just cant keep rising and rising - something has to break eventually...

developers can say land prices are rising but if prices are beyond reach of most buyers and the banks are getting stricter, eventually the demand will fall ..

high prices become an affordability issue for most people as salaries are not rising fast enough and with rising inflation, the general population will be priced out of the market..

I think bank approval is being strict is good as it giving chance for 1st time buyer. Hence, for 1st time buyer, it is an opportunities here but not many are daring. That is the problem but sooner or later, they will adapt to it.

As long as there is ENOUGH consumers + speculators + long term "investors" are able to buy up and HOLD the housing supply, the property prices will continue to go up. Due to this, some people will get rich and their wealth will be slowly leaking out to the hands of the consumers (as economy is a big circle as I have always maintain). The consumers will also get "richer" in the long run (in other words, inflation) and will find the housing is affordable in the future. Money depreciates and the savings in the bank at the end does not get much value compare to the assets value.

However, if ENOUGH consumers + speculators + long term "investors" think this is really too much and stop buying the housing supply, the property prices will sure fall. The bubble burst and those which get caught lose big money.

In other words, as in all forms of investment, the outcome is unpredictable. At the end, it all boils down to what the majority of the people is doing. The stock market is the same. Everyone wants to buy then the price goes up, everyone starts to panic and sell and the price goes lower and lower.

Compliance costs crazy means those who benefits from compliance cost being so crazy gets to become rich and buy up the houses.

when banks don't simply give out loans ... you dare to simply buy?

I will have to agree with this but somehow developer will still need to keep their businesses running to pay their loans and workers wages and realizing that their profit margins are currently way too much its either they develop shitty outskirts and make massive marketing for the area, or drop selling prices? As the matter of fact, supply has been over demand over the years but somehow speculation forces has managed to maintain and inflate property prices, no?

We do not believe in our own government, hence to just take what this Redha asswipe say would be an insult to our intelligence.

Don't buy from developer now lah. Many sub-sale got better value, and immediate hand over some more. I will BBB if I see some nice return and easy to rent out property. Cannot time the market lah. We are not god.

There are more bad news in the last 5 years than now. But the last 5 years property still increase price like a rocket. Now the world and malaysia economy is much better than during 2008 sub-prime, 2010 Euro crisis. Property price may not up up up like before, but the chances of down down down is also very small.

Glomac is political link company. Ah Jib may want the price to come down, but under him a lot of people waiting to cari makan. Now the boss of Glomac is telling Ah Jib don't over-do it. Your macai will have a hard time cari makan if you still keep bringing out those policy. This is all about politics and money game. There are other big macai under Ah Jib like Sime, IJM, Gamuda, SP Setia and many many more smaller developers and bumi contractors cari makan in property development sector. The price could stabilise a bit, but if really crash, I think Ah Jib will also crash because his macai all affected

But we still see property in outskirts like "at the tail end of Puchong" or rawang selling at premium KL property prices. Those developers never fails to amaze me.

confirm 2015 crash by GST boh

That chap is from Glomac, a politically linked company. For other companies, Just go to KLSE website and table out the net profit of those developer's profit and loss account. I did that before in bubble thread. The average profit % is around 15%. So Glomac is no different from other property development companies

That REHDA chap is trying to warn Ah Jib lah. Telling him his macai will suffer if he keep surpressing the property market.

+1 these days most buyers are either speculators, flippers or long term investors. When these guys are saturated with their own loans then no more demand. Forget the genuine home buyers or 1st time buyers, they are droping out of the market one by one as we speak depending on their income bracket.

When all is aligned, then i want to see what tune the REHDA guy will play.

With promises of a less than half an hour driving distance to prime cities, hell yeah it is amazing.


Keyword: Politically linked company.

As far as I am concerned they can come out with crocodile tears and claim what's what lah, I don't get easily conned anyway. Seriously, how do they tabulate the 15% of nett profit? I don't believe the figures at all. Might as well be a less established developer this way.

To be frank Najib have to suppress the market, he has allowed property market to soar this half decade. Wait la these many condos in KL to be filled up first.... only resume.

other countries already dropping... how can Malaysia immune only.. we are worse off with disproportionate earnings and most rich dudes are living on debts..

The question is always when it is going to happen? And sometimes external factors suddenly derails it that it either happens sooner, or later, or not even happen at all due to suddenly we all get rich when foreign funds keep pumping into our economy, such as foreign people suddenly want a slice of property market and buy it all up.

actually everybody also demand for the best..

but demand which does not comes with affordability means you only wish to have a property with no ability to buy it..

so demand without affordability= mere wish (everyone wish/demand for the best), this is demand meh?

the question can be answered by yourself.. does the market look healthy now with so many vacant units upon vp like 7-8 months and some 1 year?

[quote=TOMEI-R,Aug 1 2014, 11:06 AM]
[quote=gogo2,Aug 1 2014, 11:02 AM]
Well, I thought all indication point point to market slow down? Then we should expect price crash and then we can BBB more!!! I don't think you want to BBB a lot now with current developer price. What you think?
Yes, you have a point there. But there would only be a price crash if there is a MARKET CRASH. This will see our ringgit value plumetting, sky high inflation rates, costs of living and also loss of business opportuinities. This will also affect our buying power unless of course you have millions of cash stack in your savings. Banks also will decline to give out loans then, how to buy?

[/quote]

nvm about the buyers.. as long property market hits it reset button which it should have.. thing will work out from there.. just need longer time

not necessary the consumer need to adapt.. mb the investors can also adapt to price discounts in future.. coz many empty units and keep servicing the bank with increase interest rates and inflation ...

you really think the market are comprised of strong holding developers/sopecualtors? just wondering why bank negara need to introduce DSR then? since all are strong holding powers right?

First they set the trap to lure dumb fish into the cove ... bank offer cheap credit ! (EPF own bank)



Then they constrict the area by panicking then fish so they cluster together ... bubble story/ price increase story/ developer cannot sustain (EPF owned developer)



Then its harvest time ... interest is increase to kill off borrower and transfer their wealth (property) to them self.


Bank lose nothing since they have already pay off the property from the start at the OLD price, Developer has already made their profit and Government already took their cut on stamping.

Then we recycle the entire game by offering easy credit again, the old stock collected get sold off at above purchase price as inflation would naturally push the price up. ohh forget loan can be written off as NPL, pure profit from the asset sale.

if you understand the game then you can play the game ... else you dumb fish loh !

If property sector tanks will accetera be out of job?

Market crash is always unexpected..

When everyone keep screaming for market crash.. Property price drop..

DO YOU THINK IT WILL HAPPEN??

When everyone keep saying oversupply, market price drip etc..
Market sentiments is already perceived and all developers, authorities, banks will move in to cool and stabilize the market..

Same thing in Singapore...

Govt implement 9 cooling measures to stablize the mkt...
With the worst of all measures.. TDSR...
Yet property price in general did not fall much...
Only those super high end luxury properties fell in price..

+1... the fish now are in the hot soups, waiting potential buyers to scoop them out.. if buyers want and they dont sell high price

That is provided the "fishes" manage to get a loan for it.

in fact Singapore property falls.. remember Singapore is a country of limited lands, so property should never be enough like Hong kong, Malaysia over here has many lands, we have yet to reach reclamation zone like hong kong to demonstrate the lack of lands... even then Hong Kong and Singapore property drops

if it so, care to explain why there are so many vacant units upon vp ? even with strict measures?

I think you're right too. But if oversupply is too much, even with anticipation, it would be catastrophic.

But PRIME area won't crash la. Example is Manhattan and San Francisco won't drop much eventhough property crash in USA.

So this means that R&F Princess Cove won't drop price eventhough whole Iskandar drop price.

the fishes before cooling measures are without safeguard like DIBS & easy credits(without DSR 70%) , further more, interest rates on surge already and coming september too and also GST.. which will hit from all angle

the fishes also loses it pools of candidate wherein gov chop off the foreigner to purchase below 1 million

properties below 1 million? they are the most in d market.. making 80% of it..

Simple economics,

When demand > stocks = High price
When demand < stocks = Low price,

No?

prime areas developments are so expensive, where got room to speculate..these buyers are really got holding powers..

target is outskirts investors.. hehe .. cannot afford prime areas, buy outskirt la, buy property sure untung.. can flip upon vp ..

Just got news that KLCC will be seeing first RM3,500psf proposed project! (not land psf)

This post has been edited by accetera: Aug 1 2014, 12:08 PM

Yessir. I think its as simple as that. If got sui yi = high price. If no sui yi = low price.

The reason price is sky high because a lot of people keep on propping up the property price scared cannot buy in the future.

But now the people want to prop up also cannot because bank cannot loan u money. When will my condo become RM1.4mil?

very hard to understand..

demand . stocks= high price
demand , stock= low price

have you define demand first or not?

demand not supported with affordability, actual power to buy is not a demand

it is mere wish to buy... these ppl who cant afford can demand forever but cant buy..

so does your simple economic taken into these factors?

mature areas... the ritz carlton residence and class AA office touch 3 k psq that day..

Eh, I thought he works for free and it is his passion to spread news without money???

Which I highly doubt so....


It will happen, just not yet.

Singapore is similar yet so much different than Malaysia. Singapore has foreign investors coming in and keep investing but Malaysia on the other hand has good investor outflow. So can't compare.

But when recession comes, countries like Singapore will kek sam much more.

Not for locals tho.

When I said demand, it means demand from people who could afford to buy. When you could not afford to buy, there is no demand from you. No?

That is called Wish.

Normally its DEMAND and SUPPLY.

Not WISH and SUPPLY

ok so does the demand from those who can afford more than supplies/ or these ppl are already bought and waiting ppl to buy..


if demand / than supply, there should not be occupancy rates rates so high in KV areas.. the said demands should have snap all the upon vp units.. right?

even now developers units are still unsnapped till VP like OUG parklane, sutera residence, Tiara mutiara 2, V residency, green residence, altitute 236, you vista, ecovest cheras, and etc.. haven't include landed Vp..

the price factor.. really the demands are for 800k property? looks like the price are coming from one side the sellers/agents/investors side more.. no one will demands high price.. and cannot get bank valuation too.. demand wor..

You got it right.

Supply cannot meet Wish

True in general..

Demand can come from locals and foreign investors..
No demand from local doesn't mean no demand from foreign investors..
Even when RM 1 million is minimum, if the location is prime.. there will still be demand...

Supply depends on location factors..
if prime location, huge supply... price MAY fall..

if interest rate move up.. people unable to hold and firesale.. then create more supply then price will fall...
this depends on the loans amount given by banks...
I think the banks has been prudent now given the warnings and market sentiments..

If people are able to hold, u can see price fall but not by much...

Demand may not necessary go to subsale or developer units that cannot sell finish. Even during boom times, there were oversupply situation in some places like Mont Kiara.

Many Gen Y out there die die die want to buy New Property only. Cannot afford? Can lah still got RM500psf in Klang Valley, if not condo in Semenyih lor.

This post has been edited by accetera: Aug 1 2014, 12:55 PM

haiya why still want to deny, 1 million sure got demand... every class also got demand..

question is is the bubble and our main concern of properties more than 1 million or less?

the huge mass suplies there are below 1 million right?

further, lets narrow down it, could it highly probably the the class be around 450k to 800k?

this is range is also not withing local demands, that is why vacant units are on surge, had it been the range of local demands, there should be not much vacant units left..

those mature areas are starting from 600psq at least or now 700at least.. mature areas has no bearing effect that much they are not the main consumable supplies..

like Rice is the main food, of course there are lot of rice like Siam rice, red indian rice (for diabetis) and etc.. in the market, restaurant a and etc.. the normal rice grade is the most in demand... same like house lor..

why go and target other type of proeprties (more than 1 million), the market for 1 million demand is very low.. no competition.. look at green residence cheras launch 5 months still 2 towers unsold with freebies below 800k nia..

If the media interview developer for rising property price, the developer will say rising cost.

If the media interview HBA or any association, they will say greedy developer.

If media interview our government, they will say greedy speculators.

everyone points finger to other parties. so, who's telling the truth?

Do you support the black chess peace or the white chess peace ?



most likely your choice is wrong ... cause you don't see the actual player, you only see a hand.

There is only 1 player in this chess game, their objective is to sell ticket for you fans to come see.
they play both side.

EPF own Bank, EPF own Developer, EPF own Land ... hmmmmm who own EPF ?
you all fight ... more intense is better ... else you will see who really move the chess peace ...

very good info

How they tabulate ? These public listed company have to announce their results every quarter. They have to follow international accounting standard. Not simply "claim" some numbers and be able to con people. Just go to see their results in KLSE website. They are all public information.

Like you said, don't insult your own intelligence. Don't rely merely on your "belief". Do some due diligence before you come to your conclusion.

+1 dude is with brains... property up down depend on financial institutions includes many bodies... losers will alwayls be public.. just like company and public listed..

showtime, this part of accounting bullet proof meh? did not know corporate governance and Non executive directors, internal audit, and external audit are doing work so well one? bro this is Malaysia... land of dreams where everyting is possible..

how Lehman brothers come down? all also international standard what... how they cheat?

is is not to say we speculate something in proof but to say it is bullet proof is not right...

Accounting manipulation

In March 2010, the report of Anton R. Valukas, the Bankruptcy Examiner, drew attention to the use of Repo 105 transactions to boost the bank's apparent financial position around the date of the year-end balance sheet. The attorney general Andrew Cuomo later filed charges against the bank's auditors Ernst & Young in December 2010, alleging that the firm "substantially assisted... a massive accounting fraud" by approving the accounting treatment.[52]

On April 12, 2010, a New York Times story revealed that Lehman had used a small company, Hudson Castle, to move a number of transactions and assets off Lehman's books as a means of manipulating accounting numbers of Lehman's finances and risks. One Lehman executive described Hudson Castle as an "alter ego" of Lehman. According to the story, Lehman owned one quarter of Hudson; Hudson's board was controlled by Lehman, most Hudson staff members were former Lehman employees.[53]

http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers

Malaysian poperty reports all sugar coated, so unwary newbies kip BUYBUYBUY

Unfortunately Bank put a stop to this liao. Mostly got rejected.

yes, banks internal controls kip tighthening quietly

but only trust yurself...some new condos super high prcing yet why valuuers and oter parties no poblem?????????

always ask these questions, the whole world is full of popaganda nowadays

OT
Yes, that's true. HAMAS really got propanda to wipe out Israel. Let's support Israel.

+1 either way, the prices still go up and the one suffers is the public.

if you say cooling down period, why I still hear new projection is going for 3500psf?

if no cooling down it will be 5000psf lor..

we are almost near hk. if this continue.
so you all that do not own a house now will stay in a cage soon.

When a person wants something to happen in his favour, he will think of all justification to prove his thinking is right.

There are certainly some accounting fraud cases in the world. But you choose to believe the overwhelming minority to represent the general practice of most responsible companies. 1 company may manipulate the accounting, but look at all the property development companies' on KLSE. A glaring common observation --> their margin is not as good as those people who can't afford a nice house thought.

The article on the first post has detailed out the reasons of erosion of profit margin, but the DDD of LYN refused to believe. Just like all consumers always thought all bosses make tonnes of money. No surprise to me at all.

It is up to you bearbear. It is your money, your choice of house, and you pick the time to buy. It has got nothing to do with me. I thought you are a nice guy and just wanted to remind you the possibility of you not being able to own a house in your lifetime. As I have said numerous times to you (I don't even bother to repeat twice for other people), you are timing the market for your own house (not investment) which is not a very wise strategy. If you still hold on to this mentality, I can guarantee you the price will eventually run away from you once again and you will cry like those people who chose to believe bubble bursting 5 years ago

And you will face more difficulties after that. Just like many DDD who missed the boat since 5 years ago. A condo they eyed used to be RM250k, and now it is RM600k. It will be doubly hard for those who missed the boat to commit something which they had the opportunity to by at 50% less. The same story may apply to you in 5 years time

Instead of rising, I would say stagnant.
No demand how to rise?
Loan unable to approve, price is also too high for genuine buyer..

TS maybe too positive due to influence from developer

Property price up/down topic.
https://forum.lowyat.net/topic/3304381/+260