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 pm
What 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%) 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)