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adeline82
02-06-2012, 11:22 PM
i started to stay in usj 4 yrs ago. i really started to love this area n plan to buy a property for long stay! after surveying for a yr, the properties prices went up so high until i cant even buy a good condo... so sad...

cutebanana
03-06-2012, 10:26 AM
i started to stay in usj 4 yrs ago. i really started to love this area n plan to buy a property for long stay! after surveying for a yr, the properties prices went up so high until i cant even buy a good condo... so sad...

Assuming you are in hunt for landed property in USJ 4. Auction price for houses here is already median RM 500K. Perhaps (and this is solely my personal opinion), most of the houses are are fully owned by the owner. They no longer owe banks, and the housing loan for their houses in USJ 4 is fully paid. So, assuming they have no other major obligations and do not need to sell their houses fast for the cash. They will of course 'inflate' the house prices above the 'real value' - the auction value. It is about 100K - 250K above what is the real value of their houses. That is my 2 cents.

ng
03-06-2012, 04:09 PM
Everywhere in kl/pj the houses have skyrocketted during the past 3 years.

Who removed all the subsidies while maintaining low interest rates ?

besitai2007
03-06-2012, 05:23 PM
Landed property appreciates due to better infrastructures in the locality and increased cost of construction. On top of that, speculation further drives up the price. I compare the price of property with the first house I bought in Taman Sentosa, Johor Bahru, which cost RM50,500 in 1975. I purchased the house with a down payment of only RM1,500 and secured a government loan for the purchase at only 4% interest. After 15 years, when I moved to KL, I sold the house for RM140,000..a tidy profit then ... but the purchaser sold it off after 4 years for over RM200,000! I bought my present house in USJ6 for RM110,000 in 1989...and today with the LRT being built nearby, the price has shot up...I can't estimate its value now. I bought my eTiara apartment in 2007 for about RM180,000...now its value has shot up...can't estimate its price again. My missus and I got another cheaper apartment in Sri Kembangan under Equine Properties Berhad for about RM115,000..and it's price has increased to over RM200,000 now. So, you see prices have been going up but never down so far...unless of course there is a major disaster which renders the property worthless..like a Highland Tower. I cannot fathom the upward spiral but that has been the trend since man decided not to live in caves and the caves would probably be valued more now :mua-haha:

Rhiga
03-06-2012, 06:01 PM
Yup, property price will always goes up especially in good location.

However, there is a lot of myth that property investment is lucrative relative to other forms of investment.

Let’s take your JB house as an example..

Purchased @ 50.5k, sold at 140k after 15 years.

Gross gain is 89.5k

Assume your loan is 49k (50.5 - 1.5 =49)
Total annual interest (4%) paid for 15 years = 29.4k

Total net gain is 60.1k for 15 years.
(I exclude other costs associated with the buying, owning and selling of the property like stamp duty, legal fee, quit rent, etc)

Annualized net gain is 4k which is 7.9% over an initial investment of 50.5k.

Good return, but not too difficult to get from other forms of investment like unit trust and stocks investment.

My point is – during the good time, all forms of investment will show reasonable/good return. It depends on individual preferences/familiarity in investing the money.

Cheers

Rhiga
03-06-2012, 06:09 PM
In the era when property price is going up too fast (like what happened in the past 2-3 years and now), renting a property is a better option, financially.

This is because the increase in rental will NEVER able to catch up with the increase of property price during this crazy period.

You can save a lot of money in interest due to the inflated property price !!

Of course, being Asian especially Chinese.. renting a property is the last thing they wanted to do.
Owning a property or properties is always the preferred choice ..:)

besitai2007
03-06-2012, 06:10 PM
Yup, property price will always goes up especially in good location.

However, there is a lot of myth that property investment is lucrative relative to other forms of investment.

Let’s take your JB house as an example..

Purchased @ 50.5k, sold at 140k after 15 years.

Gross gain is 89.5k

Assume your loan is 49k (50.5 - 1.5 =49)
Total 4% annual interest paid for 15 years = 29.4k

Total net gain is 60.1k for 15 years.
(I exclude other costs associated with the buying, owning and selling of the property like stamp duty, legal fee, quit rent, etc)

Annualized net gain is 4k which is 7.9% over an initial investment of 50.5k.

Good return, but not too difficult to get from other forms of investment like unit trust and stocks investment.

My point is – during the good time, mostly all forms of investment will show reasonable/good return. It depends on individual preferences/familiarity in investing the money.

Cheers
Thanks for the input. I am not greedy to make excessive profits. Some people hold on to their property when they want to speculate. I sold off my JB house because of the move to KL and I didn't want to manage the property from KL. I don't set margins or have high expectations. I gave up on unit trusts as two portfolios of mine, one with Hong Leong another with Public Mutual only saw losses in spite of having fund managers to manage them. I find that greed is our worse enemy. I don't indulge in shares although had a brief foray during 1987 when I got Tan Chong Shares on the cheap, held onto them for a few years and made enough afterwards.

ng
04-06-2012, 12:33 AM
Landed property appreciates due to better infrastructures in the locality and increased cost of construction. :

Never have Malaysia experienced such a drastic more than 100% increase in property prices except in the last 2 years. Increased cost of construction and better infra has been going on for the past 50 years but the increase has never been so drastic. Inflation rate according to govt is around 3% every year :laugh:

The only explanation is the drastic withdrawal of subsidy by the govt and resultant increased inflation in the past 2-3 years. Low interest rates fuel speculation.

Challenger
04-06-2012, 08:34 AM
Rhiga is right. If we look at the past 10 years, the rate of return for properties in Klang Valley appreciated by approx 7% - 8% per year, which is pretty normal and decent, not excessive. It's just the recent 3 year's hike has been tremendous. We have to accept the fact that land cost will not drop, construction labour cost will not drop, cement, bricks, sand prices will not drop. Architect, engineers, lawyers will not reduce their fees. Steel might drop a bit but I do not think will be a lot. If Bee End wins the next election, GST min 4% (will definitely increase some more) will kicks in. Even residential property is likely to be exempt from 4% GST, developers is unlikely to reduce prices. Some more, when the garment cannot service the debts (our debts to GDP ratio is very very high), more money will be printed and will further depreciate the already not much value of our Ringgit. Precious metals eg gold, silver, platinum and other commodities eg oil & gas, palm oil investments which can hedge against depreciating Ringgit and inflation, are not readily available to general public. With inflation rate so high (many would agree it's double digits), the most common hedge against inflation and depreciating Ringgit would be property. Also I see that this is very sad cos many people find it hard to own a property. The days of paying mortgages over 2 generations will come soon.

vsat
04-06-2012, 01:14 PM
They keep saying the property bubble will burst in 2012. Mana burst pun !!! Just follow you heart and buy the damn property....

bslee
04-06-2012, 01:28 PM
Long time ago, someone casually and simply said to me too. Like the property very much?, JUST BUY IT!. Simple and short but comes with a lot of meaning and one just have to find some way and finance to acquire it, don't play waiting game or dwindle your thumbs and be undecided. The fastest get the best! We're now in an era where property isn't exactly very affordable for mid to low income earners and who don't own anything.
An intermediate lot 22 X75 (not that it was seriously renovated, near standard) home somewhere near my place sold for above half a mil.. Amazing, jaw dropping, left me speechless. Ori price was below 200k 14 years ago. Last year, viewed a refurbished intermediate lot up for sale at USJ5 also wanting at half a mill. Nice lot but only the price.
I've said before, I really sympathise with lots of rakyat the generation after me who'll find it quite difficult to own a decent landed property. Car, house, rising living expenses will shred your savings to near nothing, (already a fact EPF cannot last the golden ages) unless one finds a way to enrich themselves by a big percentage. No 2 ways about it, I too shrudder at deep thought how I'm going to survive the future with decent comfort and happiness. Cash is king, and always be KING! C'est La vie!
My 1 sen worth!

Henry T
04-06-2012, 01:53 PM
Why?

1) Too much liquidity in the market leading to demand outstripping supply
2) Confidence in the country's Government and economy :confused: :heheheh:
3) Cheap loan with easy approval
4) Herd mentality

Good luck to them in their loan repayment.

xinrong
04-06-2012, 01:58 PM
Long time ago, someone casually and simply said to me too. Like the property very much?, JUST BUY IT!. Simple and short but comes with a lot of meaning and one just have to find some way and finance to acquire it, don't play waiting game or dwindle your thumbs and be undecided. Very true. While renting a house can be an option, I have seen many times tenant being asked to leave when landlords sell their houses. For bachelor tenants, no big deal but for those with families who have children in nearby schools, it's a huge headache not to mention the sudden hike in rental if they been renting at the old rate for sometime. I would tell my kids to own a cheap car but save to pay for a place of their own, no matter how small, at least it's theirs. Nowadays rental here in USj is like RM1.5k per month for a basic 22x75. That's a lot of money....for not owning the place.

bslee
04-06-2012, 02:04 PM
Nowadays rental here in USj is like RM1.5k per month for a basic 22x75.
I'll presume or foresee it'll be a fact now onwards that owning a landed 22 X 75 can be realized mostly for those who're very well off at current market rates. Mid and lower income just have to contend with those below Rm250k at most in highly urbanized area. Very tough times ahead for next generation, unless they inherit something great from you. I'm very very very thankful to the Almighty I have some things, and I pray my offspring will be just as happy and wise to prosper themselves WITH assets to boot. My life is done..(it could have been greater but circumstances and events didn't allow a much greater potential) am very thankful anyhow.
Future generation just have to slog very hard and become wealthy in future...otherwise just loose out. I don't see any other viable ways. Migrate away?...always a possibility, but thats another complex journey we'd not get into.
I believe its not only the kawan baru thread starter who's crying aloud why its so difficult to own a decent property, just one at least for comfort, but millions other rakyat who cry silently on this predicament. I really really sympathize with these people. Blame who?...I really don't want to say much...pointless.
I've visited numerous places where lots of rakyat are living is affordable highrise outside reputable housing schemes and its like " low class and near slum" comfort, where people just don't care to upkeep the area EXCEPT within their grilled door, macam macam kind of tenants who also don't care, filth everywhere, hygiene is always questionable, the lift smells of piss subject of constant vandalizm, the list goes on...deplorable living standards is an understatement. Have Malaysia really progressed and rakyat are more comfortable living in these times? I beg to differ when I view how many are living out their lives and events just point to countless issues may have gone wrong, perhaps people no better than colonial times, at least lots of rural folk can still farm their lands and live in a 1 acre plot but wood plank type home, still very very spacious compared to current times. Sorry people, NO MORE serene looking 1 acre plots here in Klang Valley..unless pay a king's ransom.
Just thank the Almighty which I presume all forumers here are hugely more comfortable and better off than those I just mentioned. Be very thankful!

xinrong
04-06-2012, 03:09 PM
I'll presume or foresee it'll be a fact now onwards that owning a landed 22 X 75 can be realized mostly for those who're very well off at current market rates. Mid and lower income just have to contend with those below Rm250k at most in highly urbanized area. Very tough times ahead for next generation, unless they inherit something great from you.
I think for those looking at first homes, it's always better to work within the means than go too near the edge ie pay too much per month. For young couples starting up something around 350k (1k sf apartment in usj) is still doable. I had a friend who bought and stayed in a 100k low-end apartment, then each time she has enough savings, it goes to the next similar unit and the next, till she had 5 altogether and fully paid by now. This all happened in the last 10 years and with the current sudden hike in the property market, she made almost double for each unit. It's not so much on what we earn rather how we use what we earn. Compare this to another friend who, earning more than the first but in the same time 10 years, has changed three cars and in one of the the disposals, incurred a loss of almost Rm40k. When money is wisely conserved and invested, there is always a chance, big or small, in our lifetime, to accumulate some wealth.

Rhiga
04-06-2012, 03:27 PM
I think for those looking at first homes, it's always better to work within the means than go too near the edge ie pay too much per month. For young couples starting up something around 350k (1k sf apartment in usj) is still doable. I had a friend who bought and stayed in a 100k low-end apartment, then each time she has enough savings, it goes to the next similar unit and the next, till she had 5 altogether and fully paid by now. This all happened in the last 10 years and with the current sudden hike in the property market, she made almost double for each unit. It's not so much on what we earn rather how we use what we earn. Compare this to another friend who, earning more than the first but in the same time 10 years, has changed three cars and in one of the the disposals, incurred a loss of almost Rm40k. When money is wisely conserved and invested, there is always a chance, big or small, in our lifetime, to accumulate some wealth.

How much money/wealth should be accumultaed is relative to different people due to many reasons...

Generally, Chinese are always prudent in spending, more incline to save and conservative in life indulgence..

Don’t just always being prudent/conservative ESPECIALLY when you can afford..

No point save and save just for the last ten years of your life..

I am speaking from experience (of course, this is just my experience)...:p.

xinrong
04-06-2012, 03:44 PM
The statement was made in the context of the younger generation of buyers as per bslee's statement about house price and the comparison was actually between two Chinese in their mid-thirties. Of course people who are already half-century old or more and can afford, by all means go splurge :)

zinglicious
04-06-2012, 06:03 PM
For working couples, what is the realistic home ownership? A standard 22x75 house at 700k? Or a decent 3B 1K sq ft condo at 400K? And adding to the car ownership and maintainance which is essential for working and sending your kids to school, it is a big task to afford all those monthly installment from car to house.

And to compound the problems, how many developers are building landed properties below 500K?

bslee
04-06-2012, 06:29 PM
And to compound the problems, how many developers are building landed properties below 500K?

Just the other day on TV, one developer stated that they're not wanting to build low cost homes, leave that to gahmen to solve the problem (not in so many words) as people are looking for better or higher quality homes, so they claim,...how leh!.. just to add to more challenges to live in this land...sad sad sigh!
Even your own grave (if u desire such n such) is costing a premium...
Its just my own view that a decent 22/75 home at 700k is PREPOSTEROUS! if I may say so! Nothing much to do about it and if want, just have to cough it out and really cough, vomit and heart attack! The instalments is certainly NOT funny!
Again, I really pity with those only earning so much and not having much opportunity to buy some nice landed property. Just one of those sad things for future generation. I can't imagine what it'll be like 3 decades from now. So much have changed in 40 years already. Those who made lots by grabbing opportunities is gone..if no inheritance or starting from scratch, I wish you very good luck and work extra extra extra hard. Just have to be wealthy or very well off to afford high comfort, NO 2 ways about it.

BTW, anyone wanting 2buy a 2 storey bungalow, NEW and rebuilt up at IPOH, off Jalan Kampar 2km from town? 4000sq ft corner lot 2 gate entrance, again, NEW building, EVERYTHING NEW including new landscaping, busida trees, grass all planted, ready to move in! Lovely area and very quiet, opposide side full of stately mansion homes. Price: RM1.5Mil..firm! PM me if interested. I can email a picture of the bunglow lot.

zinglicious
04-06-2012, 06:58 PM
Of course, people wanna to stay in 3 storey super links or in 2000k condo if they have the choice. But it comes from responsible investments rather than speculating where if and should the economy contracts, the domino falls would be affecting every Ah Beng , Mutthu or Abu.

It is just my observation , the developers are acting irresponsibly by building super condo or 3 stories of building houses beyond the means of people wanting properties where decent living is what they are asking. And the Gomen of the day is not doing anything about it.

Come the day of currencies, economy or properties crashes, the worst hit would be the developers just like that that Thai developer who went busted and sell roti on the street instead. But the collateral damage would be those who are actually trying to buy a decent housing for thier families.

bslee
04-06-2012, 07:47 PM
And the Gomen of the day is not doing anything about it.


Of cours lah!.. Gomen expect u to shaddup, not to inflict anti establishment talks, just work your wealth WITHOUT their assistance as long as its not by criminal ways, then of course u pay taxes VERY PROMPTLY!..
Obviously, this is true if you're living in other lands too.

xinrong
04-06-2012, 09:53 PM
I remember reading about this many years ago, where in Japan, there are loans that go into the next generation. It seemed quite ridiculous then but looks like it'd be reaching our shores real soon. Then instead of retiring after our kids finish their education, we'll be paying for their house as well. Shudder....Perhaps it's time we also have our version of HDB...even if the government cannot provide landed housing, at least good high-rise residential not the ones we have now, with dirty rickety lifts and whatnots.

bslee
04-06-2012, 10:06 PM
I remember reading about this many years ago, where in Japan, there are loans that go into the next generation.
Its a terrible prospect and burden people like your offspring will be in debt from the day they're born.. Terrible prospect, banks and the associated will all make money.
Its all market forces that'll strangle people and gahmen can't step in and put control prices, it can't happen. People got something valuable and you want it... seller insist on selling for the highest profit or whatever the market dictate, buyer just have to fork it out if want to buy. What solution? None I can think off unless don't buy lor!
Pondering on a past era, many mid income people by the time they're 40, can own house and a car, petrol price wasn't an issue, hardly any traffic jams, people don't really often eat out, a really decent house with spacious land to boot, now no more, unless you find something in the countryside. Now there exist lots of people who can't own a home until very late in life or wait for some inheritance, renting out most their productive life. I believe the reality is more than can be imagined. In the past people mid income people can own a single storey on a 4000sq ft land, now thats beyond reach unless one is wealthy. Look at those old homes at examples, Sect 5, 6, 11, 12 PJ. The original owners were all mid income group. Now mid income can have that kind of home? All those there now are in six figure prices, if any are on sale. Its quite clear to me a kampung folk with an acre of land, small but livable house on it, no frills, is MUCH wealthier in asset than some hi-income person staying in a 22 X 75 terrace.

xinrong
04-06-2012, 10:26 PM
true, quite a horrific thought, to be born with a housing loan to carry. but like you say, nowadays there are people who own a home only very late in life so there will be people who will take a loan near retirement. perhaps that's how the 'two-generation' borrower come about. otherwise how to pay for 700k for a normal house?

CS Chua
04-06-2012, 10:52 PM
All these high prices will not stay up forever. I know of 3 real estate agents quitting recently to do other sales because their property sales have been so bad lately. They are feeling the bite and it is getting deeper.

zinglicious
04-06-2012, 10:54 PM
Japan has a population problem with limited land space. Worse, they have earthquakes!:eek:

So housing is a big big issue with them.....unlike in KL, the probles is a the creation of greeds factors coupled by the Greek-like Gomen policies.

ng
05-06-2012, 11:16 AM
All these high prices will not stay up forever. I know of 3 real estate agents quitting recently to do other sales because their property sales have been so bad lately. They are feeling the bite and it is getting deeper.

That is surprising ! I thought there is a booming sales now as property prices have skyrockett.

Sales office are packed with people camping overnight.

lly
05-06-2012, 12:05 PM
The recent price hike in property (last 3 years) are largely due to developer launch price getting to a new high with each launch. They can do it because people are snapping up all the new launches due to easy entry - low or no down payment, low interest rate, DIBS, and other gimmicks like GRR. People who do not have much money are suddenly buying many units in the hope of selling them off at a profit upon VP. This new launch prices in turn push up the sub sale prices in the same area.

Those who are buying homes for own stay, I feel that anytime is a good time to buy as long as it is within your means. The catch is that there are many good buys in sub sale market but entry is high. You need to pay all the legal fees, down payment etc etc. For purchase from developer, the price is high but entry is easy. So the choice is yours.

CS Chua
05-06-2012, 12:56 PM
That is surprising ! I thought there is a booming sales now as property prices have skyrockett.

Sales office are packed with people camping overnight.

Really? Which projects?

waga
05-06-2012, 01:34 PM
Really? Which projects?

I know of 1...cos was present there...

Temasya Glenmarie.....opposite Subang Parade...across Fed Highway.....launch in March 2012....2 storey terrace house...28' x 70' ...almost RM1M...on that day....i think more than 2000 ppl came with 50K bankdraft for balloting....for about 50 units.....sial or not ?

jan tomaswaki
05-06-2012, 01:50 PM
I know of 1...cos was present there...

Temasya Glenmarie.....opposite Subang Parade...across Fed Highway.....launch in March 2012....2 storey terrace house...28' x 70' ...almost RM1M...on that day....i think more than 2000 ppl came with 50K bankdraft for balloting....for about 50 units.....sial or not ?

I was the man behind the launching,yes you are right,i think it's 500 ppl with 50K bankdraft ..for 150 units.earliar 50x90 s/d RM2.8m sold out in one hour!

Rhiga
05-06-2012, 01:55 PM
Yup, people are still buying like carzy...regardless of finacial affordability !!

About 2 months ago, I went to the show unit of Dorsett Water Front, a luxury studio apartment project adjacent to Grand Dorsett Hotel, Subang Jaya.

Unit size is 400- 920 sqft, and is about rm600+/sqft.

Total units are 1900 in 3 towers.

The developer only launched 2 towers – one tower completely sold out, and another tower is 75% sold. !!

I think this is due to the easy entry scheme as what Illy mentioned – > no or low down payment, no interest paid until completion, etc, etc..

Rhiga
05-06-2012, 02:13 PM
Yup, people are still buying like carzy...regardless of finacial affordability !!

.............

I think this is due to the easy entry scheme as what Illy mentioned – > no or low down payment, no interest paid until completion, etc, etc..

One more factor why new launch is popular is the financing margin for house loan..

Bank will use the developer price as the property price to evaluate financing margin..i.e. purchaser will get 80%-95% of loan based on the property price.

However, for 2nd hand property, bank will use the price validated by valuer when approving loan, not the property transacted price..

For example, if the property is sold at 750k for a 22x75 house. Bank will use the property price form the bank ’valuer which is much lower than 750k, in the range of 500-600k. This means the purchaser has to get ready easily 100k to top-up the balance !!

Hence, don’t be too happy even there is interested buyer…!!

cml
05-06-2012, 04:02 PM
Yup i think the banks work hand in glove with the developers to boost up the price and their loans are based on the developers price instead of the market price. If you are selling your house the buyer would be lucky to get 60 percent of the transacted price as a loan amount. So for a regular house costing 600k now, the buyer has to fork out 240k or there abouts to be able to take the loan. who has that kind of money unless they have a property to sell, only people with that capacity would be upgraders. Here i am taking out the business people and high flying corporate executives. i am just talking about the normal people .

patrick
05-06-2012, 10:34 PM
Yup, people are still buying like carzy...regardless of finacial affordability !!

About 2 months ago, I went to the show unit of Dorsett Water Front, a luxury studio apartment project adjacent to Grand Dorsett Hotel, Subang Jaya.

Unit size is 400- 920 sqft, and is about rm600+/sqft.

Total units are 1900 in 3 towers.

The developer only launched 2 towers – one tower completely sold out, and another tower is 75% sold. !!

I think this is due to the easy entry scheme as what Illy mentioned – > no or low down payment, no interest paid until completion, etc, etc..

Dont always believe what you see or what you think you are seeing. That's my advice. Sorry but I cannot elaborate.

zinglicious
06-06-2012, 12:08 AM
Same of marketing tricks by the developers which works just fine since 1990. That's the cerita. Marketing Blitz of All Sold Out.

Just a bit of difference to the twist in few selected localities where they actually sold thier units within minutes - And it seems that the true. They actually being sold to foreigners in Bulk Order who later sold it to the locals when the units are completed.

But be extra prudent, as the offerings of condo launches are beyond actual ownerships or tenanted units. Unless you are staying or flushed with funds, or simply the location is viable, you be in for a big shocking revelation when the unit are completed. How's the "For Rent" to "For Sale" posters look to you in search for buyers and tenants? This happened to one of the location where all of the foreign ownerships are sold out before the locals can sell thiers as the marked price is done by the foreigner bulk purchaser with more than 80 units on hand for just one block of 270 units!

Rhiga
06-06-2012, 11:01 AM
Dont always believe what you see or what you think you are seeing. That's my advice. Sorry but I cannot elaborate.

Thanks for the advice..

I heard similar comment before about the so-called “sold-out”.

I was not in serious buying mood when I visited the show unit, just explore whether I can find a suitable smaller size pigeon-hole for future stay !!

After I noticed the project is built on commercial lot and is a high-density one (1900 units), I have no interest to explore further..

Fyi, I only buy property which is near completion to avoid all the unnecessary nonsense from errant developer.
And I can physically see the building and have better feel of the layout..

Of course, I have to pay extra and left with limited choices.

CS Chua
06-06-2012, 11:39 AM
There was this project which was said to have sold out all their units but somehow they kept their presence in various shopping centers. I approached a couple of them and they told me all units are sold out but one or 2 units are available because the purchasers cannot get bank loans. This happens over a space of a few months. Everytime I approached them, the same story is told to me.

I wonder whether we need a law to govern that.

Anyway it is those new projects that are having good sales. The sub sales market in USJ is bad. People are asking for high prices like RM950K for corner lots. People are not willing to pay that kind of price for 15 year old houses.

ivanhow
06-06-2012, 03:20 PM
i started to stay in usj 4 yrs ago. i really started to love this area n plan to buy a property for long stay! after surveying for a yr, the properties prices went up so high until i cant even buy a good condo... so sad...

Am really amazed that just a comment like this has kicked up so much discussion on this topic. Property has always been a hot topic in this forum.. But, shud we just accept the situation, or do something about it? Or, just wait for d gov't to do smth?

So, my question is what has really happened that causes the price of houses (including condo/apt, and all landed property) to go sky-high? And, what can be done to reverse the situation (if u have the options)? Has the gov't done enuf to help reverse the situation?

Do u really think that prices of houses (and condo/apartment) will decline and become more affordable (ignoring the quality aspect) or they will be forced to decline due to oversupply?

Altho some view given here are valid and agreeable, but let's take a deeper look.

The axiom that property prices will never come down has been proven false as we witness the housing crisis in the US in the 07's & 08's. And for most cases, prices of property keep going up and up with some corrections along the way. Here, a new s/s house in PJ during the early 70's cost as little as Rm4.5K and a d/s house cost as little as Rm19K. As time passes by, a s/s house in SJ early 80's cost as much as Rm39K, and a d/s link cost as much as Rm 79K. In d early 90's, a dsl in USJ cost abt Rm209K~Rm279K or thereabout. And just a couple of years back, new dsl houses in PH cost as much as Rm319K or thereabout. Figures are only estimates. So, looking at the viscinity of PJ/SJ/PH as a continuous logical development path, the prices keep going up and up. Can this trend ever be reversed?

CS Chua
06-06-2012, 05:50 PM
The axiom that property prices will never come down has been proven false as we witness the housing crisis in the US in the 07's & 08's. And for most cases, prices of property keep going up and up with some corrections along the way. Here, a new s/s house in PJ during the early 70's cost as little as Rm4.5K and a d/s house cost as little as Rm19K. As time passes by, a s/s house in SJ early 80's cost as much as Rm39K, and a d/s link cost as much as Rm 79K. In d early 90's, a dsl in USJ cost abt Rm209K~Rm279K or thereabout. And just a couple of years back, new dsl houses in PH cost as much as Rm319K or thereabout. Figures are only estimates. So, looking at the viscinity of PJ/SJ/PH as a continuous logical development path, the prices keep going up and up. Can this trend ever be reversed?[/QUOTE]

Malaysia is an emerging market and its properties are still the cheapest in Asean countries. In the long run it will continue to go up. But there were be corrections and some more severe than the others. Millionaires are made not just from the bulls but from the bears too. The wise will wait and buy on dips. Currently prices are not sustainable because income has not increase. If the correction does not take place and prices remain the same, it will probably take at least 5 years before moving up again.

We bought our first house in Taman Tun Dr Ismail in the late seventies for around RM40K for a single story. We were the 3rd family to move into Taman Tun, then and electricity was not even connected. So, you can say I have seen many boons and busts in the last decades. In fact one of my most vivid memories was of many friends rushing to buy Taman Sri Mudah in the eighties. It defies my logic to pay so much for a small house so far away but the fear that land is getting scares and property price will go up and up drove them to buy it. The rest is history.

So, the fear that land is getting scares has been the primary motivation for many investors. It has been hyped so many times in the last 30 years but I keep seeing new properties everywhere like Kemuning Utama, Putra Heights, Sg Buloh, Puchong, and the seemingly endless last piece of land by Sime Darby and many others. Lately, IJM launched Canal City or Bandar Rimbayu, which is next to Kota Kemuning. There does not seem to be any scarcity of land.

patrick
06-06-2012, 08:34 PM
The axiom that property prices will never come down has been proven false ......................

....Currently prices are not sustainable because income has not increase. If the correction does not take place and prices remain the same, it will probably take at least 5 years before moving up again.

.........Lately, IJM launched Canal City or Bandar Rimbayu, which is next to Kota Kemuning. There does not seem to be any scarcity of land.

Agree. Scarcity of land is not applicable except perhaps in Penang. It's more a question of choice location.

And I fully agree...current prices are just simply not sustainable, in my humble views. The problem is many are kiasu's who will start to run the moment there is a "fire". That's when prices are going to tumble. And I am looking forward...........

CS Chua
06-06-2012, 08:58 PM
Agree. Scarcity of land is not applicable except perhaps in Penang. It's more a question of choice location.

And I fully agree...current prices are just simply not sustainable, in my humble views. The problem is many are kiasu's who will start to run the moment there is a "fire". That's when prices are going to tumble. And I am looking forward...........

Me too. One last property before calling it a day.

ivanhow
06-06-2012, 09:02 PM
Do u think these are among the factors that cause the upward trend in the price of landed property (hse/condo/apt)?

1. Being in an emerging market ... (how?)
2. Fear *(False Evidence Appearing Real) of scarcity of land... (imaginary/unreal/emotional/psychological?) OK, this is not applicable to KL-Klang Valley

How abt global inflation (prices of commodities, which increases the cost of energy, transportation and hence cost of manufacturing to trickle down to construction materials, manpower)?

How abt lack of gov't foresight, improper (lack of/over) legislation and poor management (of resources)?

How abt greed (of developers/builders/speculators)??

If you look back, there had been a period where some developers had switched over to build more so-called "higher priced homes" in the 2+1/2 storey category (called superlink) houses. I first noticed this sometime in the early 2000's, and had slowly peaked in the last couple of years, with Sime Darby going int the foray in USJ Heights at prices between 750K and 1,200K range. That had in some ways left the middle bracket homes dropped in supply. But this supply has been slowly filled in again.

zinglicious
06-06-2012, 09:11 PM
For private developers, they can build or price thier properties they wanna. If the buyers wanna the super link 3 storey or luxury codo jacuzzi, fine with that. But how about GLC like Sime Darby who got special allocation of land to build decent and affordable housing for the rakyat? :confused:

Whether the prices of housing sustainable or not, some of the standard rules has changed. What frightening factor is the overseas investors are eyeing Kl properties with worldwide recommendation from reputable sites. Look at the prices in Australia and New Zealand. The locals there are being priced out from owning homes due to immigrants and overseas investors. And the China buyers are notably the main factor of the ever rising pricing in the land of the Sheep from Wellington to Auckland. :eek:

WHile the pricing of the housing keep on rising , I have to pay for for higher assessement fees though I am not selling my house which I am staying. :(

kwchang
06-06-2012, 09:15 PM
I thought it was just a simple case of cash-rich foreigners coming to buy up properties because we are still "cheap" by comparison to other countries in the region?

Look at Australia ... properties like those in Melbourne for example are now costly maybe because the rich mainland Chinese are buying up land and houses because they are sending their kids to study there. Anyone from down south verify this postulation?

kwchang
06-06-2012, 09:17 PM
I thought it was just a simple case of cash-rich foreigners coming to buy up properties because we are still "cheap" by comparison to other countries in the region?

Looking a bit further away ... at Australia ... properties like those in Melbourne for example are now costly maybe because the rich mainland Chinese are buying up land and houses because they are sending their kids to study there. Can anyone from down south verify this postulation? My apologies if I am wrong.

I am just putting 2+2 together - the prescence of foreign funds in escalating the property market beyond the reach of the locals

zinglicious
06-06-2012, 09:25 PM
From what I was told , they are not buying for education per se - They are really buying with the monies to invest! Look at how how Li ka Shing built out his empire in Canada in the 70's to anticipate the HK 1997 takeover. From asleeping town, it was transformed into vibrant city of Toronto and Vancover.

As in Malaysia, we have yet to see the China wave as yet, though personally have seen the Hongkies buying the subsales completed houses and sproadic foreigners cartel buying to resell it when it is completed.

Presently, the Chinese are looking at the Western grass as a safe haven of investment in case of political changes or they wanna to be a second home to migrate to. Bu sooner or later they might be looking at Asean Properties market......... which is scary for the locals.

ivanhow
06-06-2012, 10:19 PM
Let's look at the separate segments.
For foreign investors, the main criteria for property is convenience, resale value (saleability), strategically located for easy access to main public transportation, and commercial areas. These are usually highrise condo/apartments near existing transportation hubs/connectivity. Buyers are usually those who invest for higher returns, parents of students, and those who have been relocated as expats (eg. Korean/Jap/Brit/German) wif a 2 to 4yr stint.

The other segment which are landed property (residential 2storey) bungalows mainly within the domain of the upper-middle and those investors who purchase them as investments and renting/leasing them out to these foreigners for a specific period.

Then, the segment which cater mainly to middle and lower-middle locals - DSL and SSL - which are usually located in areas a little less convenient compared to the condo/apt located near to convenient public transport lines/hubs.

Belief zing refers mainly to those highrise condo/apt that are being marketted to foreigners (enbloc) like those in Mont Kiara and some others, where these properties are not advertised locally. Logically the prices are priced beyond the affordability of locals. But that's a story for another day.

On those highrise advertised locally (for locals), they seem to chase after the prices of these condo/apt for foreigners, thinking they will also fetch the prices, and locals will be too eager to purchase them. Yes, this segment will face a decline in property value because the glut will only force the decline. Especially when they cannot be rented out, and yet need to pay for the building maintenence services. Resale of these properties cud be rather slow too unless they are really close to convenient transportation link/hubs.

ivanhow
06-06-2012, 10:20 PM
Then, we have the DSL and the SSL, which by default are mainly local buyers, and local investors for rental income. These property do not fluctuate very much except in boom/bust years. Much of these buyers will sell when they emigrate or relocate (work related), or upgrade. My next door neighbor sold to move to a better unit. In come an 'Ipoh mali'. Yes, between the last two yrs, the gap up was rather wide. Swinging from Rm360K to Rm480K. But these are also in sync with the prices of new properties by developers, and the scarcity in the already matured areas such as SJ/USJ. But, further along the edges DSL are available around Rm360K but must have own transportation. Problem compounded by cost of transportation, or owning a vehicle where price of petrol has gone up.

Options are are still available further away, just a matter of choice of location. It's like comparing to prices of properties in KL City along Bukit Bintang against those further away like PJ, and then comparing properties in PJ/Klang Valley to those further away... Houses in KL = u can see, but cannot touch! 20yrs later, houses in PJ = can see, cannot touch. Another 25yrs later ...???:confused:

The SSL are in rather short supply, mainly due to high cost of land, and lower margins. There is a requirement that developers must provide certain percentage of low-cost housing within the development, and some medium cost. Development on some land meant for these have been delayed, waiting for mkt prices to escalate in tandem...

Yes, salary stagnated for quite some years now due to decline of FDI, or rather a reverse in FDI, where many of these MNCs have relocated, some local companies also decided to go abroad, global, and increase their investments overseas, buying up properties in these lands, winding down operations here. When the financial crisis hit property development slowed and only picked up in recent years to catch up with demand. So, the next time property prices drop (correction) will be when another crisis hits, and when ppl will be just too scared to make any purchase commitments.

Challenger
07-06-2012, 08:38 AM
From what I was told , they are not buying for education per se - They are really buying with the monies to invest! Look at how how Li ka Shing built out his empire in Canada in the 70's to anticipate the HK 1997 takeover. From asleeping town, it was transformed into vibrant city of Toronto and Vancover.

As in Malaysia, we have yet to see the China wave as yet, though personally have seen the Hongkies buying the subsales completed houses and sproadic foreigners cartel buying to resell it when it is completed.

Presently, the Chinese are looking at the Western grass as a safe haven of investment in case of political changes or they wanna to be a second home to migrate to. Bu sooner or later they might be looking at Asean Properties market......... which is scary for the locals.

I have seen a few HK people buying into properties (mainly shop lot) in M'sia. To them the price is much cheaper, the yield is much better and the bank financing is much higher. I also have many inquiries into foreigners buying local properties. I do not think foreigners are big in the local property market, nevertheless there are quite a number of them looking into our property market.

CS Chua
07-06-2012, 11:17 AM
I believe the primary reason for the rise is the low interest rate, both for savings and housing loan. Never in my life I have seen housing interest rates at - BLR 2.4%. Saving accounts interest rate was below 1%. In Singapore they hardly give you anything back in interest, just be thankful that they are not asking you to pay them to receive your money. Recently saving accounts interest rates have moved up but around 2% and FDs are around 3%-3.3%. With inflation of about 8%, real inflation and not government issued, we are losing 5-6% annually.

Therefore it is about seeking the best place to keep your money. Many have gone into gold. Many more have gone into properties. If the properties give a ROI of 5%, you are better off than the FDs. And because it is a booming market, there is capital appreciation. So, it is a win win situation. Remember Tiaraville as it was called. There were lots of naysayers and prophets of dooms, for some reasons. And today, the buyers are laughing all the way to the bank, except the pronounced naysayers and prophets of dooms. When the success stories start coming out and when the RM300 psf was successfully breached easily by Tiaraville and other properties, others start to jump on the band wagon. Anything below RM500 psf for condos were taken. Today, properties are testing the RM700 psf barrier in places like USJ, Puchong, etc. This was unheard of except around KLCC areas. Even Mt Kiara does not always have RM700 psf.

Anyway, if you are going to pay RM500 - RM700K for a flat in the sky, one might as well pay similar sum for a landed property because landed properties are always perceived to be a better investment. Hence, the rise.

Until and unless interest rates for savings and FDs go up, people will continue to look at properties. If FDs can give me 7% (like those good old years) why should I bother to buy properties even if they give me a ROI of 9%? The stress of looking for tenants and collect rent is not worth the extra 2 percent. And that does not include the risks and other matters. A rising interest rate regime will cool the market drastically but it does not seem to be happening in the short term.

waga
07-06-2012, 11:58 AM
Well said...CS Chua.......agreeable with yr post on interest rate that has been very low for years and support freehold landed property rather than highrise esp. those home-in-the-sky with easy...very easy entry level (new projects la).....at these current period.

The other concern.....shrinking RM .........as layman you will know our RM is shrinking when foods/things that u normally buy....goes up in price.....no need trained economists to explain in their confusing jargons ....cos when RM shrink.....properties oso go up....cost of higher raw materials/wages/etc .....

ivanhow
07-06-2012, 12:29 PM
Agree wif Chua on the role of interest rate, which has got the most impact on preservation of wealth at this point (apart from storing it in gold). And perhaps good ROI.

However, not too sure about Ringgit strength. It cud cut both ways. Lower ringgit strength cud entice foreign buyers to invest (not just in property, but also in other forms such as stocks and bonds if they have good yields)

1. Being in an emerging market ... (how?)
2. Fear *(False Evidence Appearing Real) of scarcity of land... (imaginary/unreal/emotional/psychological?) OK, this is not applicable to KL-Klang Valley
3. Low Interest Rate
4. Good ROI compared to other forms of investment.

ng
07-06-2012, 03:13 PM
I believe the primary reason for the rise is the low interest rate, both for savings and housing loan. .

Good analysis, Chua.

We should hire you as the Finance Minister. ;)

The current drastic price increase is caused by govt policies.

CS Chua
07-06-2012, 03:38 PM
Well, thanks, guys but there is one question which I do not have any good answers yet even from those who harbour this theory i.e. many believe that we are heading into a super inflation era where basic food products will be very expensive. Many are buying land to grow their own food eventually as inflation will eat up their money.

Property is always known as a hedge against inflation but will it work against super or hyperinflation? After all who will have money to buy properties at, say, RM5 million for a double story house? If there are no demand, price will decrease.

Would somebody like to argue for their case? I am interested to hear the different sides. Should we unload all our properties or keep them IF hyperinflation is coming soon?

zinglicious
07-06-2012, 04:26 PM
Good analysis, Chua.

We should hire you as the Finance Minister. ;)

The current drastic price increase is caused by govt policies.

100% sokong.

Irresponsible govt policies would be causing problems from housing and eating into inflation.

IMHO, EPF or any financial bodies should set up to create cooperattives to the rakyat to hedge against inflation or to profit from houses sales soemwhere along thhe lines of HUD Singapore.

Housing is a good investment to hedge against inflation compared to other investment like gold or stock market until and unless there is no control in supply and demand where eventually it would collasped with subprimes fiasco or supply exceed demands without regualtions from Bank Negara where properties is driven by speculations. Moreover should there be any stock or currencies crisis, is there any economics control to prevent financial woes?

Lastly, what's the deal of 5 % bumi for properties above RM5 million?

bslee
07-06-2012, 04:53 PM
100% sokong.

Irresponsible govt policies would be causing problems from housing and eating into inflation.


What the gomen done to fully protect buyers from possible or abandoned schemes, past few decades have heard of many buyers seriously damaged by abandoned projects. Is Malaysia still the only place where one buys a home without seeing the real thing?

zinglicious
07-06-2012, 05:07 PM
Precisely, if and when the currencies or stock market hit the Malaysian shores, think about the plights of geniune buyers who are buying it as a shelther for thier families. The worst part is these are the people saddled with servicing the banking loans while the taugeh of developers can skipped town without any liabilities being PLC or SDN BHD.

Picture this - The currency crisis 97 hit many developers to go into PN4 or ownership of PLC changed hands, projects stalled or abandoned.
Picture that - World financial crisis from Greece lightning to Spanish Flu hits everywhere, how ugly would there be as there would be stalled economy?

bslee
07-06-2012, 05:34 PM
I almost never think the gahmen is interested in genuine buyers for family shelter. The focus is likely in consistent and brisk business of property changing hands and thats where gomen and financial institutions MAKE MONEY taxes, stamp duty and interest rates, whatever... You happen to buy from some developer thinking this is HOME for eternity..the risk is ALL YOURS...so it all seems to be. If it happens the developer lari, delay in loan, delay in legal proceedures, dilly dally here n there..YOU'RE BUGGERED!... and your nightmare starts! I'm quite sure there's lots of horror stories to be found.

zinglicious
07-06-2012, 05:40 PM
Agree! But you have left out the possibilities of cronies that makes monies from the shell companies to Gomen linked companies. And the saudara saudari that benefits from the contracts. Incidentally, most of these management have ties with political figures - why ah?

bslee
07-06-2012, 05:42 PM
Agree! But you have left out the possibilities of cronies that makes monies from the shell companies to Gomen linked companies. And the saudara saudari that benefits from the contracts. Incidentally, most of these management have ties with political figures - why ah?

Oi!..of course lah.. one phenomenon is linked to another AND another...no end lah!.. And what is everyone supposed to think next? Change gahmen I suppose, no?

Rhiga
08-06-2012, 11:11 AM
There is always two sides of a story… i.e. there is always positive and negative aspect of a decision.

Lets’ start with low interest rate first…

From my very shallow layman point of view, low interest rate happened because there is not enough liquidity in the market, the central bank wants people to spend money in other investment instruments apart from saving the money in bank. With low inetest rate, people will park their money where they think can generate higher return than the bank rate like investing in property, stocks and business venture..

Low interest rate is good to do business and for personal investment where cost of borrowing is low. But when majority invest in the same instrument i.e. property.. demand exceeds supply and the price will increase and inflate. Eventually, purchasers have to pay much higher price for the same product even though the cost of fund is low.

High interest.
I said before, I like high interest rate and I missed the era of high interest after the 1997 crisis where the rate is 9-10%. By putting sizeable amount of money in the bank, one can shake legs from the annual inetest return !! But high interest is bad for businessman, very bad for those who have mortgage and certainly very bad for share market.

I learn a lesson(positive lesson) from the 1997 crisis –-> don’t always think those who pour cold water to your investment decision are prophets of dooms or naysayers !!

Why ?? .... I thought I was smart enough to park some money to earn high interest and put very little attention to share market. However, look at the numbers below.

2 years 10% compounding interest rate from bank will give you 21% return.
But after 2 years, KLCI slowly rebounded and gave more than 60% return !!

Similarly, if I use the same analogy to analyze what a forumer mentioned in this thread about his investment (in which he mentioned a lot of naysayers during his time of purchase)

I guessed the condo/apartment he bought about 4 years ago was between 200-300k and worth 400-600k now.

Just make a simple calculation, assuming cash purchase (no borrowing cost). The ROI would be 100%...!!

But, if you look at Petronas Dagangan share price 4 years ago and now, the return is more than 300% !!!

My point is – every investment has its plus and minus. Property is good investment in long run but it is less liquid. The buying and selling process take time. Share is relatively straight forward but there are a lot of unknowns inside. For share investment, never look at long term, set a target nd never look back.

So, when you commenting others are naysayer… there is high possibility that those naysayers know something that you don’t know.


Cheers

Rhiga
08-06-2012, 06:20 PM
But, if you look at Petronas Dagangan share price 4 years ago and now, the return is more than 300% !!!




Sorry, there is an error.

It is not more than 300%, it should be more than 200%..!!

The share price was RM6-7 in 2007/2008 period and is around RM20-21 now.

zinglicious
08-06-2012, 08:32 PM
From another shallow person in shares investment - it gives me flip flop moments. Burnt all my fundings in NZ equities during my teen days, overcooked during the currencies fiasco. But made a good healthy, yet tasty stock in USA where the returns was from USD1.70 average down to 60 cents till I sold all in one push of button at USD13.80 in 1 year. That's thousand of % in ROI!

Anyway, as with the OP, he was asking about Wow' how come so expensive!!! In some ways, our housing is like the stock market now, though the majority of the people are not speculating - they are buying to buy a roof over the head for thier family. The last 3 years, the outrageous growth might not be repeated or it might especially for landed properties in strategic localities. My observation is many developers are racing to build condo and shoplots intsead of standard double storey houses to maximise profits. My right eye see the demand for those sector while my left eye see over supply of condo and shoplots from Puchong to Subang, Mont Kiara to Sri Hartamas with numerous "for sale" or "for rent". And not many owners can tahan if the unit is not tenanted for months!

IMHO, I dont think there are enough people can afford to buy or rent that number of units of super condo or luxurious 3 storey link house except in few selected location.

On the other hand, I could be wrong. The stock that I sold Akam went up to as high as USD60 and it is probably USD38 now. Or I could have bought MCD where it was priced at USD15 - Nope I am not just buying the marketing biz of burger but for those real estate profolio they have had been accumulating since thier first franchise. Now MCD is selling more than USD80! ;)