let's not put things to the margin of financing. 33% is still considerable high. Some banks would take into account the borrower's debt burden of other financing facility from other banks while some don't. try taking it as 20% of a person income while the rest could be placed for other charges for the house in case repair is needed, emergency funds for the house, house insurance, quit rent, etc. Not to mention also maintenance charges. Most houses now are gated community or with security which also have maintenance charges. Tho the amount may seem small but most owners fail to pay them.

hamster9,

That 33% number is assuming that the household has NO car payment and other loan repayment except the house payment. The TOTAL loan repayment should be 33% or less of a household's GROSS INCOME.

The bottom line is VERY SIMPLE. Many households are over-stretch financially in Malaysia.

Dreamer

this is very true. But I think very few are stretched finacially due to properties. Most of them are due to car loans and cards debt.

Its not uncommon for a family living in a RM500 p/m flat to have 2 cars

not just not oil money, we got timber money, FELDA money...many more..

like typical- the graph always projected UP


there is problem with Malaysia architecture & housing also; we are building heaps of high condo & fail to consider the core of household economic. Tats why it is not obvious for me to see condo up all ard when the property price for real luxury & can be afford by typical malaysia is there.

well, lets say the bank give free car, then cars is so cheap under company assets this & tat bla..

This post has been edited by KVReninem: Aug 4 2008, 07:24 AM

so rich man got 2 cars & staying in flat??

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Added on August 4, 2008, 8:02 amCan tell us which bank give free car? We all wanna join that bank Better if can get free petrol too

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Added on August 4, 2008, 8:10 amPai,

good comment but you are really in your own world

Just read the latest news in the star today

Malacca Building Contractors' Association chairman Liw Chong Liong said the current crisis was even worse than the last recession.
“Previously, we had recession. Now it's stagflation."

Read another news about car sales in the star

"THE motor vehicle sector is bracing for tougher times as demand for cars and commercial vehicles may falter on concerns over high inflation and weak economic growth."

Motor vehicle sales trend are monitored closely as a gauge for consumer spending.

RHB Research Institute, in an update on the motor sector last week, said consumers would likely hold back big-ticket purchases, including new cars, amid increased inflationary pressure.

A car is probably the second most expensive purchase for most households in the country after home mortgage.

The consumer sentiment index tracked by Malaysian Institute of Economic Research (MIER) plunged to an all-time low in the second quarter after the Government in early June raised petrol and diesel prices by 41% and 63% respectively.

Rising grocery bills and steeper petrol prices, coupled with weak stock market and stagnant wages, had, for most people, translate into lower disposable income.

This post has been edited by muscaa: Aug 4 2008, 08:17 AM

tat i got no idea..ask the bank hw. isnt it you win this & tat from bank..free car?

Obviously u dont get the point, and somehow Im not surprised

U r not getting the point and the above are signs of a slowdown instead of a recession. Again, NO ONE is disputing that we r heading for a slowdown.

Go read back the definition of recession that u've posted and show us some proof to support that, boy.

This post has been edited by Pai: Aug 4 2008, 12:03 PM

Ya agree..not to mention just the other day sinchew just reported F&B sales dropped 50%. We might not be in a recession yet...but by the looks of it....soon to be. Few of my friends already reported that their companies are either cutting bonuses or not paying bonuses this year due to slowdown. But then again, this of coz does not applies to all industries.

yeah some people here still wasting their time arguing about the definition of recession lah slow down lah and all kind of bullsh*t, still think that he's the most qualified person to define those economic terms & presume others are idiots in economy. A lot of layman dont even bother what the hell is recession. They just want to know how well their income can survive the recent waves of inflation, if not, for them it is as bad as recession.

We are just having a discussion here. And the purpose of this thread is to discuss whether property prices would drop.

Got LYN members just waiting to jump in, I suppose.

So anyway, has prices started to drop yet or remain unchanged?

I guess the outlook is still uncertain. Bank Negara has so far held off on raising interest rates. But some say it will be only a matter of time.

Lookin at the title ".. for 1st time hse buyer" i think hse price drop or not, its not as serious an issue compared to investors.

After all, if ur buying for own use, u might need the house already, unless if u can hold on to see how the market reacts, which might disappoint u, cos everyone is screaming 'cost increase 30% !'.

A developer put its sales on hold, yup, dun wan to sell, cos they are recalculating their sales price.

I know that house prices for future phases are coming up, not just cos of material prices, but it has been the practice always - developers never sell new properties priced below their previous phases.

Why ? Cos it will scare off future buyers who think the project is in trouble & depreciating.

dripinrain,

To most people,

1) A house purchase is the LARGEST FINANCIAL decision of their life.

2) They spend the rest of their life to try to pay it off.

So, how can this be NOT a serious issue for them?? This is not like buying a hand phone.

You could buy a house for X or 10% less. The difference of 10% is A LOT of money to almost all people. How can this be NOT SERIOUS?? Do not RUSH into makeing this kind of decision. You will be paying for the rest of your life.

<<I know that house prices for future phases are coming up, not just cos of material prices, but it has been the practice always - developers never sell new properties priced below their previous phases.>>

3) Who said that a person cannot buy house from secondary market?? In fact, it is RISKY to buy house in new phases when we are entering recession. There has been MANY abandoned projects in the last recession.

Dreamer

unfortunately most banks take 33% and most loan officers would only educate their customer of 1/3 of their income to qualify. They don't care whether you could manage or not. Probably later on, Mr or Miss XYZ gets a car after their housing loan. But in the long run, many end up having to pay thro their noses.

depending...i'm having such nice list of properties, especially prime areas for lelong as well... i guess we all know wat it could mean right?

It would be a matter of time for BNM to raise the rates. Just that this particular quarter of the year, it seems to be affecting everyone on the fuel price and food price. once we are back into the comfort zone, they would be glad to raise the OPR rate

yup...some developers are holding off on the sales. one of them is Bukit Kayu Hitam Development. They could well afford to do that because the land they are developing are free from encumbrances.

depending...secondary market sometimes price are kind of over rated. i have cases of agents marking up the property price which when it comes to bank valuation, it turns to be so much lower than the buyer have to fork out more money for the downpayment.

but it all depending on individuals, whether they would have a risk of buying uncompleted property in fear of developer would run away or risk of buying a secondary market home which might have it's own history.

Cant come out with an evidence to support your claim on recession then launch personal attack on me? How low can you go?

you can always 'high' or 'syiok' on your own o and you cant come out with any evidence to support your so called good prospect no recession future of the property price either

This post has been edited by muscaa: Aug 4 2008, 10:07 PM

Oh, you are in real estate. Is the list something you can share?

If not, I understand. Thought it wouldn't hurt to ask.

I've been saying that we r gonna face a slowdown and high price are here to stay, and even you and others could come out with evidence for that. So for those who claim we are gonna/in face a recession very soon, I plead that you guys (Dreamer, Muscaa and the like) come out with some stats or data to back it up instead of making random doom calls just bcoz someone, somewhere said so.

Anyway, this is my last post to you, noobie. Big waste of my precious time and Im no gonna get any richer replying to you, especially.

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Added on August 5, 2008, 9:03 amno harm trying our luck online . In fact I started my property investment 3 years back with the help of few online frens n sifu's. Meet few ppl and now we r good frens

1 thing I learn , one person cant know everything, and the more you share, the more you'll get back

This post has been edited by Pai: Aug 5 2008, 09:04 AM

Here's what I personally think:

We are headed for stagflation. It is a situation where high inflation occurs and economic growth is stagnant or negative.

Inflation is occuring as our paper money (which is link to the USD) depreciates over time, and more due to the decrease of interest rates in US.

Our current inflation is driven by cost, and depreciation of ringgit (Not demand driven)

As inflation creeps up, wages are unable to chase up and that tightens our spending habits and capabilities. Everyone will hold back on purchase, big ticket spending, corporations will stop expanding due to lack of demand for services, reducing budgets causing stagnant/negative economic growth - aka recession.

As cost goes up, in order to remain profitable corporation increase prices and reduce work force, which further increase inflation and unemployment. Which goes on reducing the buyers for the services/goods offered by the corporation. Inducing a spiraling effect that further worsen the situation.

High prices and no growth. That's stagflation.

This will continue until there is correct interventions in policies.

Unemployment increases, businesses losses money. Property prices free fall. Raw materials prices can increase all the want, but there will be no buyers. Demand falls, therefore prices falls, as no one can afford them.

Intervention:
As inflation and recession is contradictory to each other. The only way to go is:

First:
Tackle inflation. Increase of lending interest to twice of the inflation rate, I pressume would be around 28%. Immediately stopping speculation and reducing inflation. Growth will be stagnant.

Second:
Once inflation is solved and prices creeps down, new growth projects to be launch to encourage development, consumption, to bring back growth and effectively get out of recession.

This may take years and up to 10 years.

The main cause:
The insolvency of US banks and the bankrupt of USA will bring down the value of the USD comparable to toilet paper. So will the ringgit. Food, commodity prices soar sky high. We shall face hyperinflation. Where our fiat money can't buy anything as prices of goods - food - soar 100X !

The impact:
High unemployment. Soaring food prices. An age of Depression.

Main issue about buying a house now:
If you are unemployed, how will you service your loan especially with such high interest rates? You will be driven out from your house. Sleeping on the street and your house auctioned off.

Best suggestion: Don't purchase any big item, rent at all means. Save money and purchase food and be ready in case you got laid-off.Or buy fully cash down. Don't buy cars now.
Solution: If you have to buy a house now, go for fixed rate loan from insurance company at 6% such as AIA.

My argument:
It doesn't matter whether we export mainly to USA or not. But when USA goes into stagflation, Europe will follow suite, then China, then Asia. China can't sell their low cost labour products to anyone else. How could there be demand for growth? Oil demand reduces dramatically as no growth affecting the Middle EAst. Eventually Malaysia is also affected. Buying power and food prices will be main concern.

Greatest myth: Asia economy has decoupled from US economy.

We are living in a very perilous times.

What we can do now?:
Sell off and repay loans as much as possible. Reduce consumption and brace for recession. Stock up on food. Withdraw all your EPF money. Store your buying power in physical gold. Keep your job. Prudently run your business. Its no longer about investment, it about capital preservation right now.

The key: Use common sense to protect yourself. Be PRUDENT.

What if I got it all wrong?
You loose nothing. You purchased your house at a higher price, so does everyone else. You have too much food in your house but you can still eat them and save money avoiding the inflation and price increase. You still have your job and your teh tarik. Your EPF money will still be safely parked in gold which becomes your investment vehicle. You save more money by not buying a car.

BUT what if I got it all right?
You have everything to loose.

Think about it. In a situation where the negative consequences outweights the positive, it is better to be safe rather than risking it.

May God helps us all.

Some really good economics here in this thread. I would love to learn more from you guys. Please keep on writing.

Regards,
LokGP

LokGP,

Thank you for your take on this.

It's ok, nobody will give a damn whether you reply or not

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Added on August 5, 2008, 3:16 pmThanks for your advice Lok

This post has been edited by muscaa: Aug 5 2008, 03:16 PM