Tuesday, December 30, 2008

新年快樂 , Selamat Tahun Baru, Happy New Year, สวัสดีปีใหม่ , Glueckliches Neues Jahr , お正月

It's that time again and phooh... how time flies. As we greet 2009, let's reflect on 2008. This is the year property prices were at its' highest in Kuala Lumpur, especially the CBD area and mostly the expatriate concentration areas such as Bangsar, Mont Kiara etc. We have seen launches touching RM2000 psf and we have seen sub-sale prices double or in some cases quadruple. Many people managed to cash out, many became millionaires (in the case where they are already not). Unfortunately for some, thousands of units came into the market or are preparing to go into Vacant Possession as we slid into recession.

Whatever 2009 brings, I don't think anyone of us will be able to predict but one thing for sure, we will not be able to see major increases. We can be sure that Malaysia will go into deeper recession (although our Government is still in denial that we are already in recession), thousands become retrenched and many businesses will close. Thousands of expatriates goes home, leaving the rental market into oversupply and free fall. That, I think we can be very sure about.

Although I cannot predict what is going to happen, I think one of the following scenarios will occur:

1. Interest rates goes up - thousands of purchasers, especially speculators will be burnt and forced to sell below cost or go into bankruptcy. Property prices plummet as a result

2. Interest rates goes down - the government tries to flush money out into the market to revive the economy. Suddenly, money in the bank has become a liability. Inflation at more than 10% forces thousands of cash rich people to spend their money in tangible investments - gold, commodities, properties... Not forgetting that tenants are on the decline, the rental market depreciates, high costs of maintenance and installments kicks in. At the same time, many speculators and property owners who are wage earners get retrenched or for some difficult reasons, they are forced to sell. There is a debate among friends now how this will affect prices but my take is, it will go for a free fall but not as bad as the 1st scenario

Well, Idaman Residence by TA Properties and 231TR by Urban Delta will be ready in a few weeks time. I am a little surprised that agents are quoting more than RM1000 psf (which is almost 80% appreciation from launch price). Let's wait and see...

No comments: