hi everyone....please advice me, is it worth to buy house now? during this chaotic (or could we say 'unstable..?') political & economic environment.... . i'm planning to buy house (kajang area) for own stay but advised by someone (financial planner) to hold it on for a while (not sure why...) but some people said that better fast in buying house as fast as all the prices are going up... ...anything i should know...? BLR...gov tax...new house...secondary house...etc..?

Everything going up, including raw materials and labor cost. What do you said?

You may picked a fixed rate instead of relying on the floating of BLR.

The most important thing is may you secure you job????

i would say better buy a completed property now as soon as possible, construction cost is expected to keep rising until 2009, developer will have no choice but to raise price, renovation cost will also increase, if you have the budget and can find a good property, why not buy now. I just buy one last week, still waiting for Public Bank to approve my loan application, better play it safe and go for fixed rate.

Hmm...if u r interested, i have a SEMI-D house 40*80, freehold in Kajang New Town, Prima Saujana. Developer is Prima Paramount. House is selling for 480k. Its brand new. PM me if u r interested. Strata Title oredi out.

If u ask me whether to buy a hse now....hard to say la. Some say prices will keep goin up because of inflation and raw materials, some say recession, price will go down. Depends lor i guess....50/50.

This post has been edited by mIssfROGY: Jun 29 2008, 01:32 AM

I think most likely "enter recession" periodssssssssss

and get down down down..as for the materials pricing, there is another way of countering it...

but again, it depend on how govt react!

if u need a house , y now buy now and stop worrying about recession, worry about urself whether u wil be targeted if there is recession and budget ur self properly for the house u buy.

BLR is going up soon

now gotta see which bank gonna kick it first

agree with you, developers have already hinted that they have to increase prices by 30% soon. even completed property are taking this opportunity to increase the prices, i was talking to a seller a few days ago, compared to the price 2 months ago, he has already increase his price by 10 - 15K

I have experience the same thing... sigh... increase by 10% after the fuel hike announcement. Only in 1 month, the price is so much different

on top of that , i want to add that a lot of house owner have decided to rent their property rather sell now it in anticipation of the rising cost property.

yea correct...if i cannot sell at the price i wan, i rather rent out. More people wanna rent also since cannot afford to buy houses.

If You Have Budget, Yes..

It's Good Time To Buy A House Or Shoplot

Once Petrol Price Increased.. Everything Will Increase Too..
And Also The Construction Meterials Keep Growing..

fa-tin,

1) Can you afford to pay the house loan if you lose income for long period of time??

2) Do you know what is the RIGHT price to buy your house?? If you do not know, you should not buy. Who cares whether the house price is going up or down?? You buying a house to stay. So, you NEED to know what you can afford and where you should stay. Whether the house price is going up or down is irrelevant. Be patient. Study first.

3) Buy completed house. The developer may go bankrupt and leave you with half completed house and you still have to pay the house loan.

Dreamer

This post has been edited by dreamer101: Jun 29 2008, 07:30 PM

You should know that banks are now extra careful about giving out loans. They take longer time to process your application, offer smaller loan amount than what you requested, less willing to give good rates and so on ... I should know as I am in the middle of buying a property.

@Moneylust,
Have U had issues getting that loan?

Should Be Ok With Him..

If He Knew He Can't Get Loan, No Point He Open Thread For Opinion

Tinkerbel,

With recession expected, the bankers are now worried about non-performing loans and they expect to BLR to rise by at least 1%. Hence, they have been tightening the screws on new loan applicants.

The offer letters have been slow in coming ... so I'm a bit concerned and will be applying to additional banks this week as a precaution. But if I, with a squeaky clean financial record, can't get a loan, 90% of Malaysians won't be able to get one.

But I'll advise those thinking of buying a house in this uncertain times to think twice.

having high standard in approving loan is a good thing, at least we can prevent a sub prime crisis like in US. giving ppl loan to buy house and car they cannot afford is not helping them.

Then you better pray pray that PBB doesn't reject your loan application or gave no response even after 4 weeks (as alleged by another forumer) or give you a bad offer (you do know that banks are not obligated to give you the published or promised rates, right?). I hope you applied to more than one bank

haha, last week i apply to like 7-8 bank, still waiting for result, how long you wait for the reply?

i heard from my public mutual agent that the BLR is going up...so just make sure you can commit on the repayment should the BLR goes up again..

seem like ur loan having trouble...

mine apply CIMB, Alliance, HLB & PBB...
Alliance, Hong Leong and PBB 3-4 working days inform me my loan approved,
so i wait for offer letter around 5-6 working days for PBB...
i signed offer letter after 1 week i submitted my documentation...

I brought house at Butterworth Penang, expected to be completed by end of next year 2009.
But now I'm worried this project will suspensed because of raw materials price all went up 30 - 40%.

Hope this will going to happen. Thanks.

In terms of property prices, based on history, in a recession, prices drop due to lack of demand. All goes back to demand vs. supply thing. If everyone is getting jitters on committing to a property during uncertain times, it means demand drop. High home loan and strict application guidelines means less and less can afford a house, means, those on the market will be price pressure downwards to get the few buyers to snap them up.

So.. I think best to wait a while for the property market to soften over the next few months and then pick up your unit.

dont scare me lah, just submited 4 working day ago.

---

Added on June 30, 2008, 5:03 pmbut the current inflation is not due to demand but more because of rising cost, when building material cost more, you cannot expect the developer to sell at cheaper price even is sales is slow.

This post has been edited by robertngo: Jun 30 2008, 05:03 PM

this depend on the developer whether they did "good homework" before they launch any house...
as what i know, developer will "lock up" the price of raw materials with all the suppliers before launch new house...
so if sudden price hike occured wont effect much since the price locked for certain amount of raw material amount...
that is how all of the QS work in developer company... calculate the correct amount of material and order from suppliers...


no scare u lah... hehe... u should call ur banker now to know ur loan status... dont sit and wait till last minutes...

yeah... upcoming new house price will increase because the cost of raw material and operation...
But we can get house with cheap price if economy recessions striked in malaysia bcos no demand and ppl forced to sell house asap to cover the loss... but at the moment getting the house with cheap price, i believe bank will package very high interest's package also... unlike current BLR-2%, maybe that time will BLR-0% or BLR+1%, bank also need money to ensure their operation still in normal condition when recession striked... so actually no much different between expensive house with low interest or cheap house with high interest... just depend on our luck how cheap the sellers going to sell their houses...

my loan go problem at bit with valuation last week, but now seem all the bank can get the value now so should be a few day before approval is know. you guys have problem with bank valuation before or not?

Robert, you just doomed yourself Never apply up to 7-8 banks. They'll all think you are desperate and have something to hide.

i dont have issues at all i think...
1st, my banker calculated my income able to afford the houses 80%+ my loan can be approve...
2nd, i have 99% clean CRSIS record...
3rd, my salary bank-in into the particular bank saving account (so bank can auto debit from my salary)

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Added on June 30, 2008, 5:55 pm
but i think banks dont have the relationship with each others right?
unless they can record the loan application into system (something like CTOS/CRSIS) and able to view by every banks...

This post has been edited by gkl83: Jun 30 2008, 05:55 PM

I think Robert meant some valuer valued his property at substantially below market price. It happened to me before. Some valuers are idiots.

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Added on June 30, 2008, 6:01 pmYes, every single of one your application is on record. Banker from Bank A can even find out what is the margin of finance you asked for from Bank B and Bank C and Bank D. If the first bank to give an answer rejects your application instead of approving it, you'll be in trouble

This post has been edited by Moneylust: Jun 30 2008, 06:01 PM

u means the valuer are the bank's staffs?
i know that bank will check the house market value and the provide the loan according the house market value but no the selling price from sellers... i asked a banker and he said house price can quote below market value, maybe that house extremely poor condition? impossible poor condition house but still have to follow market value...

hm.. no wonder got a bank no giving me any news since 3 banks approved my loan...

This post has been edited by gkl83: Jun 30 2008, 06:13 PM

from my experience, valuation is only done after offer letter is issued. their margin in the offer letter will be based on s&p price or valuation, whichever is lower.

unless of course your property is grossly overvalued from the start, then the bank will be suspicious.

My prediction would be the housing market may be soften in the next 12 mths. Although raw material cost increases, but because the demand for houses may be lowered in view of the current economic and political instability. So demand low, supply high... what you guys think on the prices? ))

robertngo,

<< you cannot expect the developer to sell at cheaper price even is sales is slow.>>

Who say so?? The developer is borrowing money from the bank to build the house. They pay interest on those loan. Every day that they do not sell the house, they lose money. Ditto on every single business that has inventory. It is a question of who has more staying power.

It is the same as people that who lost their job and has to sell their house. They have to do it even at a loss. Or else, they will go bankrupt.

Dreamer

if demand low, supply low?

if demand low, why developer going to launch new houses that may cause the loss for themselves?
rather that they invest the money on another sector instead...

if sell the used house when low demand period
they may reduce the house price if they desperate to get the cash asap...

the valuer is not working for the bank, some bank can use the same valuer, the problem with my unit is the owner spend more that 60k on the renovation, one stupid valuer not ask about renovation first value it at 260k, come on lah, my unit is on high floor corner unit the original price with not renovation already 288k, and with some many renovation done. he just pick the last transacted unit price for the condo.

apply for too many loan can hurt my chances? i dont know about this, last week straight after pay deposit i contacted several bank and some banker even call me proactively, i not working that two days so send my application to all the banks, cannot do like this meh?

They can see from CCRIS how many loan application you have applied for.

This post has been edited by cblau: Jun 30 2008, 08:17 PM

the agent tell me they need to get the value first before getting approval, if the property is overvalued the manager will not approve the loan.

Yes this is only true if developers have thin margins and can no longer absorb the cost of raw materials. But in Malaysia, its all speculative and greed and margins are BIG in property development. We get indons and banglas to build houses at dirt cheap unskilled labor cost but our homes can cost as much as developed countries where they use skilled labor at AUD or USD 15 per hour.

today several bank approve my loan, right after bank negara make anouncement it will hold rate at current level at this month meeting, is this connected?

Don't think their margin really BIG. If so we won't have so many abandoned projects in our nation previously, make more than 10k++ ppls suffering right now...

u getting Fixed Rate package right? if BLR fluctuation happened, bank dont have authority to advise the fixed rate interest that agreed in the loan agreement earlier...

their margin is really that big, other wise they won't be that rich.

houses in malaysia are way overpriced, most of the houses are sold twice the price of the cost to build one.

fixed package only got one PBB 5 year fixed at 5.4, other banks are flexi package.

same with me taking the same packages from PBB...
hopefully inflation or recession happen within this 5 years...
later economy may stable and BNM giving better BLR rate after 5 years and advice for lower BLR from PBB...

This post has been edited by gkl83: Jul 1 2008, 07:16 PM

All,

It does not matter whether the developer has thin or thick margin.

A) If the house is not selling, it MIGHT be more profitable for developer to abandon the project and leave sold house half completed.

B) If the project is completed, they may sell at any price just to stop the bleeding. Or, they will build mor ehouses.

<< Why build more house when there is less demand??>>

C) In USA, there are developer that is doing this now. They have to in order to get NEW LOAN and MORE MONEY to service the loan of the OLD project that cannot sell. They have to keep on building to stop going bankrupt.

D) This is similar to people applying and getting new credit card to pay the minimum balance of the OLD credit card debt.

Dreamer

wanto ask , is it possible for a project tht is 75-80% sold n is their maiden project in their big piece of land to go abandoned ? chances are?

yah loh, praying hard for economy to recover within five year. not brave enough to let my largest commitment every month be subjected to changing interest rate during this trouble time. better safe than sorry.

This post has been edited by robertngo: Jul 1 2008, 09:20 PM

I got my fixed interest rate from AIA...less worried...

Lets put it this way, whether or not to buy a house now really depends on your needs. If you are an investor, of course you have the luxury of waiting for the right price to come along. if you plan to get married of whatever reason that requires you to get a house in the near future, you got no choice, you cant really wait for the price to go down. Should there be a big time end of the world recession like some of you guys predicted, buying house will be the last thing in your mind.

@tzeyin,
Yes it is possible.

if the project is 80% sold also does not mean the company have all the money needed to completed the project, the worst thing is the developer develop until like 70% completed and run away, all the buyer need to pay loan on their 70% completed property

I guess time will tell which way the prices will go in the midst of this coming recession. I'm still pretty certain prices will be driven downwards instead of up

Congrats Coincidence or not, after the announcement, a banker called me to say the offer letter is ready. Read the letter today - very competative rates

Today's Sunday Star has some related articles -

http://www.thestar.com.my/news/story.asp?f...3487&sec=nation
Builders cautious about starting new projects

http://www.thestar.com.my/news/story.asp?f...3232&sec=nation
Desperate times force contractors to turn down government jobs

http://www.thestar.com.my/news/story.asp?f...3489&sec=nation
Ministry may cut tax to help developers cope

http://www.thestar.com.my/news/story.asp?f...3491&sec=nation
Contractors return jobs for government projects due to rising costs

http://www.thestar.com.my/news/story.asp?f...3113&sec=nation
Housebuyers hope there won’t be delays

This post has been edited by joe_mamak: Jul 6 2008, 06:01 PM

demand and supply will determine the price of houses, not cost. some developers have to build, because that is their source of income. if they dont build, they dont have money to pay their staff, to settle their borrowings etc. as such, they must keep to their plan.

some developers abandon their projects because or bad budgeting. some abandon their projects because of sudden surges in the cost of materials.
some abandon their projects because they have siphoned all the money out of the company, and they cant pay their contractors.

also, don't get too excited about the blr being maintained. i think it is just a matter of time before they are forced to increase it. spending is still high.

i got a friend who's a small time developer....he told me the margin around 40%....


so you are right, it's sold almost twice the cost to build one.... but according to my friend...high risk, high gain la... they are risking all their money to build the houses...so it's proper for them to reap high rewards as well...

johnsonm, care to elaborate ur thought's on this?

kevyeoh,

<< they are risking all their money to build the houses...so it's proper for them to reap high rewards as well...>>

Come on. Please do not be so naive.

1) They get payment upfront from the buyer.

2) They borrowed money from the bank to build the house.

So, they are NOT risking their money. And, if things go bad, they can siphon the money out and abandon the project. And, you CAN'T do anything against them. All the risk is bear by the bank and the buyers.

Dreamer

worth buying house now, but must make sure that the location of the house is good (no.1 priority)

and of course your income is stable to pay the instalment

What I understand is, bank wont release the money to them till they sell certain % of houses - for example 30%. To get the initial 30% of buyers, they need to spend their money to build something to secure the buyers. That is probably the risk they are taking.

Our RM is depreciating fast.

If u have ample cash, should seriously look for currently under-valued property.

Riuken,

But, they get certain amount of down payment from the house buyer when they sell without building ANYTHING other than model house.

Most of the risk is with house buyer and bank.

Dreamer

i am not sure if you're in the business but i have a friend who's in the business himself and his company actually completed a few small housing project at mainland penang...so i think i can trust what he say unless he has intention to bluff me la... ...so i think they still have risk as well to lose their money.... that's what he told me... if he bluff me...too bad la...doesn't matter to me...

if all risk bear by buyer and bank, then everyone might as well jump into construction business? sure win ma....


This post has been edited by kevyeoh: Jul 10 2008, 09:34 AM

kevyeoh,

1) You need the connection to get approval in order to be developer.

2) Yes, he bear some risk but it is not as large as you think.

"Trust but verify"

3) You can do YOUR OWN critical thinking to figure out whether he is telling you the TRUTH.

4) Ask him when he actually put in his own money?? Only a small developer that CANNOT get loan from the bank has to bear larger portion of the risk.

Dreamer

---

Added on July 10, 2008, 9:56 amkevyeoh,

1) You need the connection to get approval in order to be developer.

2) Yes, he bear some risk but it is not as large as you think.

"Trust but verify"

3) You can do YOUR OWN critical thinking to figure out whether he is telling you the TRUTH.

4) Ask him when he actually put in his own money?? Only a small developer that CANNOT get loan from the bank has to bear larger portion of the risk.

Dreamer

This post has been edited by dreamer101: Jul 10 2008, 09:56 AM

bro...
that time casual talk la... don't drill until super detail and think a lot not to trust my friend...

but he did tell me he still need to invest a few hundred thousands also la... so at times, he cannot sleep worry cause sometimes the gov paperwork take a long time... so it's delaying his project....because u only earn when you sell the house and complete...if the project take a long time...u won't earn anything yet....

i'm just saying what i was told from a friend who's in the business... that's all... and my own critical thinking tells me that it sounds quite true he will need to dump in money himself... maybe to you a few hundred thousand is not a lot so that is not consider high risk... to me...sounds like a lot of money...

ok... nothing more to discuss... i'm just informing here what i know...maybe wrong info also...

i'm out...later become a flame thread and i sound like a retard without critical thinking.... chao....

Yeah, I agree. Or other forms of investment.

I am not sure property is the way to go.

@Scorgio,

What does RM depreciation got to do with properties?

And, when u say depreciate, it depreciates against what lah?

This post has been edited by Pai: Jul 11 2008, 09:01 AM

Well, what I meant was, the value of our money is shrinking fast.

So putting money into property, will at least retain the value. Heck even buying a solitaire, or gold bar suffice.

At the current rate, 10-20 years later, a person holding a manager's post (salary RM6-8k range) may not even afford a link house in Subang Jaya, Petaling Jaya etc. This view was brought up by a consultant during one of our meetings and agreed by all attendants (mostly high ranked officers of a developer).

if even manager cannot afford to buy a link house, who will be staying there? if there is no demand how can the price keep going up?

Somehow, sometimes, whatever theory on asset management & ROI can't be applied to property.

Hi,

Im also thinking of buying a new house. It should be below 200k most probably. Where should be the best location in KL area or cheras?
Im glad if there is any input.

Thanks for the future feedback.

I see, and I use to describe the scenario as declining purchasing power instead of currency depreciation.

Totally agreed on the gold and property theory, but aint sure about the solitaire idea though

Ya like the people in swiss, all rent houses because they cannot afford the prices eventho they earn tonnes. Most houses are owned by businesses.

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Added on July 12, 2008, 2:43 amcheras below 200k....hard to find oredi. Maybe further south.

This post has been edited by mIssfROGY: Jul 12 2008, 02:43 AM

Further south, how about ampang area? any recommendation?

========

agree...declining purchasing power is the more accurate term...

but property is a general term, in my opinion, apartment does not guarantee on long term that it will protect the value of your money.... but for landed, yes...
i don't know about KL...but lets say in Penang, i think the price of apartment has already been stagnant for the past 5 yrs and it won't go up anytime soon because there's oversupply...

Very good observation, and couldnt agree more.

KL is not too diff, except that nowadays with current new launches are going at ridiculous levels, the older condo and apartments starts showing upwards capital gains.

You could got spectacular returns from landed props, but you must haveholding power of min 10 years before u'll gain substancially. Your rental income from landed in the meantime sucks big time, not enough to even cover our installment. Hence why I always opt highrise investment, while I might not get 1000% return after say 10 years, I'll get minimum 300% returns after 5 years and some handsome monthly pocket $$$$ as a passive income.

ampang? Ampang is so near town, dun think u can even get below 300k. But not too sure about inner ampang la....but if u r referring to props nearer to town, i dun think so.

setapak quite ok what. naer to town and some of the houses still underpriced. hahahaha the only few overpriced housing are those area where no students go

ya bro pai...

generally.... i think if you want return via passive income, then you can consider apartment....earn from the rental there...if your rent is higher than the interest rate...then that's the income...

for landed...it's capital appreciation... a RM600k house over here is rented out at most for RM900 or RM1k... means RM12k for RM600k return p.a... definitely sucks big time...


so i think our idea is about the same...just a matter of which jalan you choose wanna go....
i just can't decide now which way i'm going... the rental or the capital appreciation route... kekeke.... but most likely if i can afford...i'll go for landed first....


This post has been edited by kevyeoh: Jul 12 2008, 05:38 PM

hehehe, this one is a bit of a gamble, but if it works, then u'll make tonnes of $$$$$$

Good luck mate, and PM me if u got any interesting buys

This is a good read from The Star -

http://star-space.com/news/story.asp?file=...94787&sec=pnews

Saturday July 19, 2008
A frank assessment of property & construction
INVESTING SCENTS
By S. DALI

ACCORDING to census only 5% of households in the country have a monthly income of RM10,000 or more. You would think the figure was a lot higher judging from the number of property launches over the last 2 years with condos, semis and bungalows selling for over RM1mil.

The recent fuel price hike coupled with higher cost of living and inflation may require a sober assessment of the local property and construction sectors.

There are about 4 -5 million households in the country, so we are talking of just 200,000 to 250,000 households with income of more than RM10,000 a month.
If you bought properties that are worth more than RM1mil, you’d better be living in them when they are completed.

A property purchase of RM1mil on a 30-70 deposit-loan ratio would be staring at a RM700,000 mortgage. That would be a monthly payment of RM7,000 - RM9,000. Even if you bring that down to RM400,000 it is still RM3,500-RM5,000 a month.

Hence one can safely conclude that it’s a market for rich folks and foreign buyers mainly. Rich folks being those who can put up all cash or 50% deposit hoping for a nice fillip in the near future.

According to the Masters Builders Association of Malaysia, building material cost for local contractors have risen by 25% on average since January this year. Following the recent electricity tariff hike, they should be looking at another 5%-10% hike in the coming months.

Coffee shop talk has it that contractors are already putting requests for price variations of a 30%-40% hike on the original contract.

Over the last few weeks more than 200 contractors have turned down letters of award for government projects. Some are asking for mutual termination.

Let’s look at some building material cost items:

Sand (washed)/t: 2006 24.00 / Q108 27.00 / June08 34.00

Readymix Concrete 40 M3: 2006 152.00 / Q108 186.80 / June08 234.00

Re-bar High Tensile/t: 2006 1,855.00 / Q108 3,169.00 / June 08 4,050.00

Property companies have been jumping on the super luxury market as the trend and sentiment were on their side. The huge success of casinos in Macau followed a very spectacular property boom in Singapore triggered by the IRs over the last 2 years. Hence some spillover effect is understandable.

Currently property prices in Asia-Pacific is still high but largely flat in recent months. The proverbial stuff has not hit the fan as yet. The wait and see attitude is masking grave dangers.

The big fallacy is to see property companies reporting enormous profits. Do bear in mind these are profits booked for the past 12 months.

Naturally developers would be the last people who would want to come out and sound the alarm bells. Many property companies in Asia-Pacific have delayed their IPOs over the last 6 months. These are the alarm bells.

We have to remember that property affordability and property speculation have a high correlation to local stock markets performance. In particular, it is more prevalent for Asia-Pacific because we tend to have a large portion of our GDP being listed, plus the fact that Asians prefer to do direct investments themselves.

Just look at the equity markets from 2005-2007 and note the markets’ performance. Now look at the markets’ performance over the last 6 months. The doldrum is only just working its way into the financial economy.

Looking ahead, we will still have firm commodity prices, high inflationary expectations and likely higher interest rates – all not exactly friendly to stocks or property markets. Enough said.

In fact the real demand in the market place is for properties between RM300,000 to RM700,000 which has been sorely lacking. Even semis in Balakong and Rawang are nearing the RM1mil in new launches. It all boils down to affordability, and that’s the affordable range.

If you had bought properties that are worth more than RM1mil, you’d better be living in them when they are completed.

Ask anyone in property about the price for concrete and steel bars, and you will get a good idea of the huge jumps in construction and material costs. All things being equal, higher material cost should mean that your existing property should be worth a lot more as the replacement cost has gone up significantly.

If you bought 12-24 months ago, technically speaking your house is worth a lot more based on higher building materials’ cost alone.

Why then is the property market flattening out? When things dictate that property prices should move higher, but it doesn’t, then something is very wrong. It’s an old adage but worth repeating here (for property and equity investors): If something that is supposed to go up doesn’t, it is very likely to go down.

Sub contractors are now more willing to give up on the jobs secured, even paying the penalties and giving the jobs back to the main con because cost of building materials have gone up so much that they will be making losses if they go ahead. Just look at the run up in billing estimates for the second Penang bridge and you will have a good idea what we are dealing with.

For the super luxury market, probably less than half will be tenanted if at all. One can expect more to come back onto the market place in the coming months even though the replacement cost for these properties are actually higher.

The merry-go-round has stopped for super luxury items. Just witness the property markets in Singapore, Hong Kong, Thailand, Indonesia, China and even Australia.

The only sub-sector that may hold up well might be commercial buildings but that’s largely due to under-investment the few years following the Asian financial crisis of 1997.

As things stand today, just in Selangor alone there are already 140 abandoned projects from the previous cycle, involving the 47,000 odd units worth RM2bil. The huge cost run up will increase the likelihood of more new abandoned projects.

We Asians tend to view property investments differently. We tend to do it with minimal discussions with friends or relatives, as if its a crime to let others know that we are buying properties.

Maybe people will think we are rich, or too rich. In the end we end up discussing property investments with property agents, and reading tomes from property magazines. Just note the number of new property magazines launched over the last 2 years. After all, this is probably the most important financial decision we make in our lives.

The probable consequences in coming months

· Properties having sold 100% off the plan will see some of the developers starting to lose money if they are less than halfway through their projects as they may not have secured the building materials cost budgeting.

· Some smaller developers will be hit even harder and there will be more abandoned projects. Better to run than to continue the project. Developers cannot really go back and ask buyers to pony up another 30% to their purchase price, or can they?

· A substantial portion of the economic vibrancy in Asia-Pacific over the last 3 years has been due to strong property prices. A similar contraction effect will happen if things slow substantially in the property and construction side.

· Luxury properties will see at least a 15%-20% easing in the coming months even though the holding power is stronger. 15%-20% is about the loss that speculators are willing to take going forward.

· Real affordability is between RM300,000 to RM700,000. Anything above that is a different market, but they will still be affected. Completed units will have to be left empty or be rented at cut-rate prices. Maybe we can rent a RM1.5mil house in a gated community at RM3,000 ? who knows.

· Affordability is a function of outlook on inflationary expectations as well, and that’s not looking good

· Government construction projects will have to be revised higher to be viable or else the successful bidder will just walk away, even with penalties. Construction spending will rise in the coming budget but not in actual number of projects. Just accommodating the higher costs alone will move the budget a lot higher.

· Developers who sold 100% off the plan over the last 12 months may now be looking at making losses just to complete the projects.

· Coming months: a slowing US economy; higher inflationary expectations; commodity prices to stay firm; global equities under pressure.

· Rental market is a lot better in Hong Kong and India, showing a preference to defer property purchase. Expect that trend to be replicated in Singapore and Malaysia as well.

· While Asia-Pacific has weathered the US sub prime implosion well enough, the recent Vietnam implosion has rattled some feathers of regional developers.

· Be prepared for margins destruction, projects disruptions and scrapped/deferred projects.

Things we need to do now

· Lower your leverage and borrowing substantially, even if it means making some loss.

· By lowering your leverage, you are basically making it available at a future point in time to capitalise on probable better opportunities in stocks and property.

· Re-evaluate your property portfolio, be careful if there are yet to be completed properties you have bought.

· Be very wary of buying from smaller developers as the risk quantum has increased substantially.

· The state and federal government should start imposing adequate “capital requirements” for existing projects and new projects. Don’t wait till they abandon the projects. It is a lot harder to revive once abandoned.

· Think about the potential jobs constriction within the property and construction market place and plan your policies to mitigate those effects on the broader economy.

· Even developers with overseas projects may not be immune unless the rise in material cost has been factored in fully. Even if they were factored in, a 50% jump in cost may make many of these projects unviable. Only places such as the Middle East countries swishing in petrodollars can maintain the aggressive infra spending plans over the next 1-3 years.

· The economy may hold up a lot better than the general population as oil and gas receipts and plantation receipts will be positive. Generally speaking the general public’s wallets does not have a high correlation to oil or CPO prices, if there is even a correlation at all.

· Authorities should only allow build-and-sell developers over the next 3 years. As consumers, buying from the secondary market place would be a much better option than off the plan.

· A three-year contract in the Middle East with lucrative terms on a construction related job should look a lot better now.

· The government should defer the big projects which may not be the priority now. Instead it should spend more on Klang Valley’s transportation system.

· S Dali is a pseudonym. He is an ex analyst/fund manager and active blogger. (malaysiafinance.blogspot.com) who says he is too young, too old, too sarcastic, too dark, too funny, too charismatic, too poor, too Cantonese, too Malaysian, too frank, ...too bad ..

as long as you have stable job, why not? it's for your own stay anyway. for me, buying a home is always the first major investment one should do. but buying a house is not.

I know some so-called "investors" (you know who you are) who are either overleveraged or own underconstruction properties, are wetting their pants and are looking for suckers to buy their properties.

That bad?

Poor chaps.

why don't they just go to the toilet? you would think that investors would know better...

is it a time to buy house now?
i don't know..cause i'm not investment guru...

but i have already lost RM40k because the house i was offered last year...which cost RM320k is now RM360k...

like what has been said...if you need a home and u can afford it...just buy if everything is right for you, price, location etc cause if you wait...you might not get the chance anymore...

if we keep on waiting for the "end of the world" kind of recession like mentioned above, i bet we will forever be renting a house to stay or staying in with the parents
like what one of the guys mentioned, is it worth the wait ? your guess is as good as mine.

@kevyeoh,
Let's say the house is supposedly worth RM500k now [think about who determines the worth?!] but because of the bad economic climate, U could only liquidate it for RM400k.

Do U take it as $ lost or $ gained; assuming the house was purchased @ RM320k cash [make it easier hence no interest calculations]

And pls don't mind me; I'm just babbling away whilst waiting to get off work. Am done for the week

tinkerbel,

One of my neighbor's house just sold for 180K. Another neighbor bought his house at 250K 6 years ago. This is going to be a VERY BAD recession like you have NEVER seen before. I bought my house at 145K 10 years ago.

Dreamer

@dreamer101,
You're certainly right; I'm forecasting it to be a lot worst than the last one *gulp* AFAIK cash is indeed important now - and not to mention, job security *grins*

uhh sounds like a good time to invest!!!