PETALING JAYA: The property market will take a terrible hit next year, with developers and house owners facing one of the toughest times to find buyers, says a real estate veteran.

Ernest Cheong said it could lead to a market crash as consumers do not have the financial capacity to own homes with some failing to even pay their monthly instalments.

“The panic (within developers and house owners) might start after Chinese New Year in February or later if the government decides to pump in money to strengthen the market,” he told FMT.

He was responding to a reply given in the Dewan Rakyat by Deputy Finance Minister Lee Chee Leong who said unsold completed residential units rose by 40% to 20,807 units in the first half of 2017 compared with the same period last year.

Lee had said the units were worth RM12.26 billion with condominiums and apartments costing over RM500,000 dominating the unsold homes in Malaysia.

However, Cheong pointed out that the RM12.26 billion is only from the primary market, which includes launches by developers. It does not include the secondary market, which is house owners seeking to sell their homes.

“Previously, house buyers needed to pay 10% as deposit. Today, the situation is different. Developers are in a desperate situation.

“That is why they are allowing buyers to pay 1% of the property price and pay the remainder upon completion,” he said.

Cheong said this “generous payment mode” exists because developers are finding it hard to sell off their new properties.

He said they are in danger of losing their bridging finance from banks if they fail to sell at least 40% of the total units. The bridging finance is used by developers to support their construction.

“This is where the danger starts. I predict if this continues, markets will crash within 24 to 30 months because consumers do not have the financial capacity to buy properties any more.

“Furthermore, developers who started building two years ago are expected to flood the market further with their units.”

He estimated the value of homes waiting to be sold in the secondary market to be around RM4 billion and expected more foreclosures by banks.

“So about RM16 billion of properties are waiting for buyers. But there is no demand. The reason is that people don’t have the money,” he said.

When the property crash comes early next year, Cheong expects the prices of houses to fall from RM500,000 to RM300,000.

He advised Malaysian consumers not to commit to buying a home unless they could save up to RM1,000 a month for at least a year.

“This is to cover for rainy days if they lose their jobs.”

Cheong said findings by the Employees Provident Fund show that 89% of Malaysians earn RM5,000 and below a month.

He said those who bought their homes five years ago are facing hardship as prices of homes were at their peak then.

On average, for every RM100,000 housing loan, a buyer pays the bank RM500 instalment a month, based on a 30-year payment period.

Cheong advised Malaysians to spend cautiously and invest wisely instead of buying any property at the moment.

“There should not be any urgency to buy a property at the moment. Try renting first.”

beli 9 hartanah dan hari ini menderita nak beli susu + pampers anak pun tak mampu

No point reading FMT. Differentiate Opinion vs Fact. Base on what they say 500k drop to 300k?

Yes, Developer has been launching a lot more smaller units, high density, 400-500k units. But that doesn’t mean property price dropped.

Yes, it’s much easier to lose money than make in the prop market now. Making money pre 2011/12 era doesn’t make one a good investor. 95% of the property in the market are not investment grade property. Chances of Buying into the wrong one and lose is very common. Buying wrong product at wrong price —> lose money
Buying wrong product at right price —> 50:50 u make or lose
Buying right product at wrong price —> lose money
Buying right product at right price —> make money

FMT always report of property glut. This attracts readership.



This post has been edited by propertybuddy: Nov 14 2017, 07:00 PM

This is why Gameplan is so important. Understanding the risk of doing so, what to buy, How to buy, when to buy, Buying without proper gameplan can be deadly. If he hv the right plan, he probably only need 4 good ones instead of 9 bad ones. 4 would be sufficient to generate him a healthy 20k/mth passive income for retirement. Buying 9 bad one doesn’t make him better investor than someone who plan properly and buy 4 that suits his plan

This post has been edited by propertybuddy: Nov 14 2017, 06:51 PM

People see things differently, that is why someone sell the bitcoins at $1, $100, $1000 while someone buying them at those price.

My take is MY economy is recovering from the oil price and therefore will spill over to rest of industry. On paper, barring any major crisis, MY economy will do well and housing will be ok.

But there are some fundamental issues on oversupply on poor location and certain segment. Just be very cautious and hope everyone make money.

Very informative.

Another similar updated index by BNM up to Q1 2017 at http://www.housingwatch.my/02_market_01_mhpi.html -> Q2/Q3 will be updated soon.

I liked the statement "95% of the property in the market are not investment grade property". Does it mean only 5% of property investors are making $$$?

In the scale of 10 how bad would it be???

Some property guru i know 5 6 years ago.. now dun want to be known as property guru already..
Haha

now it's bad with 40% unsold completed units ...almost 20k units....

for good properties, when the unlikely guy defaults or sells cheap, surely got investor waiting to catch in today's market. for bad props good luck in the auctions. 40% unsold by dev is unsurprising which we see in the desperate race to larger and larger discounts. yet if the developers do not go bust and investors are still ready to catch the falling apples the market should find equilibrium instead of free falling like this article suggests. as said above FMT is always 3rd rate sensational news, take with pinch of salt.

its the data...cant lie...times are bad...pockets are tight...sentiments are low...

Everyone is waiting for crash. Price is finally dropping, next year is the best time to buy. Why are u guys worried? Your wish is coming true, rejoice!

still got many upcoming interesting launches ...

Game Over.

NYsayers like tus guy and me were laughed at and ridiculed when we sounded warning..now where r these smart ah beng hiding

Then the people who already locked in their money for a unit this year gg liao loh?

Yea those not ready, pls rent first, don't buy until you r ready to buy. Renting can be cheaper than buying a house. Taking grabcar is cheaper than buying a car, though car depreciate and house might appreciate.

I hv one question, y developer unit can't sell will cause market crash? Anyone can enlighten me?

This Ernest Cheong has always been a doomsday predictor. If you listen to him from 2008, then you are still waiting to buy.... people already earn double to triple money...now paper gain give back a bit lah... lol... but those late comers from 2013 ...sorry lah... simply buy from developers sky high price..adui

U see whether he ask u to buy or not in the next 10 years...

Scary tale ??

http://happytifywin.com/docL3lZUE04WW0wWkE9/2658

Star Business – 18th July 2009

Stories by SHANNEN WONG

IT can be extremely frustrating to be at the mercy of property developers who have abandoned their property projects, not least because most of them do not offer any explanation to their house buyers.

When asked, this is the usual excuse provided by developers: “We are temporarily having some minor problems but will revive the project as soon as possible.”

“Soon” unfortunately, more often than not, turns to years of waiting for the victims.

Cashflow problems, demand shortage and budget over run, owing to poor planning by the developer are mainly the causes that lead to projects being abandoned.

But while some abandoned projects are caused by unanticipated market conditions and economic uncertainty, including rise in building materials and labour costs, there are many cases where developers have only themselves to blame.

Industry observers say there are cases where developers have channelled purchasers’ deposit money for personal use while some others deliberately hold back their projects for better resale prices.

There are also instances where developers inflate progress payment claims to draw more money from purchasers and the banks. Observers say this can be done with the help of architects, who are responsible for issuing certificates on the construction progress of the purchased houses, which are then used for progress payment claims.

“As progress payments are disbursed to developers through these certificates, end finance banks can be misled into making excessive payments,” Ernest Cheong PTL Chartered Surveyors property consultant Dr Ernest Cheong tells StarBizWeek.

“Some of these developers end up not using these inflated payments to develop the housing projects,” he says, adding that perhaps they would channel it for some personal investments.

But when these investments sour, the consequences are dire; the developer will not be able to pay the contractors and suppliers and the brakes are then slammed on the construction activities.

“This is what contributes to the problem of rising abandoned housing projects,” he says. But in most cases, the culprit is poor planning and research. Developers that rush into a development without comprehensive market study will most likely find themselves stuck in a project due to poor cashflow.

“They end up facing poor sales due to the mismatch of supply and demand patterns in the project location,” says PPC International Sdn Bhd executive director Thiruselvam Arumugam.

Chan Ai Cheng, the general manager of S.K. Brothers Realty (M) Sdn Bhd, says developers shouldn’t be over ambitious and ought to be realistic.




I extract the article from 2009. This is a negative guy all the while......