QUOTE(cherroy @ Dec 26 2010, 12:40 PM)
I do not think BNM will raise more than 0.5-1% next year.
Even when inflation is severe time during 2007, when oil price reached USD140, BNM merely raise 0.25-0.5% to around 3.xx% only, never exceed 4%
BNM may only raise rate to beyond 4% if the economy is robust time, while if economy is robust, I do not think property market will crash.
A correction, price going down 10-20% due to economy recession, or price stagnant, yes, very high chance.
A crash, chance is rather remote.
I also do not think BNM will raise 100 bps next year.
However, I do not think your figures of the BLR is right.
Attached the historical BLR.
By the way, my reference of interest rate refers to BLR, not deposit rates.
QUOTE(cherroy @ Dec 26 2010, 12:40 PM)
For properties price crash you need to have several key factor
1. High leveraged forcing fire-sale. Until now, Malaysia situation although a bit alarming, it is still not as high as what happened on US. (or yet)
Banks are not releasing loan like no tomorrow as what happened to subprime.
2. High unemployement. For current situation, most employers are having hard time to get enough employee. Yes, one might say those are more lower paid. But for the wages range from 1~2.5K, there are still abundant job available, if one is not choosy and has enough skill in the first place.
3. High interest rate. Chance is also remote based on current situation and worldwide central banks reluctant to hike rate. 99.9% of central banks prefer to see inflation as compared recession.
Properties is about location, for strategy location, it is hard to see how it can crash, a minor correction is the most possible outcome.
Those crash one may more about those remote, non-strategy location, which people speculate like no tomorrow one in the first place. But think deeper, those properties won't crash, because there won't be any buyer for it, so no transaction going on, no price transacted, price don't crash.
But buyer stuck with those properties.
1. Banks release of loan versus income is indeed very alarming. As posted previously, I do know of banks lending based on monthly instalment of 60-80% of disposable monthly income.
A general guide should be indeed 30-40%. Anything more, is risky for the individual, and may affect the economy too.
2. The range of salary from 1-2.5K is not worrisome as they are not, or at least I assume, they are not part of those who purchase 500K property. The more related one would be those in the range of 5K-10K monthly income.
That said, I do not see much employment issues for those in this range.
3. Malaysia did raise interest rate in 2010. Korea as well. China I cannot remember if they did in 2010 though they are likely to do so in 2011. US as well. China's govt also show that they dare to cool down the economy while US always fear that they are not competitive. Assuming China does raise interest rate, US would likely to follow suit as their competitiveness in export may not be so affected.
Properties indeed is about location, passive investment tool. However, nowadays it became like another Genting. I do not see much difference in the way the flippers play the property market vs those gamblers in Genting. Of course, there are genuine investors around with high holding power and long term horizon (5-10 yrs minimum)
Now indeed it is slowed transactions - listing increases, duration of listing increased as well but price stagnant. Both buyer and seller refuses to budge. Lockdown, I d say.
Dec 19 2010, 10:42 AM
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