1) Yes. Given the property is around 6 years old and it has already "appreciated" over 70% of its initial sale price, which is more than the interest rate charged on the loan (if one was taken). Essentially, you're paying for the profit of at least 2 parties, the developer's, the bank's and the existing house owner (and possibly any other middleman). Almost any property within the greater KV will be overpriced. People buy because enough people believe in UUU, as long as you sell before it becomes DDD, you're safe.

2) You should not consider your property an "investment". It is something you buy to have a roof over your head. Whether or not the bubble will burst depends on how much "stimulus" the govt puts into the economy. The more money govt throw into non productive purposes like subsidy, bailouts, white elephant projects, or other wastages, the higher the likelihood of a bubble bursting.

I see... so between 2001 and 2009 the property price went from RM120k to roughly RM200k, and then from 2009 to today, the price went from RM200k to RM350k?

Well... Personally, I will be asking myself, did the prices of bricks, cement, piping, electrical wiring, labor costs went up by 4x over the last 14 years. It probably cost the developers RM70-80k to build the house, so if you strip the house down to its bare components, you're essentially paying RM360k (price) for something that cost RM70-80k (worth) to build.

This itself is not an issue as long as you are willing to pay. But keep in mind that the further the price of a property is to its worth, the more volatile it will be in the open market. Is something that is worth RM80k going to realistically go much further up? Maybe, but it will be very prone volatility of market disrupting factors, for example... container homes, or GST, or RPGT, etc. Lets say a property built at RM100k in Jinjang suddenly experience a population boom, it is very easy for that RM100k selling price to turn into RM200k, but for the price to move even further upwards away from RM100k, there needs to be some market factor to push the price wayyy up.

It's similar to the UUU people sentiment talking about a bubble bursting. In order for property prices to crash, you need a 1997 level economic crisis. For property prices to surge, you will also need a 2010 type property boom.

Is that going to happen again?

This post has been edited by s2peMocls: Sep 23 2015, 12:03 PM

That is why I suggest that people who are not in the property speculation business to buy a property as a place to stay, not as an "investment". As long as you can afford to pay your mortgage, and you're happy living in your home, it does not matter what market it is.

DDDs complaining because flippers are hoarding properties back when property prices were reasonable.

Not really. Unless flippers are buying properties under construction, with a very slim chance that the project will have LoD, there really isn't much risk they're taking. It's basically a buy and hold. Not much risk there, unlike something like share market, flippers do not stand to lose the property.

That's bad reasoning. It's like saying "Why people don't invest in gold instead of complaining inflation made their currency value go down?"

Why is it that when there's a new project launch, on day 1 itself they already declare 50% sold? 4 weeks later 90% sold?

Obviously, it is because not everyone is a flipper, just like not everyone is a gold investor. The problem is unlike gold, properties are necessary to house a growing population. Furthermore, property hoarding by flippers is a compounding problem. Today flipper buy 1 house, next year he sells it off to buy 2 houses, the year after he sells those off to buy 4 houses and so on and so forth. He is buying up properties faster than any individual non-flipper property owner.

And that's just 1 flipper, not taking into account a gradually growing number of flippers, worsening a compounding problem. A handful of flippers could be hoarding properties which can be had by hundreds. That's profiteering, and in very many countries, is against the law.

This post has been edited by s2peMocls: Nov 4 2015, 04:19 PM

Hmm... speaking of profiteering... looks like there is some call to better define the Anti-Profiteering Act on properties.

http://property.bernama.com/detail.php?id=1095412

Doesn't change that you made a bad reasoning.

You're entitled to your opinion too. That you actually choose not to address the response makes you look defeated though, and that is not an opinion.

It is your delusion that it is out of context. It's still very much within the realm of taking risks.

Buying house is almost never an investment. When you invest in something, that something has the prospect of either increasing or decreasing in value over time.

However, a house can only experience a decrease in value over time, at best it remains the same. What increases is the price of a decreasing item due to a perceived worth that property is an "investment".

Of course land parcel is a property. Do you mean "investment"?

It depends on whether or not if there are plans for development/growth for it. If there are none, then it's just property that will soon become unkept, and overtime it will be overgrown with shrubs and detritus, which itself will be detrimental to re-sale efforts.

That's why it's important to know how to judge a property's value, whether the price increase is due to urban sprawl, or due to hype. For instance if a house price goes up double just because got LRT nearby, I will tell seller go fly kite. Other people might buy, but other people want to land themselves in an overvalued property is their business.

Depends how much he paid in interest over the 3 years, not including stamping fee, lawyer fees, quit rent etc.

I had always found the term "capital appreciation" for property a misnomer. Let's say own a business that produces widgets. For every widgets I produce (cost), my business loses capital (i.e. depreciates). If I sell my widgets successfully, my business gains capital (i.e. appreciation, profits).

What does a piece of property produce to get capital appreciation? It's made of the same brick and mortars now as it did the day it was built.

House prices not going to crash unless significant number of owners are willing absorb losses. I believe the quality of supply will impact pricing more than just a general increase in suply. Currently you can get supply from main 3 methods:
1) Developer launch new props.
2) Govt projects
3) Sub-sale.

Developer launch is sensitive to market demands, especially for the sell-then-build, i.e. no demand, no supply. In short, they're not going to build if it's not profitable to them, which means there's nothing to stop existing property prices from going up.

Govt projects simple lah... straightforward. PKNS/PPR/etc. Directly supply to market, people apply. Typically viewed as low end property which doesn't appreciate well. I don't think this will impact much to property prices as a whole.

Sub-sale. This consists of various people, flippers, ex-pats, relocations/migrations, emergencies, aging owners, crime rates, dead owners, bankrupts etc etc. This is probably the most volatile of the supply segment. Price fluctuations will depend on the external pressures exerted on the owner. Someone who has debt to pay, or is leaving the country permanently will be more likely to sell their property below market price, than someone with a steady job and is debt free. Once these pressures accumulates to a certain level, then only you will see a significant price drop as everyone looks to dump their property, regardless of location.

Still got suckers dumb enough to pay rental at close to installment amount. LOL!

Msians....

Unless m'sians have an obesity epidemic, I don't think it's out of line to spend 31% of income on food. Unlike cars and petrol and mobile phones, food IS a true necessity after all.

My bank just sent me a letter announcing an interest rate drop on a high interest rate savings account. Sounds like they're going to ease up on the credit noose. Will probably see more people shopping for loans soon.

Question is, can they afford the mortgage or not? LOL.