Don't deduct the possibility. Anything is possible, BLR increase is no suprise. Just make sure you're well prepared.

Yes, BLR is likely to increase this year to fend off inflation. BUT the magnitude of increase is likely to be small (at most: 100 bps or 1% but more likely be 0.5%-0.75%) depending on a number of factors (I don't want to turn this thread into another macroeconomics lesson). The HSBC guy is GUESSING like any other experts you hear/read in the media. Even our respected Dr. Zeti (BNM Governor) will not even know how much will the interest rate increase in 2011 now, let alone the external "experts". Remember there are other tools such as appreciating MYR to fend off inflation. I remember somewhere in this thread wrote quite well on inflation v. growth (two of the key objectives of central banks). The balancing act is a tricky one.

If you hope BLR increase in 2011 will be high enough to derail property appreciation, my best guess is you will be wrong (I/R increase in 2011 is likely be mild BUT I/R forward expectations that count more) - please in a likely election year - Govt will not want slow growth or property price plunge. No doubt, any increase in IR (and fear of I/R increase) will dampen property price but remember, the fear/greed of property price running away is also there.

I may be wrong (I have been wrong on numerous occasions - the trick is get more right than wrong, even 51% right is good). I can only make a calculated guess based on the current factors/knowledge. Remember to come back around this thread Page 98-102 in 2012 to see what comes true...

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Added on January 12, 2011, 7:25 pmWhat is the income level assumption for a working class person? If I assume less than RM5,000/mth, you can do a quick calculation on the loan repayment + do some stress tests on I/R (up to 6% to 7%, not BLR but actual borrowing cost) on affordability. Key answer to your question: cannot afford a landed property in good location (>500,000). Probably can afford around 200,00 to 300,000 - there are still a lot of high-rise properties in Klang Valley in that price range. Remember land cost + building materials have gone up significantly in the past few years unless there are EXCESS supply, prices will not drop below replacement cost (which is a baseline).

Hope the above helps.

P.s. I have regional investment exposure - houses in M'sia are still much more affordable (relative to income) as compared to a number of countries such as HK, Taiwan, China, South Korea and Australia. Always look on the bright side, please live within your means and as advised by a fellow forumer - try to INCREASE your income and don't spend too much time/effort on getting frustrated on high property prices ( a bit of venting is good but excessive is counter-productive...my apologies if I am naggy)

This post has been edited by chabalang: Jan 13 2011, 08:15 PM

Please read the article carefully.



Total 0.5% by the end of 2011.
Now is beginning of 2011 only.
It is not raised 3%, but to 3%.
0.5% a big deal??

If gov seriously want to control escalating properties price, the most effective way to fence off speculator is always RPGT.
I advocate RPGT very much.
It hurt nobody at all, except affecting the greed one only.

This post has been edited by cherroy: Jan 12 2011, 10:03 PM

100bps is not small.
I d expect smaller than 100 bps.
100bps may have bigger impact.

Thumbs up!

This post has been edited by TheDoer: Jan 13 2011, 10:58 AM

I strongly agree as well..

Governments all around the world in developed nations have imposed forms of RPGT and other forms to control RE from loosing control however it is the developers/banks/investors and/or regional elite who are able to persuade these officials from making it "official".

Sorry folks, it wont be this that forces the correction, this will be saved for down the road for the "what went wrong phase".

High End area listings are absolutely through the roof! My Iproperty searches are showing 4-5x listing increases and nothing has been selling since Sept 2010.

This along with affordability indicators show the top was in last May-Aug!

Tread Lightly!

This post has been edited by Onemorething: Jan 13 2011, 11:27 AM

I agree with your analysis. What is your definition of good location for landed property? New launches are all touching 1 mil mark. Do you think buying a 4-6 y old terrace house now at 600k will fetch 1 mil when it is 10 y old?

Ok, for discussion sake, take condo as an example. Take 3 categories for comparison, high end, middle high and middle class. Just check the price chart. There was a slump in high end property in early-mid 2009. But middle class generally flat.

This forum started in Jul 2008 before global crisis. Crisis hit after 080808 olympic. So which segment was hitted hardest? While many are debating since 2008, how many entered in 2009 when bubble burst at high end properties? How many even feel the bubble cause many were not from tat segment?

So before you say bubble going to burst, yup you are half right. Which segment are you referring to? Which properties, which class, which area, which one ….

High end
http://www.propwall.my/klcc/marc_service_residence

Middle high
http://www.propwall.my/bandar_utama/1_bukit_utama

Middle
http://www.propwall.my/bandar_utama/pelangi_utama

Of course if refers to landed property chart will be different but generally highly speculative ones including 90% of new launches going will be hitted hardest if market sentiment turn negative. So if you wanna wait for bubble, go wait for those highly speculative ones. Conservative middle class generally will be able to withstand the rising storm if any.

RPGT will be implemented again after GE. Mark my word. Currently they cannot do tat else there will be no more flippers buying the new properties. The best flippers property I heard asking for Mont Kiara price but located near airport sitting on a formal dump side!!!

Not surprise need more funds from you-know-who for GE.

this part, think everyone understand but in diff ways:
. if vested in highrise, will say landed will kaput
. if vested in landed, will say highrise kaput
. if vested in everything, nothing will kaput
. if not vest but waiting, everything will kaput


oh, that dumpsite one - yep, looks very much like a trap for the waterfish!

"The best flippers property I heard asking for Mont Kiara price but located near airport sitting on a formal dump side!!!"
whihc project is it? i heard some of the sub sales 3-4 storey shops near KLIA is selling close to 1 mil

1. The most vulnerable are the high end condos targeting expats in areas where there are many many projects nearing completion, like Mont Kiara and around KLCC.

2. There will always be demand for landed properties in good areas and the owners there have strong holding power, so this segment is generally safe.

3. The middle high and middle-cost high rises in good areas are also safe ....... there are people from all over Malaysia coming to Klang Valley every year, and they need a place to stay.

4. Of course, those who overpay for property (landed and high rise) in not-so-good/speculative locations are also vulnerable.

Now, the impression I get is those waiting for a property price drop are targeting 2. and 3. But if prices of 2. and 3. refuses to drop, will they buy 1. or 4.?

RPGT, if implemented, might hurt both flippers and first time buyers. The sellers will try to factor in the RPGT when selling ..... and in the end it's the buyers who's actually paying RPGT.

It really doesn't matter as long as someone else is willing to take it off ones hands.

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Added on January 13, 2011, 2:42 pmCan't say for the rest, but for myself, I guess, it's quite alright. The problem is paying and arm and a leg, for a lousy place.

This post has been edited by TheDoer: Jan 13 2011, 02:42 PM

Let's study the historical data, the key factor to enter the Property market is "Interest Rate", if you have study the interest rate fr early 80' till now, then one shd know that we are in fact in the best position to buy real estate.

2011 is offers the second lowest (in M'sia history) in Avg lending rate, I dun see any impact that even the BLR is heading to 7.5% level, so long the ALR is maintaining at 6%, I will still invest property (of course good one), I hv gone through all these up & down cycle, those fr 1983 to 1998 are really called disaster!!

Buy when interest is lowest with moderate price, not highest interest with
lower price

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Added on January 13, 2011, 4:25 pmThis post has been edited by UFO-ET: Jan 13 2011, 04:25 PM

BLR vs Average Lending Rate


Attached thumbnail(s)

Sorry not very clear

Yellow line - BLR - 1980-2011
Blue line - Average Lending Rate - 1980-2011


Attached thumbnail(s)

Oh, tat refers to old airport.

The clue is in LY.net/forum/property ...

1) Good location is subject to (i) personal preference (one man's meat another man's poison), (ii) market perception and etc (caveat: I am still a property novice, I am more well-versed in equities). To me, good location are established ones and in hot demand such as Damansara Heights, Bangsar, Taman Desa, Taman Tun and etc... (pls note: I have vested interests in the named areas and I personally feel that the asking prices in these areas have gone AMOK!). As I am not too familiar with whole KV, my colleague told me that there are some reasonable priced ones in Cheras, Ampang side and even Old Klang Road areas - he mention that property prices are quite efficient - i.e. prices will reflect demand and certain areas are cheaper because of perception/stigma and surrounding environment.

2) I have NO answer to second question. Please be aware that property prices have moved up quite a bit (particularly for landed) in the past two years, forward increase is likely to less in %. I made the same comment on Chinese and Australian properties a few years, but I was wrong - they continued their uptrend strongly (I still think properties in key cities of China/Australia are bubblish - their affordability is crazy if you compare to M'sia). Anyway, luck does play a part. Maybe, you should ask some of the property experts here...it's anyone's GUESS

This post has been edited by chabalang: Jan 13 2011, 07:19 PM

emm.. high interest rate wont be forever..
dun think the interest rate will stay in high forever

which one u'll choose ?

interest is lowest with moderate price
u buy 500k > interest let say 3%

interest is highest with lower price
u buy 400k > interest 6%

the interest might change from time to time..but the properties value will remain the same [i mean the total amount we need to pay to bank, not the price for the properties as each year it'll increase]
its not applicable for those speculator cus they just want to goreng nie.. so.. if for gorengers.. they'll choose the first one
as for me who wanted to get a house to stay (my first home ~~~ ) i'll choose no 2 XD

This post has been edited by CKHong: Jan 13 2011, 07:04 PM

Totally agreed! Interest on properties are based on BLR which fluctuates... Unless if u r talking about cars, I agree with the theory!