Mind sharing the location/condo name of the unit? 2k rental for 1.4m property is seriously very very low. But on the hindsight the owner might have bought it when prices have not spiraled exponentially lately.

Jeng jeng jeng.. First the high end market gets affected, then once the mid range starts to get VP for their units, the domino effect comes in.


KUALA LUMPUR, April 17 — A growing glut in the luxury property segment here is pushing some owners to shave nearly a third off their asking prices in order to secure a sale or rental.

According to data from the National Property Information Centre (NAPIC) on residential homes here valued at over RM1 million, unsold units increased by over 9 per cent from the first quarter of 2014 to the same period a year later.

Cumulatively, this was equivalent to RM158 million worth of surplus units in the luxury home segment, based on figures from the first quarter comparison alone. Figures for subsequent quarters are not yet available.

Property agents speaking to Malay Mail Online also noted that the phenomenon was especially prevalent in the secondary market, saying owners in the Klang Valley, Penang, and Johor were now prepared to lower their asking prices.

“If you look at the property market in KLCC and KL Sentral, owners are willing to rent out office spaces and homes for RM3 and RM4 per square feet compared to RM7 and RM8 before 2013,” senior property consultant Jeremy Jr told Malay Mail Online when contacted.

“Owners lowering the price of their properties by 20 to 30 per cent is also becoming a norm these days,” the agent from Oriental Realty added.

The drop is also fuelling a vicious cycle. Lower rental yields are making it harder for owners to meet their mortgage payments, leading some to sell off their units at discounted prices, which in turn affects rental prices further.

With an excess of luxury property, Jeremy also said new launches were being affected.

Property firms are now aggressively promoting their new developments in the hopes of meeting sales targets, he said, albeit noting that they have so far resisted blatant price-cutting.

“Freebies like kitchen cabinets, plaster ceilings, 0 per cent down payment… these are among other (offers) developers give out these days to sell their new launches,” he said.

The zero down payment is effectively a 10 per cent discount on the list price.

The realtors who spoke to Malay Mail Online declined to speculate on reasons for the drop in demand for luxury property, but a study released in January by property investment firm JLL Malaysia attributed the decline to the slump in the financial services as well as the oil-and-gas sectors.

Depressed oil prices have hit the once-lucrative O&G industry hard, with even state oil firm Petronas resorting to layoffs. O&G expatriates were some of the main takers of high-end property, but are now a relative rarity.

“Sales and rentals for properties valued at more than RM1 million have been very slow in the past four years or so,” said property agent Michael Lim

“After almost six months, I just sold one condo in KL for RM1.2 million recently after the owner was willing to reduce the price by RM300,000,” he said.

More recent data from NAPIC also showed a general decline in transactions within the luxury home segment. From the second quarter to the third quarter of 2016, total transactions dropped from 2,014 to 1,826 — a 9.3 per cent decline.

The same was seen with high-end commercial properties that fell 10 per cent in the same period.

For Lim, however, the falling prices were not entirely negative. Buyers, for instance, could take advantage of the situation and get property in the area for up to a third less than the previous asking price.

But he conceded that the long-term effects would be detrimental to the overall development and area.

“If everyone is selling off their property for 20 to 30 less in a particular area, the value of the development will definitely start dropping,” he said.

When contacted, Malaysian Institute of Estate Agents (MIEA) past president Siva Shanker concurred with the property agents on the weak demand for high-end property.

Siva said that renting out expensive property would also be difficult as owners could only afford to go so low before it was no longer worthwhile.

“At some point, the asking price will be similar to the price at which they bought the property about three years ago, which makes no sense any more to sell because they are definitely going to lose money,” he said.

He predicted that the property market would grow in 2020.


http://www.themalaymailonline.com/malaysia...o-seal-the-deal

My self analysis will see a huge oversupply in the mid range market (450-800k) due to the current onslaught of properties launched since 2014 onwards.

1) House prices reduce by 5-8% average annually till 2022, since a lot of "investors" have overlooked the burden of forking out maintenance fee for their properties. With MF trending around 30-40sen/sqft currently, an increase to 40-50sen within the next 3-4 years (past trends of condo launched in 2011-2014 with mf fee of 22-28sen). a 1000sqft property will command 400-500 monthly in maintenance, eating out a sizable chunk of salary.

2) When management starts increasing mf due to poor collection from house owner, existing tenant can and will force management to initiate foreclosing against a property for outstanding mf as they would definitely not want to be burdened by unperforming flippers

3) Condos that are not family orientated, or for own stay purpose will attract subprime renters (maipren, habibis), reducing resale value of properties in prime locations. This is not to say that rental yield will be bad, its just tougher to off load the property to someone else who is looking for long term stay. Cost of repairing the house might go out due to irresponsible bad tenants.

4) Salary growth will be muted in the future as more jobs are being taken up by upcoming markets and also automation of most jobs that can be replaced by robots etc.

5) Low upside in O&G, Banking and other high income jobs will further put pressure on the high end market in the foreseeable future which will cascade down towards the mid range as existing condo-owners will not have much room for price appreciation as the high end markets are rather muted. with existing condos going for more than 450/sqft in the past 2-3 years, a 1000-1400sq ft house will cost 450k-630k before even calculating interest and maintenance cost that has been incurred for the next 5-10 years. Therefore even if the condo-owner is able to dispose it off at a 30-40% increase in property price, end of the day the discounted cash flow coming in 10 years later on will probably be even lower than just saving up the cash and investing in alternative investment such as REITs, mutual funds or businesses etc.

6) Just assuming every couple in Malaysia have a minimum combined income of 6k nett with no other commitments, they would still be hard pressed to afford any property above 600-700k.

Just my 5 cents on this. For property surplus to be fully consumed by 2020 is a rather optimistic presumption. Especially for those UUU hardliners.

One thing the market has failed to realised is how willingly local flippers are willing to gear themselves up in debt.
Added on to the very low savings most msian have, a new property will always be more attractive than a subsale due to the low downpayment, deferred loan payment for 3-4 years in hope that by that time their income would have increased enough to offset the new loan commitment as well as the ease of taking up personal loans etc.

A subsale property will have to be sold at a 10% loss compared to market price for a new buyer to purchase it without downpayment. Furthermore the buyer will have to fork up extra 6% GST on the sale price.

Simple calculation:

Property price : RM700,000

DP@10% : RM 70,000
GST @ 6% : RM 42,000
Stamp Duty : RM 12,000
SPA Legal Fees : RM 4,650

Upfront: RM128,650

* Loan stamp duty & Legal fees are ignored since it can easily be added into the loan.

How many people are able to afford even 100k upfront to buy a subsale property?
Hence the domino effect takes time to set it. Low interest rate, hot money flowing in due to QE from western market, China buyers looking for ways to diversify their undeclared money out from China etc have contributed a huge inflationary effect on the property market in Msia.

With the outflow restriction on China hot money, hiking interest rate in US and probably Europe in the near future will cause a massive outflow from emerging markets, causing a big wound for local investors to lick on their own.

A market crash in property prices is not going to reduce prices by 50-70% for all properties, outskirt places like Rawang, Kajang, Semenyih etc will be the places to suffer the most. Core KV area will have a downside pressure easily in the range of 30-50% for condo market and around 20-35% for landed units as the prices have appreciated tremendously with no major market correction happening since 1998.

They are already sucking out the money, but not investing in local properties. Black money are all brought overseas and invested in safe haven places like US, UK, Australia, France etc.

Who ask you to get stucked in a rat race? When times are good now you should be hustling instead of slaving off working in a day job. There are many ways of alternative investment u can do now, Mutual funds, money games, quick hit investment, forex exchange (self-trade or master trader account tagging), uber/grab around etc. Ride the wave as you go, dont fight the wave. Ikan bilis like us will have to ride the wave first to gain more before we can be the wave maker.

Property bubble have been floating around since 2012/2013. Why?
Because at that time, people were used to market prices of 150-250/sqft house prices. And that is landed property.
When prices went out of their comfort range, many people thought that prices way beyond normal affordability, hence the hope it will crash.

We laugh at our neighbours (singapore) for their pigeon hole housing. Look at KV now, its a swift nest housing market now.
Now when prop prices are going at 450-600/sqft, and easily up to 700-900/sqft if its near a Mall or MRT station, when the market crashes, its not going to go back to 150-250/sqft. the new norm will be 300-350sqft and appreciate from there onwards. at 300-350/sqft price, people would rather buy then rent, hence reversing the bubble pop.

Easier way to put it is petrol prices. Ignore world market prices of oil. we were so used to RM1.30-1.60/L of petrol back then. Whenever there was a price hike above 1.60/L, example a 10sen hike, people would be bee lining at petrol stations to fill up their tank. After a market adjustment of prices beyond RM2 and above, now with a weekly price adjustment of 3-8sens, rarely u can see petrol station having such a huge line like before. Rm2 is the new norm for petrol price and people have adjusted to that. Now if it goes below RM2, people are going to say its cheap as compared to before.
Similar theory applies to property market.

After every bubble price will still trend at a higher high and higher lows.

This post has been edited by ZenGTMM: Apr 18 2017, 12:07 AM


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True with PR1MA and affordable projects coming up here and there, those current renters who couldnt afford to buy property at current prices will move on to the cheaper affordable property. More units are going to be vacant and putting more pressure on people who especially those leveraged on multiple property. Vacant unit surplus up, rent goes down. Rent goes down, cashflow will be squeezed. We dont need so many foreclosure. Just a 4-5% of existing units in the market will be enough to cause panic in the market. Just a 5-7% in unemployment rate among city dwellers will be enough to trigger panic in the market.

Valid question. Because everyone ignore the higher high and higher low theory.

Do u know before the year 2001,
1) the maximum loan tenure is only 20 years? 25 years for fresh grads.
2) Maximum loan installment amount is only 30% of your gross salary?
3) People are very geared towards a landed property instead of condo?

Fast forward to 2016
1) max loan tenure at 35 years.
2) max loan installment up to 80% DSR ratio. It went from 30% of gross salary to 50% of gross to 65% of gross and now 80% of DSR?
3) People now are adjusted to the mentality that landed in KV is too expensive and the new generation is too focused on lifestyle activities and are attracted by facilities offered by condos etc. Plus landed props are in such short supply, rich people see it as a statement of wealth to own a landed unit, hence the constant price increase for landed units.

Well u said it urself. There is no future for current workers to have upside in their salary. How will there be an upside in property prices?

I never said FD. FD is for stupid people to invest. U can keep a minimal amount in FD as rain cash. The rest should be in higher investment return.

Mutual funds suggestion:

http://www.chokleong.com/2015/05/28/what-i...-last-10-years/

http://screen.morningstar.com/fundsearch/fundrank.html

U can see from here, an annualised return of 12-15%, with lump sum deposit of 100k can give u 330k-444k in 10years.
This is just assuming u do a lump sum deposit, if u factor in monthly contribution to smoothen out the average price of ur units, u can gain even more.

Quick hit investment? Why not? As i said ride the wave. The everpopular money game from Penang is based off on a system advisor that Im using in my real forex account. 20% a month sounds absurd, but put it this way, u take 1k usd put in there, monthly get 20% u take and reinvest into ur unit trust. Nobody ask u to put ur whole life wealth in there.1k USD = RM4.7k. Sounds like big money, but its better off than buying a new car and suffering a depreciation of 15-20k a year. Diversify and ride the wave.

Real world forex trading? Why cant believe? Msians only pandai do MLM. Ask u go study and research urself and trade in real market urself.

babypips, forex.com, fxstreet all provide valuable information on how to trade the market. Learn the basics before jumping on the bandwagon. Learn to paper trade. Everyone wants quick money and when they get burned, they turn back and cry saying its a scam.

U said msia on its last leg and its almost beyond hope of returning. so why not change SGD now at 1:3 and wait for 1:5 later and profit?

U have to learn to look long term my friend.




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These 10-15% are the ones that are forever renters, feeding the current property owners.
another 20-35% is the young adults, waiting for salary to increase before they can purchase their own house.

Quick Return investment scheme. Like JJPTR, Richway etc etc. MLM is old school now. People are not buying into that.

Nope. What I am saying is diversify your funds to grow faster than the inflation rate.
I have shown how to get consistent 15% return a year in mutual funds. U will need to target growth orientated funds compared to balanced or fixed income funds. Mutual funds are not guaranteed, so stick to reliable ones. Public Mutual, Kenanga are the 2 firms I invest in. Nothing is guaranteed in life, not even ur job, nor your life.

pros and cons, its up to individual investors to read and research up. A simple rule is the higher the return, the more riskier it is.

We can forget about hardcore poor. They wont even be able to pay for their rent consistently, so they are out of our target market equation.
The one fuelling this property growth and rent yield is the fresh grad to below 30yo crowd. This is the crowd that wants to stay in the city, enjoy nightlife, after work activities. The urban crowd. They are willing to pay more for rental compared to a 30yo++ who is looking for a permanent property to settle down.

Which condo?

can never get, when it drops to 160k for 500sf i will sapu all the stock in kl.

Based on this thread activity it's safe to say property bubble is deflating hard and all those bbb are under water. 😂