come on guys, get with the meaning, you need to sell the property first, find a buyer!  This is not liquid when it's a buyers market only when it's a sellers!  Ask California residents who are now taking a 60% hit on million dollar mcmansions as there are NO buyers and actually as I stated two weeks ago, in the month of July, there was not ONE transaction in the USA of greater than 500K.

Stocks, PM's even Currencies - Equities - Bonds can all be sold quickly if needed.  Your house, car, boat and antique Ming Vase, NOT!

Yes Pai, agreed but what avg. malay is going to know how to do it!  There loss becomes someone else's gain.  They will never know the liquidity we are talking about here.

You keep coming at this from your highly knowledgeable position but one liners arent helping your fellow man invest in RE with options.

There are extreme pitfalls for the novice RE investor in a good market.

What is the purpose of this blog if not to assist the group with strong explanations rather than subtle soundbites!

Thanks Pai, strong response and worthy for those here to view.

As for the US comments, I only use these as an example of speculation, emotion and yes how the US woes have an ultimate effect on global investors.  The US coughs, other countries seem to get a cold.  I could have used the UK or EUROZONE as same example.

For the record, I have never said properties on KL could drop to the levels of 60%, I have maintained a correction of 10-30% based on those areas and types of props, landed or not which have had run up due to speculation only.  You will see significant drops in China, HK and SING.  Malaysia will be okay.

My point on investing is an important one, at no time should your total investment in any one asset class be too high.  In this case I use a 40% of my assets in RE as a max.  RE is easy to invest in, and in a downturn not easy to sell unless you drop your price quickly and grab some wanna be vultures before the sellers dry up and play the I'll wait for another 10% down game.

As for these other investements listed, these are the liquid ones I tend to use and with a good mixture can net an avg. of 12-15% return but still stay ready for any volatility which is what the next decade is all about....globally.  I like you around 2007 used the Buffet model but saw the bubble forming and had to learn quickly what other asset classes were needed for balance and in some cases to some heavily weighted in RE, survival!

I have been a avid RE investor for years and have done extremely well however may I subscribe that this is the first time in history where I see a very unique trend occuring which mates credit expansion with demographics.  The boomers, gen x and gen y's are all in trouble and being in one asset class such as RE is already shown to be troublesome.

The problem is simple IMHO, our people are partying and drinking from the punch bowl similar to those in the rest of Asia and world and to the point in which the RE market is defined as UNAFFORDABLE.  This is where the trouble starts and eventually ends.

The solutions as I have posted before:

1. Dont buy what you cant afford thus keeping the 40% rule in RE investments. 
2. If you can meet this criteria then it's all about location and future trends in KL and KV.  I see a highest correction in KL with affluent areas as trends (cheap borrowing/relaxed banks) driving up these the most in the last few years along with the new speculative group who have bought into new developments in these areas.
3.  If you have bought previous to 2002, no problem!  If you have purchased 2003-2004, with the run up of 50% then fine but if you purchased 2006 to now, take a look at recognizing these nice gains and sideline yourself with liquid assets ready to re-invest.
4.  RE is an emotional game right now.  The wrong trigger can turn it to negative!
5.  If the Articles in the MSM are talking about a bubble or potential for it, the position is already there and it's just a lagging response to try and curb it via measures on speculation.
6.  Industry professionals when asked to comment on the perceived formation of a bubble are all neutral to positive means they hope they can ride this one out.  You dont have an industry professional, who's livelihood depends on the health of RE this question and expect them to be bearish even when the writing is on the wall.

There are two types of people on this blog, invested and not invested.  You can guess which one I am right now.  I am not counting on the fundamentals this time as there is a massive disconnect between what is truely happening and what is perceived.  I have been there before, have won and lost but know the new game to be a divided one between the afluent and not, just like the middle class disappearing in the western world, the same will occur everywhere.

As for location, I am looking to purchase next only for personal use!  This is in these affluent areas that are most bubbled, hence my position!  As for investing, looking for land, land that can be worked with minimal infrastructure for local and export purposes.  30-60K per acre on outskirts of KV. 

That is all I can share for now!

We believe Malaysian property market is currently at the general recovery stage.

In the past yes, moving forward no!  I believe the age of the house is over but will invest in a home during the correction.

People still have to rent though so there would be opps I might look at but with rental returns very low now and I believe in future, I will put my liquidity to work searching for higher yields and what I believe will be some rare opportunities in the sectors I follow.

but it seems that this cycle is very very long... when did the up-swing start? it's been a long while and has not shown serious signs of reversing...

also, bubble or not, it will only burst if majority of buyers are speculators who cannot hold... i think there are some such speculators around but i also think a huge portion of buyers are investors who can also hold if prices drop...

so i personally think that there may be a small down-swing... but it will not be a crash.

I do found nowadays some subsale properties is cheaper than the new......

cranx,

The KEY to a REAL and SERIOUS real estate bubble is the abandonment of the 28% rule.  Aka, bank not allowed to make loan to people with the monthly repayment exceeding 28% of their income.  This rule was dropped in USA about 20 years ago.  Until this happened, the bubble in Malaysia will never be as serious as what is happening in USA...

Even in the 10/90 or 5/95 rule, I believe that the buyer still have to qualify for loan under the 28% rule...  Please correct me if I am wrong...

Dreamer

It is very dangerous to have this kind of mindset, aka try to time the market.

This is not called investment, it is purely a speculation mindset to start with.

It’s getting way too costly to own a home

AS I will be getting married next year, I have been looking forward to owning my first home. However, it is really painful to witness the ever-increasing prices of houses which is outpacing my income growth.

Recently, I walked into the sales office of a new condominium project and the sales person told me the developer is giving a special eight per cent discount for units on the lower floors. The person told me that I only had to put down two per cent to secure a mortgage, as they will report to the banks the full price of the condominium, and give me the eight per cent discount without the bank’s knowledge.

Coupled with ever higher loan-to-value ratio, it sure is a sign that the market is now beyond the reach of most genuine home buyers. Otherwise, why resort to such tactics to entice buyers to sign on the dotted line?

This reminds me of the hey-day before the 2008 crash in Britain. Just before the crash, British banks were lending up to 110% of the value of a property. Any form of affordability test was circumvented by mortgage advisors who encouraged buyers to “self-certify” their income levels to declare an inflated income.

The whole of the UK was in a euphoria, and everyone was piling into the “sure-win” property market. Mortgage repossession in Britain has increased drastically in the past couple of years, probably causing ruin to the lives of those caught out.

After looking at the property market in the Klang Valley, I am now more inclined to rent my first home.


I can rent a nice house in a good area for RM2,000, whereas I would have to pay RM4,000 or more to the banks if I were to buy a similar property in the same area. Many people say renting is a waste of money. I don’t see how paying double the rent amount to a bank to service the interest is not a waste of money.

http://thestar.com.my/news/story.asp?file=...40931&sec=focus

Maybe our friend need your guiding light in teaching him RE, mortgage, rental, etc ... 

kekeke... you are much more direct than me... at least when i replied to him, i was polite...

Site line a little....

Since China & HK has set so many restriction on property investment, do you think mainland chinese will invest in Singapore and Malaysia?

or it is happening now?

went for a preview of one of these property gurus..
the actual course abt 5k..
is it worth it? ...any opinions from those whove signed up for such courses will be appreciated.thanks

Malaysia is expected to adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up in consumer credit card spending and speculation in the property market.
“We believe Bank Negara Malaysia (BNM) is focusing on tackling household debt in 2011 to promote healthy credit card spending,” said Kenanga Research.

In its 2011 “Wish List”, Kenanga said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.

It said bank loans should be lowered to between 70 and 80 per cent value ratio for third mortgage, it said.

Bank Negara should also consider capping maximum of two mortgages for each borrower, it said, adding that such a rule would slow down housing price appreciation rate, going forward.

Should tighter borrowing rules be enforced in 2011, it would not have any impact on loan growth this year as borrowings are anticipated to remain strong till year-end, it said.

“But we are cautiously optimistic on business loans as businesses in the next six months may be negatively impacted by global economic turmoil and Malaysia''s economy is not immuned from moderating global growth,” it said.

The research house said it was cautious for the second half of this year due to healthy loan growth but increasing risk on slower growth in the business segment, namely manufacturing and exports.

"Profit margin squeeze is directly triggered by the wave of intensely- competitive pricing, moderate growth expectation and possibility of a slowdown on mortgages if 70 per cent to 80 per cent loan-to-value ratio (LVR) is implemented.

“We see the implementation of a blanket 70 per cent to 80 per cent LVR cap as a real challenge to the industry's loan growth next year and could put pressure on retail banks,” it said.

However, strong asset quality suggested lower credit charge-off, going forward, compensating net profit for the lower top line growth, it said.

As for credit cards, Kenanga said new measures should see tougher limits on the number of cards a person could hold and lower credit limit on each card.

Bank Negara should restrict a consumer to own only two credit cards from two banks of their choice and allow people with an annual income of above RM24,000 to own a credit card from the current minimum requirement of RM18,000.

The central bank should also reduce spending limit by 1.5 times their monthly salary (currently 2.5-3.0 times), set at the bank’s discretion for first-time applicants.

“In our view, stricter credit card rules are prudent and limit the risk of rising household non-performing loans. It will curb spending-spree cultures that have surfaced in certain segments of the population recently,” it added. -- Bernama
Read more: Tighter BNM rules on property sector likely http://www.btimes.com.my/Current_News/BTIM...l#ixzz12EW1LxQ8

With all these crazy price increases, it is proof that the property bubble is already happening. As with all bubbles. it will burst and those who have bought at much inflated prices will pay a heavy price. Only upscale and stable areas will be safe. So please do not even consider buying properties in non - prime areas at these over inflated prices.
__________________________________________________________________________________________________________________________

Property investment in the new decade

The times have been good for property investors in the past couple of years. Prices in certain areas, particularly in selected areas of Kuala Lumpur and Petaling Jaya have risen significantly, some as high as 50 percent. And as a result of this rise, practically all property investors had made money. In fact, some people have seen their net worth jump up by 30 or 40 percent because of the price rise. For example, a young colleague who purchased their house two years ago saw the value of their house increase from RM950,000 to RM1.3 million today. Of course, the owner was all smiles when they told me the story.

I am happy for them. As an avid property investor, I have benefitted from the rise myself, so I am certainly not complaining. At the same time, I must admit that I have some reservation about the whole scenario. The price rise has distorted reality to many investors, including my colleague. Because the price climbed up as soon as he bought the property, and remained at a high level even today, his view on property investment is seriously distorted. He thinks that:

1. Prices will go up as soon you buy a property.
2. The gains will be in double digits per annum.
3. This is normal.
4. Prices always go up.
5. It is easy to make money in properties.
6. He is a super genius when it comes to property investment!

Long-term property investors will quickly point out that none of the above are true. That’s right – none! For starters, I can tell you the current situation is exceptional. It wasn’t like this five years ago, and certainly not ten years ago. I can also tell you that times are not going to remain this good forever. Prices do not rise to the sky, and interest rates do not stay low forever. In fact, interest rates has already climbed (or to use the toned down term of ‘normalised’) by 75 basis points already this year.

Why am I so sure of this? Simple; I have seen similar euphoria before (the first in the mid-1980s and then in year 1997 during the Asian Currency Crisis), and the story did not end well on both occasions. Like most bubbles, prices edged up slowly initially. The initial buyers made money and this attracted others to invest into properties as well. And as prices climbed higher and higher, the euphoria got to the levels that some people were rushing to buy because they were scared that the prices will spiral out of their reach if they do not act then. But when the market crashed, as all bubbles eventually do, a lot of people were seriously hit, a lot of money was lost, and that included seeing their properties being auctioned off by the banks.I see the same story being repeated today. On top of the ever present dangers, there will be massive challenges in this new decade. There will be much turbulence in the coming days, and some of them will be unlike what you and I have seen or experienced before. This may include double-digit interest rates, multiple bank failures, currency crashes and explosion of the derivatives market.

As a result of the new challenges, the investors using the current success formula of buying five properties at one go (by paying the minimum down payment and borrowing to the hilt) will be seriously hammered. They will experience much pain, to put it mildly. Some people will lose their properties, some will lose more than money and yes, some will become ex-millionaires.

Almost a week past after the 70% LTV policy announcement, can any agent or expert here point out the actual effect to the high end properties price?

Personally notice that price of some properties (landed) on advertisement has been lower this week. e.g semi-d from 2.4mil to 2.35 averagely. Could it be individual case?

Fortune favours the bold 

Don't discourage her lah.  Must cheer her on. After all, people say: property prices in Malaysia always go up one ..... no bubble one .....we are still cheap compare to HK, Spore, Shanghai  one

err... if market heads south, both suffer la... the bold and well-informed who masuk also kena... 

The price is really not encouraging for those youngster who wants to have their own house.. Not sure whether gomen can do something to assist lower income ppl to secure their house, especially in town area, things are too expensive..

Yes, i renovated it and rented it for 2 years at double the basic unit usual rental. I recovered my renovation cost within this 2 years, and the last 1 year choose to keep it empty as my vacation home in Penang. Before that, there was problem of strata title, bad maintenance, developer's bankrupt, parking problems, congestion. All these are now solved since residents form their own management committee after getting strata tittle. Also some new highway was building nearby. The price of the property gained almost 100% from my initial purchase price, all these without being a speculator.

I would define a speculator as someone expect capital gain from their investment rather than cash flow positive. In this case i do accidentally gained in capital though my initial intention is for cash flow.