another thing to point out.
although construction price increase 30%, the house wont increase 30% as well.
For a normal house, the true value is the location.. especially in penang.
So if u're buying 300k condo, most probably 200k goes to the location and the building material only cost 100k.
Even got increse also 100k X 30% instead of 300k X 30%

somehow i can't help but suspect that the developers are taking advantage of current situation to hike up their profit a bit as well instead of purely to cover the cost increase...

ychwang & kevyeoh, you are both absolutely right.

house prices should not increase in proportion to the building material price increase as then the price of the land is not factored in. however this seems to be the case now.

that is why i am not going to bother looking at any properties just yet. i have to wait and see how things pan out.

I think land especially in prime areas are more expensive now compared to 6 months ago, hence the 30% increase. Im not saying its right but they r in the business of making $$$$$.



For the NATOers, good luck in securing any decent properties at todays price 5 years down the road. Your cash value today will worth a lot less than it is today.

another good point by Pai. for those of you who are holding on to lots of cash, perhaps it will be better to search for a cheap 2nd hand property. that cash you are holding on to might be better used as recycled paper soon.

as for me, i am waist-deep in property investments already, so i am trying to make sure i don't drown!

perhaps after US election i will start again.

Bro,

Can't you refinance now? Read your contract. You may have to pay penalty but do your P&L and Cash Flow. You might recover after 2 years.
The banks are offering BLR - 2.2% now.
It would not be that level for long, probably until end of this year.
I got a good deal. I refinanced at 3.88% first year and subsequent year of BLR -2.45%.
BLR is expected to increase to 7 or 8 percent apparently. Lets see what the Central Bank does!

you can google some refinancing calculators, that will take everything into account such as current interest rate, penalty etc and tell you how much you can save/lose if you refinance.

Ooo.. then it's still an unsure whether property is going to drop or not in Malaysia, also depending on the location I'm trying to buy.

We are thinking of Setia Alam which is freehold but the current price is quite steep at minimum RM295K for 18X65 double storey terrace. Is Setia Alam considered as prime location?

Definately NOT.

Since the person left 1 year, i dun think he shd opt for refinancing. I myself just refinanced my hse, the whole process took me around 6mths. So in the end, if he left only 1 year be4 he is off the penalty hook, its not so feasible for him to refiance.

Means I can still afford to wait, right? and hope that it'll drop.
At the other hand, if it's increasing their price, may not increase by too much?

RM295k for 18X65?
somemore need to pay toll everyday and no so convenient to go anywhere too... why dont spend the money for ur house installment rather than pay the toll for few decades?
but i think they just increase the price, they cant sell the house for now, may able to sell those house after some times...
i got a house beside KESAS highway worth RM308k 22X70 (quality so-so, but i love the house design), built up 2100 sq ft with 24hr gated&guarded and community society type, at least almost go to anywhere no need to worry about the toll fare and may hike again in future...
even new house at Bandar Puteri, Klang (IOI property) which beside KESAS also, worth RM270k for 22X75 with better quality...

This post has been edited by gkl83: Jul 17 2008, 08:23 PM

Your view really scared me. Now I under pressure to look for house. Was thinking to let the dust settles first before looking again. Everything uncertain now.

One thing certain is that price of new house going to increase. If next week BNM increase OPR, then BLR will increase and loan rate from bank wont be that cheap anymore.

Buying house for own stay is not waiting for the right timing. As long as you like the house and have the capability to service the loan, then go and buy it.

Not scaring anyone lah, just merely stating facts

Dont buy a prop bcoz of peer presure, but buy bcoz its right for you. Right PRICE, right LOCATION, right TIMING. U'll be fine if u do just that.

Its not wrong to wait for the dust to settle, but expect to pay more when it does. Good luck

which bank on earth offer BLR-2.45% ? from the 1st year %, it looks like Maybank...

is your property in REAL PRIME AREA? finance <80%?

Waiting dust to settle?
Good, waiting people to go for desperate selling... hahaha
Nowadays many competition la, i guess. Maybe im wrong

dude...can you share which bank that offer you that nice rate?

haha... it's a good deal. it's refinancing and about 50% left.
as for bank I can't tell u la

Going back to the original question asked by the Topic Starter,

(1) If a recession hits, yes, house prices will drop. This is an unalterable, unalienable fact. What happens (although it may seem pretty obvious), is that demand will dry up (or shrink from where it presently is). Regardless of whatever prices developers charge, the no. of potential buyers in the market will drop. Gosh, unsurprisingly, this has been the case in 100 out of 100 recessions globally around the world

People will generally conserve cash.

(2) If a recession doesn't hit, i.e. economic growth hums along albeit a bit slower, then, no, house prices will not drop, but will rather rise. In this case, our economy will very likely have cost-push inflation (as opposed to demand-pull inflation), and the prices will reflect increased costs of construction. Unlike a demand-pull inflation situation though, house prices will not skyrocket. An earlier poster hit the nail on the head when he/she identified the percentage of property cost that would be likely to be hit by the inflation factor. It's not like a demand-pull situation, when overall prices will zoom up.

Thus, you will just need to figure out if you think a recession will hit or not.

If you think there'll be a slowdown, either because of global contagion, or local issues (e.g. political issues), then hold on to your cash and wait to buy at the bottom of the market.

If you think we are a resilient economy, that we will stay the course because Asia is decoupled from the rest of the world, then proceed to invest.