Continue of V12

https://forum.lowyat.net/topic/3381037



As per the topic, i would would like to gather some view point on how Property price increase impact our life in general.

http://www.positivemoney.org/issues/house-prices/

http://www.economicshelp.org/blog/5381/hou...-pros-and-cons/

Also i would like to discuss how property price affect humanity, does it change us to be a better person - More prudence in spending, reduce wastage such as buying non essential item eg. Changing gadget every 2 months, spending on clubbing, so that money can be spend on better house for family.

Or Property price increase actually make us a worst off person, eg. taking advantages of Family members, friends, employee, employer, so that we can accumulate more money to buy higher price property to gain social status.

Come come let's discuss [COLOR=red][COLOR=blue]

This post has been edited by jolokia: Nov 4 2014, 07:13 PM

Member posting with sense

Is it "over" leveraged ? I don't think so. I have explained a few time why the consumer property loan is not "over-leveraged" but is caused by innovative loan packages

The rapid expansion of property loan is due to 1 factor --> zero entry + dibs. And this new way of buying property has created new demand that shift the equilibrium to the right. Ie. price increase. The demand comes from 3 new categories of people :
1. Gen Y
Previously, only people with cash equivalent to 15% of property price can buy. So younger generations aged between 22-30 hardly can afford to buy property. They have to save for years. During my time, we (Gen-X) bought our property only around 30 y/o. Even if our salary is RM5k, we can't buy property because there is another barrier --> 15% deposit. We have to save enough only can buy. This takes time.

But with zero entry + DIBS, the developer and banks have made owning property a lot easier for Gen Y. They do not need to save for the 15% deposits. As long as they have a job with good salary, the banks can loan them. This is not possible before. So, a new category of buyers (demand) is "created"
2. Female Gen Y
Previously, there are not many girls get education up to university. Nowadays, girls and boys get to further their studies if they are smart enough. So, together with the zero-entry + DIBS, the female property buyers have become another new category of demand.

Worse, even fresh grad boyfriend+girlfriend suddenly can afford to buy property jointly right out of university age maybe 22-23. That's why we see at the new launching so many young chaps. So, another new category of buyers (demand) is "created"
3. Parents
Previously, Gen-X (35-50 y/o) after buying their first property, they keep their investment in FD (high interest), stock etc. But due to zero entry + DIBS again, these parents find it easy to buy their 2nd/3rd property too. They don't need to start saving the 15% again after the 1st property.

When they see the prices keep increasing, they feel that it is their responsibility to buy for their young children (although they are only <10 y/o now). They thought if they don't buy now, their children are not going to afford. So nowadays, you will see Gen-X own >1 property. For the sake of their children 20 years later. So, yet again another new catetory of buyers is "created".
So here is the important question - are these loans given to the 3 new categories of people vulnerable (ie sub-prime as our student likes to put it) ?

I don't think so. They have the job that pays well and their instalment is affordable as long as they have the job. For Gen Y, they are at the stage of climbing the corporate ladder and their income will only increase fast over time. For those joint name purchase, they can even consider 2nd property after 2-3 years.

The "culprit" is "zero-entry + DIBS" which allow them to bypass the second hurdle of saving 15% deposits. Before, it was a major hurdle for Gen-X to save the 15% deposit. But not Gen-Y. As a result, the property price increased so "abnormal" for the past few years.
Of course, if economic crisis happens, recession will hit everyone. Borrower who lose jobs will face problem of servicing loan instalment and it will lead to property market downturn eventually.

But do you honestly think economic crisis is coming ?

By Showtime747.




Hi Bear, lets go into specific on Bukit Beruntung.

TBH, I am an old man, already pushing 45, so I was old enough to know about Bukit Beruntung and could have even bought into Bukit Beruntung.

Today, we look at why Property prices are depressed in Bukit Beruntung.

The Answer is simple - cos there is ready supply in terms of completed and abandoned homes but there is NO demand. Hence, Prices are Low.

Now why there is No demand, cos the Centre of Gravity is towards the Southern Corridor.

Brief History Lesson.

In the early to mid 90s, in the times of TDM,the talk in town was that the Centre of Gravity would be in the Northern Corridor, Linking Selangor to the Silver State (Perak)

Land & General wanted to be the front runner and bought huge parcels of Land and decided to sell and many people were enticed to buy. I was in my 20s and amohst our friends, we talked about buying a unit there but at the end, we did not.

Then, two things happened, the first being the Asian Financial Crisis and TDM announcing that the Airport will be in KLIA and togeter, the development of the Southern Corridor now known as Putrajaya and Cyberjaya and Bukit Beruntung, Rawang was abandoned. L&G wend under and the situation has changed little for past 20++ years.

Today, we look at your comparison of Setia Alam and Semenyih vs Bukit Beruntung.

The Analogy is not comparable.

When Bukit Beruntung was abandoned, there was hardly any infrastructure there.

No 3-Lane Highways

No Public Transportation

No Malls of any kind.

The country went through a Financial Crisis / Recession.

Even if a Developer were to revive the Projects, it would not be viable without the necessary infrastructure.

In fact, only with LATAR, etc, is Rawang becoming viable and some Developers like Mah Sing starting to build there again.

Now we look at Setia Alam. It has a highway.

It has a Mall - filled with outsiders as u may claim.

But the houses are completed. Yes, it may be vacant but its not abandoned.
.
If SP Setia decides to give up on Setia Alam, there will be ready takers in form of other developers, the issue being only pricing

We look at Semenyih.

It has PLUS Highway to Kajang. MRT also stops at Kajang.

It has SILK Highway

It has LEKAS Highway.

Kajang is almost fully developed with only small parcels of Land, so the natural progression is either Bangi or Semenyih.

Problem with Bangi is most Land are Bumi Land so, there won't be huge developments there.

Of course, Southville, etc is there but that's about it for the time being.

The issue with Semenyih is only on pricing.

Is it overpriced - the answer is YES, cos they are selling at Kajang prices already

But will it end up Abandoned like Bukit Beruntung - the answer is NO.

Subsequent phases might be delayed until the right time but it WILL NOT be Abandoned like Bukit Beruntung.

It does not matter if there are many Vacant Units. To Developers, sales has been done and its up to the Secondary Market to find the equilibrium price.

Now on the population part.

Pricing is always a function of Demand and Supply.

If you are the Supply Side, u also will not Supply 1,000 units if there is anticipated 1,000 Demand.

To build momentum, future profitibility, you will build at most 50% to 60% of anticipated demand.

This is cos

1) Not all of anticipated demand will translate into real sales

2) Company must always be a going concern - if u build 100% today, tomorrow u will go bust

Now the real issue of this anticipated demand, how much is

1) Genuine own stay
2) BBGC - Buy Bu Give Children / Long Term Investment
3) Buy to Flip

The above is based on desirability of demand to the overall industry

A bit of speculation is good

Excesive speculation is bad

Demand in SG has dropped cos the Govt has imposed additional stamp duty on foreign purchasers

HK also imposed additional stamp duty to deter excessive speculation

China has a huge risk of property bubble popping anytime

By cfa28

This post has been edited by jolokia: Nov 10 2014, 06:42 PM

Current cooling measures implemented by government of Malaysia inclusive of state, bank negara and federal:

a) Removal of DIBS

b) Foreigner restrictions increased from 500k to 1 million which was enhanced by breaking to 3 zones in KV
respectively for residential & commercial (in short hot areas in Klang valley had raised the bar to 2 million above)

c) RPGT (disposal of property within 5 years) in force 2014 are now chargeable tax:
1-3 year= 30%
4 year= 20 %
5 year= 15%

d) DSR (debt to service ratio) in force on August 2013
loans approved are based on 70% max from your nett salary

e) Maximum loans tenure up to 35 years or max 70 years

f) Government intervention in building affordable houses

g) 3rd and above house maximum loans of 70% from financial institutions

h) etc

Current price range : mostly sub sales are priced between 300k to 800k
: mostly new launches are priced between 400k to 1 million

Current rental price range./most optimum demanded rentals : between 1.2k to 2k

most new launches rental yields will score negative rental yields especially 500k category or 300k above properties above

***
for newbie/first time corner to own a house:
a)due to the current price of new launch are withing 400k to 1 million,new launches tend to have package and minimum down payments as possible to facilitate buyers to own a property

b) as for sub sales groups, due to the properties within the region of 300k to 800k, buyers now need to provide the following:
i) down payments (around 30k to 80k, depending on range)
ii) legal fees for Sales & purchase agreement ( around RM2.25k to RM6.5K)
iii) legal fees for loan agreement (same around RM2.25k to RM6.5K )
iv) stamp duty for Sales & purchase agreement (RM5K to RM18K)
v) stamp duty for loan agreement (RM1.5K to RM 4K)

**all in buyers/newbie need to fork out a range of (RM45k (for a RM300K property to RM115 K (for a 800k property), not inclusive of disbursement which may easily cost 10k for all the above (depending of firms) renovation, and etc, just mere basic unit or old sub sales with renovated

the calculation can be found below link, put in your figure into the S&P/loan/STAMP DUTY calculator:



Units available:
a) apartments
b) condo
c) double storey
d) Towns house
e) Semi detached & Bungalows

**Mass supplies are mostly found in category b & c

Upcoming property challenges and external factors:

a) affordability (higher entry prices with down payment, legal fees stamp duty)
b) OPR/BLR increase
c) Inflation
d) Property price going up (resulting stretching away from valuation)
e) Transaction volume
f) Competitive packages
g) Government affordable houses
h) GST implementation

Upcoming factors boosting property property price /external factors:

a) MRT completion
b) star LRT extension
c) MRT extension (Putrajaya-Klang extension)
d) population increase (migration of population to KV & johor)
e) government package of stamp duty exemption of 50% on properties below 400k and below 500k( terms and condition applies just in force after budget applies to loans too)
f) developers are bypassing DIBS programmer (by giving high rebates, such as marking up prices and etc) to qualify lower entry
h) Financial institutions are offering to cover all interest served during constructions by either factoring into the loan sums

Outlook of properties that were risky of correction in TS personal opinions are for properties purchased 1st hand (developers sales):

a) those range below 100k ( flats & apartments are best bargain chip, no bubble and renal yields are the best, suffer hardship in selling due to old units)

b) those range below 300k ( apartments & maybe condos & townhouse or even double storey in some areas consider very good bargain in sub sales as these sub sales price falls within the region of the lower bracket of affordability i.e maybe around 400k to below 500k, rental yields also good as design are more modern especially condos)

c) those range below 500k ( mid end & high end condos, apartments, double storey , semi D in some cases) quite risky investment as the sub sales price are climbing up to 700k above region in sub sales and mostly located outskirt properties or newer/modern properties especially outskirts projects like Semenyih, Bangi, Rawang, Seremban, or high rise within city center and mature areas.

d) those range 600k and above ( latest generation of property double storey, semi D's and bungalows with most modern facilities and facades) investment is rare is this category , most developers are holding to these properties with these pricing.. no competitions meant for own stay category

** categories a & b can be considered as blue chips in properties, even they can be sold, the rental yields covers as median /optimum rental demands are between 1.2k to 2k (highest demands)

**category c are highly likely to face bubble with vacant units

**category d shall remain resilient in price, these are meant for own stay products and if there are invetors, it will be a long terms ones

Other factors/abusive factors which push the property price by using (agency body & financial institutions):
** detail explanation will provided later

a) Marking up prices normally sub sales (malpractice by valuers, loan officers, owners & buyer)
b) soft launch, official launch, for VVIP's, investors clubs, developers staffs and etc
c) reintroduction of rebates/DIBS into the property buying activity by returning money back upon completion, no need down payment is needed and etc), one of it is by jacking up the price.
d) deployment of potential buyers by developers to portray a good/hot buying project
e) refinancing activity to buy more term by borrowing more monies under the cheap interest of (BLR 6.85- 2.45=4.XX) rather than personal loans/constructions loans/and etc to prolong the sub prime crisis while awaiting time pass to pay for sub sales
f) sales & purchase activity between family members like selling to family to get loans that can be used to service loans and prolong the defaulting period
g) developers launching new phases with higher price, this has to do with mentality to the coming investors or recurring investors, by launching prices higher, this gives them a feel of "paper gain" scenario
h) suppressing bad news about property investment & those disseminating it

Copyright BearBear Wong (President of LYN DDD Club)..

Continuations from Cybermaster98 4 critical sign of property bubble & Bearbearwong Multi factor of property bubble.

https://forum.lowyat.net/topic/3381037

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 to avoid buying in 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.

As requested buy Latuk Manutdgidds LYN grand master grade property investors since 1980's.


This post has been edited by jolokia: Nov 10 2014, 08:35 AM

sad news ahead, change of work may be an impact due to property slowdown/burst

Real estate agents JUMP SHIP as property market sinks

Survival instincts kick in as sluggish property market takes its time reviving

Faced with a tepid property market, Mr Nicholas Chia, 28, decided to go from selling houses to shining cars.

An estate agent since 2010, he decided to "jump ship" in the first quarter of this year, setting up car-grooming business Doorstep Detailer as well as a franchise of a pre-school enrichment centre.

"Because of the slow market, I need something to supplement my income and something in which I can tap the network I've made," he said.

Car-polishing was a natural choice: "Almost every property agent has a car, and image is important when they meet clients."

In today's sluggish property market, more agents are letting their licences lapse or trying their hand at other jobs, according to anecdotal reports.

Housing Board resale deals hit a record low of 18,100 last year. There were just 12,683 deals in the first nine months of this year, putting 2014 on track for a new low.

Private property deals this year barely hit 10,000 as of September, a number that was about the average of each quarter in 2012.

On top of more agents leaving, there is also less new blood entering the industry. According to the Council for Estate Agencies' annual report last week, there were 3,061 new registered sales professionals in the last financial year, down from 4,289 the year before.

Agents say the exodus began last year, but really gained momentum this year.

Some part-time agents have returned to their day jobs, said Dennis Wee Realty agent Priscilla Pang, who is still in the business.

Full-time agents simply took their skills elsewhere. Active PropNex agent Remus Koek said: "They are mostly still in sales, but different types of sales."

Dennis Wee Realty agent Aaron Lin said he has seen older agents turn to multi-level marketing or driving a taxi.

Alternative jobs beckon in the food and beverage as well as spa industries. Agents are also turning to forex trading, holding investment seminars and even setting up economy rice stalls.

A 41-year-old agent who wanted to be known only as Mr Ong returned to his previous field of engineering. "I'm not seasoned enough to weather the current lull," he said.

Another agent, who wished to be known as Ms Xie, 27, stopped actively advertising around April, a year after she got her licence.

"Ideally I would have continued my activities in real estate but it just wasn't viable."

Besides the slow market making it tough to close deals, the new Personal Data Protection Act has made it harder to get clients, she said. Potential leads must be checked, for a fee, against the Do Not Call list of people refusing unsolicited marketing requests.

Still, she has renewed her licence for next year - just in case.

Indeed, some agents are biding their time, noted Mr Michael Long, key executive officer of Spacez Real Estate. They have told their agencies they would let their licences lapse on the understanding they can return in 2016.

Property experts expect transaction figures to start recovering by the end of next year. -ST

Full article: http://www.malaysia-chronicle.com/index.ph...3#ixzz3HUX8Fz1o
Follow us: @MsiaChronicle on Twitter

2015 is a good year... even agency firms are giving up due to the bull run theory has over ( but still enjoy 5-10%). let see how it goes.

more fraud on property detected as agents has not enough sales target to meet, resulting deposit cheating and collecting

Fake property agent cheats victims of RM454,000

http://www.thesundaily.my/news/1201469

more sad news on social impact

Woman Cons 18 Of RM544,000 In Housing Scam

http://www.malaysiandigest.com/news/523595...using-scam.html

http://www.bloombergview.com/articles/2014...e-don-t-buy-one

1.) You can afford a sizable down payment to cushion you from the effects of local economic downturns or you have a super-stable job, such as working for the government or your father-in-law, that makes you unlikely to ever miss any payments.
2.) You can afford the maintenance as well as the payments, insurance and property taxes.
3.) You have good disability and/or mortgage insurance to make sure that you do not miss any payments even if you break your back and can’t do your job anymore.
4.) You are pretty sure you do not want to leave your area or move to a larger, more expensive home anytime in the next five years.
5.) Your payment is a reasonable percentage of your take-home pay (I shoot for under 25 percent; anything over 35 percent is far too risky).
6.) You have a sizable emergency fund to deal with contingencies.
7.) You can afford other forms of savings, rather than counting on your house as a piggy bank for future needs. In general, if declining home prices would send you into a hysterical panic about your financial situation, you are buying too much house.

agents also jump ship due to low transaction, but under table mark up... still going on resulting price increase, how to buy now... social impact is no body buys

simple, rich become richer;poor become poorer lor ...

Why the other closed?...... Some losser must hav pressed the Report button ya.....

Regardless of what the circumstance or environment has changed to..... As a human (an adult), u always hav a choice of choosing how yourself wants to change into..... Be it good or bad.....
Environment changes is inevitable...
Agents jump ship or not is also inevitable, sooner or later..... In every biz, its a common situation and it dont happen only in Msia...... When something is hot, everybody will jump into it hopefully to grab a big piece of share.... But the fact is, when more ppl jump into it, the share will sooner or later become smaller.... Check out those biz, Paparich, Old Town, the considered as one of the successful pioneer kopitiam chain..... Check 2-3yrs back a sudden trend of outlet selling burger.... Now how?
So does it going to affect our life?
Likewise to prop.... Price up or down.... we still got to do something abt it..... Importantly its still getting the hands on the first house.... regardless where when or what..... It is DEFINITELY the earlier the merrier...... At earliest possible.... There is no such thing as best timing on live..... U will only kno if it is best timing when it becomes history.
Those who always complain abt high housing price, or blaming all those individuals involve..... Will your life improve to be better?
It is not only naive to think the environment going to change after your complaining or blaming.... It is damn stupid..... Because even if it really happen, it will also means that you are going to live in a environment or country that is moving backwards.
Yeah.... I do foresee prop investment will not be a commoners investment instruement sooner or later....

"Change is the law of life. And those who look only to the past or present are certain to miss the future." John F. Kennedy

This post has been edited by AppreciativeMan: Oct 29 2014, 12:43 PM


Attached image(s)

Ok fellow member, please feel to give comments not only base on topic alone, as long as not total out of discussion topic, it is acceptable.

I will not press report button to avoid answer.

bro TS, u busy ah today? less activity one

No need to work meh ? We bought property need to work to earn moolah to pay installment mah, like you meh no burden, no house, no car, no wife & children.

Don't lepak so much hoh, Boss might be watching.

After one bought house they work harder to ensure can afford installment are paid monthly, Good social impact.

While those still watching here & there no so keen on work, waste whole day in forum make unproductive comments..

House price up productivity increased..

Agreed!

When young.... I can dump off all my saving into investment then push myself to earn more commission the nxt mth....

Get married..... commitment push another person with better responsibilty.....

However..... There is also a lot of ppl (like bbw lor....) scare this scare that..... end up no great achievement..... Even next time grow old also dont hav exciting successful stories to share with the nxt generation..... Can only talk about regrets, shld hav done this, shld hav done that, missed this missed that.....

Scare failure is the biggest failure itself.....

This post has been edited by AppreciativeMan: Oct 29 2014, 08:22 PM

That will change lot of women thinking.. Soon own a house will be the 1st priority before a woman agree to marry a man.. Even provide a shelter also cannot afford, then no need to talk about how secure if she marry to that guy..

That's why he always ask us to shared failed investment story loh, if shares successful investment story then great impact towards his present life, can't take it.
Careful hoh, nowadays people learn to click report buton, sikit2 lipot, says u all personal attack him, 377A ..lol

Gd to hav more agents leaving tis field. I dislike looking at those unprofessional newbie agents.

And it's gd for some to join other industries in order to bring down the number of illegal workers. After all too many young ones wish for fast moolah which bring no gd to Malai econ.

This post has been edited by ManutdGiggs: Oct 29 2014, 10:38 PM

One big social impact i really sees....... real life example.....

Chat with bearbearwong one will kno and see how big the impact is......

This post has been edited by AppreciativeMan: Oct 30 2014, 11:24 AM

Side effect = kisiao