Hi Guys,
I am a bit noob on this but hope someone could enlighten me.

I am curious to know what would happen to Malaysia Property Market following global economy melt-down. (assuming Msia will suffer the effect following US market soon.) Would the property rise drop? Interest increase?

Planning to buy a property soon, just think whether now is the right time.

if economy recessions hiked, everything will be less demand and material price increased... by common sense new property price wont drop... the common issues during recession is on the Bank Negara Malaysia side... the BNM's BLR will increase (current 6.75%) for sure, maybe 8%++ later? and for sure bank wont offer fixed interest rate even again for now... overall only the bank interest will killing you but bank still will reduce the little of interest rate for u during recession, if unlucky that ur company going to fire some staffs to cut cost, u will having big problem that jobless but need to pay house installment...

actually if u wanna to buy a new house, the best may early of this year before petrol hike... quite a lot of house price increased because of petrol, transportation and material... but if u dont mind for old houses, u can get it quite easily during economy recession bcos some investors may loss money that time and selling their house to cover their loss...

but now material cost already gone down,are we get discounted new housing price too?...dun think so..

Above really a puzzling statement.

If economy will go into recession, demand will less, with less demand how can materials price being increased? It doesn't make sense.

When economy is heading into recession, the only way of interest rate is heading is down, BLR will be reduced as BNM or central banks will reduce the interest rate to spur the economy (that's what happening now globally especially in US).

Unlikely in near term, you need to have significant lesser demand and higher supply that pressure the developer then probably you will get discount for the new house price.
Do remember last time round of petrol hike did increase the overall inflation situation quite severely which impact the cost structure in all sector from labour cost, to foods cost which history show those kind of cost structure is non-elastic aka go up, won't come down one. The basic material cost might be coming down, but others cost might not. (even your TNB bill won't come down even though oil price has dropped significantly already).

Demand of property won't suddenly died off, demand will match employment situation and economy condition which somehow is a bit lagging indicator. You won't see immediate impact.

What is the purpose of the property you intended to buy?
A house to stay or investment.
I've always mentioned that if it's a house, than the right time would always be when one can afford the house without heading into financial burden.
However if it's for investment, than I would still think that the property market currently is still overpriced. When the supply is more than the demand; than you'll see the drop in property market. As currently the price of properties is still based on the surge in demand in the property market. But looking at this down turn, cash is king. So whoever can hold their property will continue holding it. But to those in dire need to dispose their property for cash liquidity, that's the time for property investor to do their huntings.

I've just booked a Penang island high rise for own stay, and I am now thinking of chicken out. Looking at the falling of world wide share index and Singapore's recession announcement, things really doesn't look good to buy any new property now. Worst thing is that Malaysia government is still confusing of our country's economy status now...

I believe the property price will fall by 10-20% by next year base on the below:
1. Oil price is falling
2. Steel price is dropping
3. Share market drop (people, especially foreign investor to start selling their property to cover losses)
4. Very high possibility of recession

BNM is expecting to drop interest rate by 0.5 next year. If that is true, that could help sustaining the property price a bit but I doubt it will help much when people are making huge losses in the share market and lost their job.

Unless you are very desperate, I will not advice anyone taking up loan while the property price have tendency to drop. If you're to sign up for any loan, please make sure you have at least 20-30% of cash of the loan amount you've just asked for. In case the property price drop, the finance institute may ask you to fill up the differences with cash. Do think twice, the long awaited property bubble burst may happening within next 6 months. Just my 2 cents...

IMO, now is a good time to buy mid-end segment properties due to :

1. Currently its a buyers market, can choose and nego as u wish.

2. Panic selling does happen occasionally due to global stock downturn. I see more bargains in the market today compared to 6 months ago.

3. Financing rate is at its all time low and banks have still have appetite to lend. In US now even the price drop by 50℅, banks refuse to lend.

4. We now have an influx of expats from middle east to increase our expat tenant n buyer pool.

5. Min 70℅ of all future launch will be high end props and it will only make mid-end properties more desirable due to decrease in supply.

Just remember to buy below market, and pick the RIGHT location. Myself last week just sealed another acquisition and looking to close another next week, hopefully

Caveat : if u have tones of cash and can afford a property without financing help, then u should wait until mid-2009 then only buy.

material cost alredi gone down but the living cost has gone up due to previous rise
so it will stay or go higher

it's too general a statement, last 97 crisis, I believe prices in popular places in Klang Valley stayed about the same, and then continued rising after a few years. Would expect prices in places like JB to drop though...

i think oil price as a limited commodity would actually increase in price, this year's average cost is already much higher than last year's.

Maybe should refer to 1987 economy crisis to be more appropriate? If I'm not mistaken the housing prices during that time fall below 200k from about 300k in KL prime area yet no one is buying. The similarity of both 1987 crisis and today's finance crisis is the collapse of Dow Jones index. Dow Jones index hits the greatest fall in 10 consecutive days since it created 131 years ago. That should tell us how serious it is.

Regarding the oil price, it's already fall below 78 per barrel, hitting 1 year lowest. Well, I can't say much if the gov not tuning down the price though I hope they will But I agree with you, it's controlled commodity where they can still cut the output. But whether cutting of output can help increasing the crude oil price in the situation like this... I do not know. Perhaps is more likely to sustain the price? Not all oil producer are happy to see the oil price hike, as that will stimulate the invention and the need of technology that do not or use lesser fuel.

This post has been edited by Interrupt: Oct 12 2008, 11:09 AM

Hi,
Thanks for responses, it really help me to have some ideas, and sure i need to study further to learn the links and consequences.

My objectives is for investment, probaly i wont look for a house for stay in next 3-4 years. Anyway the purpose of my investment in property is more on getting passive income or to secure the value of cash, cos i am not ready to put a lot of time into property to make income.
From above responses, i think it would be better i hold my cash untill next year to see how's thing go.

(1) Prices in places with high underlying demand and in which the investors or house buyers are asset-rich, will not suffer asset drops, particularly if these investors or house buyers are taking up first-homes in these country.

Explanation: If you are a rich Arab investor, and you are investing in a KLCC area property for a family home in Malaysia, you are not likely to exit. If you are a foreign investor, with highly leveraged capital base, and you have extended into several high-end properties, you may dispose / clear some of your asset base.

(2) Prices in other segments of the market i.e. those with less underlying demand will suffer a drop.

Explanation: Some places always have a "popular" factor / "first-home" factor. Avoid places which are more likely to be crowded with speculative investors. Let me put this way, if you buy into an apartment complex and you find out that 80% of the units there are taken up by speculative middle-class people who borrowed money to buy 2-3 units each and they are all not first-home-buyers, then i'd say there's a pretty good chance that property will suffer a price drop.

Ultimately, if you are buying a property for first-home purposes, you shouldn't worry too much. I saw a mention re: purchasing a property for long-term stay. Don't fret. Just look for a good reliable developer.

RE: Commodity / material prices, Cherroy's statement is spot-on... the drop in buyer demand is probably going to outweigh the material price factor.

This post has been edited by Playbook: Oct 12 2008, 08:52 PM

Studio King Pai,

Out of curiosity, where are your latest two acquistions located? I doubt you bought a Casa Tiara unit though

I'm thinking to purchase my 1st house too in this year as my own staying.

But this coming recession really make me think twice even though i could afford it.

Scare company will lay off

Cement price and steel price have not really gone down. Cement and steel are now open to the current market, no more controlled pricing.

House price is primarily location. But there is already an average increase of 15-25% on overall property price in KL.

However, if BNM revised the BLR upwards then you may see house price decrease cos demand will reduce.

Totally agree.

However, the key word here is "if". Should this happen, BNM will effectively kill off our domestic sentiment for good, and we wont recover until the next 2 years.

I for one anticipate the opposite will happen by end of this year.

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Added on October 13, 2008, 2:28 pmboss, PMed you

This post has been edited by Pai: Oct 13 2008, 02:28 PM

i personally tink that the housing development is off cyclical in nature lo. When the economy isnt ideal and rising of interest rate will cause a decline in housing activity, this will further reduce the housing costs. And it wont have immediate effect...

can PM me too ? Btw interest rates won't go up. that's my bet

hi guys,

im planning to get a landed property in Kota Warisan, near KLIA for RM250k.....
so is it good to buy this year or better to wait for next year?

my concern....
1) the house value drop....(donno this is possible or not, but seing the current market crisis)
2) increase of BLR.....i think if increase from 6.5 to 8.something.....(normal bank loan BLR-1.5)
3) what would i expect in 10years time?

please advice.