After this price hike, the property material like cement, steel etc will increase. Definitely for sure property price will increase.

@knwong,
Such raw materials haf oredi started increasing - ah well, like we said, property prices might increase but it might not increase v much more from the current price. If people aren't going to be buying the houses, wouldn't developers lower the prices just so they can dispose them and make some $?

In the long run, it will cost developers more to keep those unsold houses, unsold.

lets have a look at short term, compare last year and say end of this month, do you think there is any changes in terms of prices for the house ?

@nnpjj,
I don't think I'm in position to answer this question cause I haven't checked out the house prices in totality. I do however think if U do compare house prices from last year and this year in the same locations, U probably will find an increase.

Property, unlike stock is not a liquid investment. Meaning even the market price for certain property had drop to certain level (based on transaction record), doesn't mean u can get it at that price. Unless there r lots of house owner a.k.a speculator in serious financial problem, they may choose not to sell. In the end, there may be just a few transactions going on at the lower price. Eventually you ll still have to pay a higher price in order to close the deal.

@Singh_Kalan,
It still doesn't answer the question of whether it's a good time to invest in properties now?

I am waiting for good bargain during auction instead

All,

1) Per capita GDP of Malaysians is RM1,800 per month. Even assuming dual-income family, how MANY people can afford 300K to 400K house/condo?? Isn't this a property bubble??

2) Yes, material price is going up. But, how much is the costs of the house tied to the building material to begin with?? I would say not much. It is the LOCATION aka price of the land that determine the house price. Why am I saying this?? You can go a bit further away from Klang valley and the house of the similar size will drop by 100K to 200K. So, the house price is NOT that much determine by building material.

3) BLR. With inflation, it looks like may be the interest will be going up eventually. Or else, RM will be devalue. If interest rate goes up, how many people can afford to but those 300K to 400K houses??

4) Unemployment. How many of your friend / colleagues can survive without income for 6 months? If we have a sustained recession, how many will have to sell their house??

Given (1) to (4), I believe house price will go down in most places. Most Malaysians are over-stretched financially.

Dreamer

Building materials prices went up about 15-20% today. This would translate to about an extra 15k - 25k increase per house for building costs (depending on type of house).

I'd say the property market will soften further in the near term.

jchong,

Okay. That is 15K to 25K out of 300K to 400K house.

Dreamer

Or could be 500-600k house (depending on location). It's just to give some perspective and to support your point about how much/little the selling price of a house is tied to building materials (and the price increase).

This post has been edited by jchong: Jun 6 2008, 06:19 PM

of course, the property market surely slow down. i am a property owner, and of course i do not want this dilemma to happen, but based on this higher inflation condition, property slowdown is inevitable.

But, i dont think the slowdown will be serious, perhaps a minor effect. Since this higher inflation ( oil hike ) just begin, i guess it is still too early to predict as we dont know the BLR story still. To add some positive view, since there is a discount of stamp duty of up to 50% and the abolish of property tax, i believe these are the 2 points will give a positive impact onto it.

Building materials, is definitely soar in price as well. This will make a heavy impact of new development price. Forget the steels, bricks, wood, cements, just a PILING WORK work cost the developer a huge sum of money.

Strongly agreed...

I must have been on mars. Property tax may be abolished???

Anyway, gotta say that if Malaysia is heading the way it seems to be economically, then its highly likely homeowners with large debt may opt to sell out but it does depend on each persons individual situation.

I agree with dreamer on the fact that many malaysian stretch themselves monetary wise. Financial management and economics really ought to be taught as a subject in school...

Just keep an ear and eye on the news to monitor how the G is handling everything (read between the lines people!), watch general public reaction, business trends and all.

I know MAS offered pilots a raise on conditions which would affect the seniority system that is in place (meaning a pilot working 20 years wont really be better than a pilot working 5 years) and they rejected it >< If some companies offer raises to help their employees stay above economic decline then maybe the entire situation wont be so dire thus properties wont be discarded quite so fast and desperately.

At this point, speculating is all we can do... We should get a much clearer picture in a few months if not sooner.

yes, i do refer to property tax, indeed which is also known as RPGT. i believe it is also being announced in newspaper quite some time ago.

Thanks

Ohhh the Property Gain tax... Yeah that has been abolished since april last year. That I knew and the plus point I saw for that was people who wanted to 'flip' houses profited more.

All I can say in light of possible economic decline linked to RPGT is that homeowners who cant keep up with payments will be able to sell their homes at a greater profit if they aren't able to continue loan payments.

*shrugs* if people opt to sell their homes then long term investors profit. I cannot say for certain how property sales will go cuz I don't remember how the market was after 1997... I assume it will be close to the same if the economy does slowdown like that time...

Looking on the other side of the coin, I reckon properties near to public transport hubs will go up in price due to more higher demand in rental. Young adults like me dont want really want to drive around anymore so we'd be looking at properties with good access to public transportation.

Syd G,

That is assuming that you have a job.

Dreamer

Ah yes

Nowdays I only consider companies that're near public transport. I'm very stingy about spending money on transportation so only allocate 5% only. 25% is already allocated for saving. I'd rather walk than sacrifice my nest egg