HAPPY NEW YEAR 2009!!!!

This post has been edited by kelvin667: Jan 2 2009, 02:54 PM

Whether property going drop?

Well, I believe most people will be arguing on location including me as well. Yes, location plays a part in sustaining property price during bad times, however, it cannot be denied that it will re-adjust to cope with the market rate due to comparison and competition.
I think the best way to relate to the property market now was to relate to THE ECONOMY as it will affect the property price directly. No argument as it shown in other countries like UK, Singapore and Hong Kong, the only different is the degree of affection.
Everyone know that the first wave of economic wave is on the way coming after this 1st qtr reporting which may show a negative % y-o-y basis.
There were some market recovery at the moment due to recovery in US and current political issue (GLC). I might be a false signal for temporary or it might not. Let pray it's not a false signal.
However, learning from the market intelligent that most business now are having a slump. It will show more bad sign to the market if more manufacturing and exporter was to close shop.
However, I believe that property investment will always be good in long term especially landed property in prime location which is scarce. However, for short term, the slump in real estate will be materialise if the market condition worsen, eg. GDP -1% to 1% - Demand vs Supply rule.

Please note that there will be opportunity cost for tying down on property instead of good bargaining on share, unit trust and bond which offer a better return in short time due to the high risk factor. Reversely, property are more risk adverse.
The rule for me is not when the lowest price, it always the right property taking advantage of market situation.

Just some opinion.

Dear Pai,

Thank you for constructive comment.

I always believe the concept of high risk high return, low risk low return.
Yes, you are right, property will bring high return and more risk adverse if the right property chosen, however, it will be very similiar to the others financial investment as well, if proper fundamental and analysis be done. The higher the risk, the greater the return. Some may be fews folds in few months. Blue chip/ bond/ low risk Unit trust may take longer.

I tend to see it diversifying the wealth investment rather than focus only on one investment, of course the % of investment will be higher if your area of expertise are in that area. May be we should not put all egg in one basket. I understand that inproperty itself, diversifying can be done - type of property-commercial, residential, geographical-UK, Hong kong and etc. Reason being this type of diversified is within property and will not enhance the portfolio in term of investment diversified.
For me, I always have high/medium/low investment in my investment portfolio.

Thank You

I think if we had a next drop price in properties, it gonna be cause by a double dip in the world economy. I feel much correction will be adjusted to luxury highrise only. Scarce area like BU and TTDI will stay.

I think everybody investment strategy is different, property is eye of beholder. Some go for capital appreciation and some go for rental yield. I think as long as the project do not stall or end up like bkt beruntung it shall be alright to invest for long term. Another risk is what happen to hong kong where the loan amt exceed the value of the property when market make adjustment after economic crisis. Property is still affordable by middle income now and I foreseen that middle income group will be force out of this game soon in the future. Look at the property price now and five year ago, what the different and what will be the price in another five year. Can our income able to follow this inflation. We only heard people take housing loan for 20 years last time and now everybody is going for 30 years. That show much people can't justify the loan they took for the property. I personally looking for another slump in economic for money making. Good time, bad time, money making is always there.

a) Agree. BLR will definitely rise slowly to pace back where its fall from. I believe it happen in 3-4 year time.

b) look at other part of asia country like hong kong and singapore where there a lot people rent house instead of owning them. Scarce material like metal and wood are becoming more expensive nowaday. It is lucky that malaysia house are still built by indonesian where wages are at very minimum. Imagine a day when we have malaysian to do the job when we can't afford to pay indonesian to work or our govt forbid that. Moreover, land are getting scarce and scarce in develope area like pj and kl. I bought a terrace house in shah alam 3 year ago for 270k, now with 280k you can only buy terrace house in rawang and kajang. The value is there unless we have a war in m'sia.

c) There are investor and mostly are older generation at 40+ that can invest much property. Honest, with my age of almost 30, i can't see much of my friend buying property unless their dad is super rich.

BNM will have to hike the interest rate following others countries like australia. No doubt the RE price will be affected by the whole economy and US economy. This had been proven in the last recession last year and there no argument on this. Us economy had been rising on the stock market and economy growth. However, the 10% unemployment that will affect the retail sales and productivity is a major concern. The intervention by FED seem to create artificial economic upturn and no doubt this will be very fragile. In coming month, we will see Dow Jones coming up and down vigorously as a effect of the artificial rebound and FED intervention. I forecast there will be a slow growth in ecomomy for all countries.
Looking at this, with BLR on the rise and PGT, this will push the property price up as cost have been more. However, due to the higher selling prices and unencouraging higher BLR and PGT, buyer will turn away soon. It will take some time for buyer to feels that the price are stablise before starting to rushing into a deal again.

Conclusion : Prices of property will stay providing US economy stay. I forecast this year end will be another double dip for whole economy and this time it goin hit hard. So guys, don't be too highly gear.

Pai, liquidity is good, cash is king, but both is less inflationary hedging. So guys, balance out the wealth management and always get ready for another round of opportunity when the economy collapse. Those who done so in the last recession is laughing his way to the bank now!!!

Dear all,

Thank you for the constructive argument. I learned more from you guys.

Anyway, it is not always that when you have a economic crisis, the govt. will lower BLR. It may be uptrend also, dependable it is a recession crisis or others. So, please do not estimate that BLR will be low everytime there a economic crisis.

Pai, i think we all there to see there 5-10% price correction in prominent place like bu, ttdi and md. Compared to mon't kiara and klcc where prices had dropped 20-30%. There not much to pick from the property, however, just piok any share market and unit trust, you be laughing your way to bank. It happen in 1987, 1997 and 2009. Just look at the data, the rich will get richer.

look like the dip is beginning now in Q1, get the cash ready boys!!

Guys,

What happen when

1] Supply > Demand
2] Price increase sharply over a short time, mostly by investment and not for own stay. (No real demand)
3] Market is in the volatile condition of recovering and yet prices of RE and stocks are better than before market collapse

Buy only if you have holding power,
Always be prepared for a economy crisis and if this time the crisis hit in Malaysia, many ppl will be affected. Those who affected will be those who being layoff. You will only be in recession if you get laid off or your business get affected by it.

The government are proposing max 80% margin financing. I believe this is to slowdown the high inflation rate jacked up by investor. This is mere following China move to press down property price by implementing minimum 40% down-payment in China. Initially I believe they are slowing the property prices by increasing the OPR, thus BLR but this mean also bursting the bubble earlier as most people who bought under lower BLR will face a higher loan installment. However, this move will also penalise property purchaser for own stay as not all can get 80% due to OMV and may get slash by bank to 70%. That mean someone going take out 20 - 30% down - payment to purchase a house. Let look at a typical 400,000 property =

20% x 400,000 = 80,000
Estimate s&p fee + stamp = 14,000
loan agreement = 5000
valuation fee = 1000
________
100,000
________

Almost 25% if one get full 80% margin financing, what if can't get OMV due to high prices jacked up by investor?

Just sharing my view

Hmm, remember back 2 years time that those ppl that take up DIBS (5/95, 10/90), i believe it is about time it get mature this year. Some might not be able to pay up. Furthermore, BLR is most likely going up for at least another 25 basis point for Q1. This will jack up some NPL. We better pray for slow down now or else "pop". HK is now approving LTV 50% only, china make it top priority now. We are so high up now because of the hot money from west that flowing in. Once they are gone we go bust. So if we stablise now, then most probably it shall stop any roller coaster for the moment.