All,

Technically, you ONLY KNOW you are in recession after it happened. The OFFICIAL definition of recession is 2 quarters of negative GDP growths. So, normally, you only know you are in recession after you are a few quarters into recessions. Now, even in USA, they can revise their GDP numbers after a few quarters.

Dreamer

Big deal lah, my pocket money is shrinking badly everyday

@muscaa,
At d v least U still qualify for pocket $, I don't! And I haf to fill other people's pockets before I can even fill mine *siGh*

with all the manipulation of figures going on nowadays, the definition of recession might have to be revised

C what i meant? Inflation alone wont send us into recession. The key to recession here is economic activity.

Show me which figures that say we have severe decline in employment, investment n corporate profit n i'll agree with ya were in a recession.

---

Added on August 2, 2008, 3:25 pmjohnsonm has the answer for you, how can you trust the govt official figures on employment, investment and corporate profit?

Anyway a lot of people are doubtful about the property price in malaysia, soon or later the properties problem in USA/UK will end up here, but i think the severity is probably not as severe as in USA

This post has been edited by muscaa: Aug 2 2008, 03:29 PM

So u r telling us that u got nothing to justify why werre heading for a recesion,apart from your own hunch,rite?

Doubt all u want about malaysia's property prices,but i could guarantee u high prices are here to stay,UNLESS construction cost goes down by 50℅. Time will tell

Recession is difficult to predict. Unfortunately, I believe our current political environment makes things more uncertain than previous years (I am not saying political situation was way better before-pros and cons in all situations-but certainly less volatile and uncertain.) thus creating a sense of general insecurity which is never good.

Like I said before, I don't know if we will be facing a recession but if we did, I won't be surprised and I have ensured that I am prepared for the worst. If other people, investors and non-investors alike, can say the same then we will not face a huge meltdown as USA seems to face with the subprime. However, who knows? Too many invariables to consider and like many investors have been warned-previous performance does not guarantee future performance. We can only speculate based on previous events and current events which are numerous.

However, as Pai said here, it is doubtful property prices will drop drastically (In KL anyway) as cost of construction materials rise and demand remains at the very least steady (Shelter is one of the basic human needs after all...). If I had to give an estimate I say that properties won't drop more than 5%-10% and even then I am stretching the price decline estimation. This is again speculation as I am not certain if we will face a SubPrime crisis like the USA, if we did then the entire scenario changes but lets leave this SubPrime possibility out of the picture as no one can say for certain.

Furthermore, let us face facts that once prices on goods such as construction materials rise, they are not likely to decline again. I for one doubt it will decline 50%. Those who can pay by cash during times when people are forced to sell out will certainly feel grand but how long does one want to wait for capital appreciation, which is not guaranteed, and there is no guarantee that one can maintain constant tenancy in their property. Also, even with capital appreciation-it is only realised once property is sold and cash is in the bank or a person takes out loan with home as collateral.

I dare not make claims that there will be no recession or that property will continue to gain capital appreciation or be able to rent properties (even strategically located properties) with no trouble. Properties are an investment which may or may not prove profitable depending on individual situations but let us not get ahead of ourselves and declare that strategically-located undervalued properties are going to fall from the sky.

I must admit that I do hope FD rates increase though as I would love to reap profits from that.

@shadowz,
AhH..... loads of cash at hand huh?

org kaya alert

no la~ but it would beat the current lousy 3.xx% p.a that is offered now. I haven't learnt enough to invest money in stocks so FD it is for now. Sad to see that I am getting so little for it though so hoping interest rates climb up... At least then my money working bit more harder no? Hehe.

If really kaya then I would buy several nice (& rentable!) properties with cash and enjoy passive income lor while still having cash in FD too. ;

Sigh... Orang biasa - got to work hard for so little k. U all are the ones who seem to be kaya with your properties and masterplans I cannot conceive of! Hahahaha.

poor chap like me has to take risk buying propeties and "pray" for decent returns.....

Org kaya can afford to have only 3% return, and I personally would do the same if I had couple of millions in da bank, heheheheh

Agree if u ask around with people doing business locally, u will basically know how bad the situation is.

well, you are playing risk. while orang kaya take position to avoid risk....both wil come to a crosspoint also.
if one risk based on speculation, then one is due to bail by speculation, if one risk by strong understanding of fundamental, the one is to bail by the fundamentals...

well, if all goes too well in business without slowing; tats worst.

and my view is the same with you guys. I know that we are and will going thru tougher times, in fact I've been saying the same thing all this while, but strongly disagree with claims that we r heading for a recession as there is no evidence or signs apart from the "oil-money" argument, which is only half right.

I am not quite sure whether we are heading for recession or not which atm I dont see any sign of it. But I do know which our kind of economy situation like this + the political instability, a single problem can easily trigger it.

This post has been edited by billytong: Aug 3 2008, 09:19 PM

A lot of our contractor is complaining that the cost of construction material is keep on increasing. Even though the fuel cost is reducing slightly, it doesnt have any significant effect on the material cost as looking from the previous years, it will take a long time for the materials to reach a stable price..

So, most likely that the new houses nowadays will not come cheap.. Already the new houses cost rise to about 5-10%.

Not quite true, when u talk about an over speculated property like those luxury Condo which popping out in Klang valley @ much faster rate than the number of rich people growth rate. Over supply + luxury + overspeculated, the material cost of these properties plays much lesser factor in their price. The land price(land price is also speculated) + demand is the major factor that determine the price of these luxury properties when those interest are off, u know what will happen next.

I would be less worry about those mid to low end properties in KV. The supply it limited.

True. Wasn't there a statistic showing that there were less than 10% of Malaysians with a household income of more than RM10,000/month? I cannot recall where I saw that now though...

There are very few Malaysians who can afford to rent luxury properties and quite frankly, if they are that wealthy - they can purchase their own properties rather than rent right?

I wonder when the luxury condo trend will stop. There are only so many deep pockets that developers can go and dig after... Unless of course Malaysia is prepared to let foreign investors own the most expensive condo's in KL. *shrugs*

All,

1) What is the mid range price of house that people actually can afford?? 300K?? 400K?? 500K??

2) IMHO, 200K to 400K is where most people can afford.

3) Remember the 33% rule. Yes, the bank can loan you above that limit but whoever is stretch beyond that limit are HIGH RISK for financial disaster.

4) For 30 years 300K loan at 6%, the house payment is 1.8K per month. The household income needs to be 1.8K X 3 = 5.4K per month.
For 30 years 400K loan at 6%, the house payment is 2.4K per month. The household income needs to be 2.4K X 3 = 7.2K per month.
For 30 years 500K loan at 6%, the house payment is 3.0K per month. The household income needs to be 3.0K X 3 = 9.0K per month.

How many household that you know actually earn that much??

5) If the BLR went up to 7%,

For 30 years 300K loan at 7%, the house payment is 2.0K per month. The household income needs to be 1.8K X 3 = 6.0K per month.
For 30 years 400K loan at 7%, the house payment is 2.7K per month. The household income needs to be 2.4K X 3 = 8.1K per month.
For 30 years 500K loan at 7%, the house payment is 3.3K per month. The household income needs to be 3.0K X 3 = 9.9K per month.

How many household has the additional income to handle the changes??

Many more households are stretch to the margin than you think.

Dreamer