Tuesday, October 11, 2011

2012 Doomsday

So far this year, everyone I have discussed the economy with, including lawyers, bankers and property agents all say we are heading for a huge price correction next year. Especially in the high end property market. Apparently, most banks are now approving less loans for condos over RM1m citing lack of expatriates in the RM6000 and above rental market.

However, today there was one dissenting voice. It is not banks having less confidence in borrowers or their purchases. Banks have now introduced a new KPI putting all defaulters records under the officers who approved them. Therefore, loan officers have become exceedingly cautious.

What do you think?


13 comments:

Anonymous said...

Hi Sin Leong

Am thinking of booking a small unit.
Do you think the price is reasonable compared to the other new projects i.e. 6 Ceylon by Bolton & One Ceylon by UOA?

Appreciate your advise.
Many thanks
JS

Anonymous said...

Oops, sorry, this was meant for your other post on Laman Ceylon.
JS

sinleong said...

i think it's totally unreasonable, the price... but then again, all other "small units" have been sold out in the other projects - 6ceylon, suasana ceylon. As for One Ceylon, this is a different type of investment altogether. It comes with GRR, so while the price may not seem reasonable, it's because the "guaranteed rental" has already been built into the price

Anonymous said...

This place will be another KLCC with low occupancy vaccancy rate in 2013~2105. The future income stream i.e rent does not justify the current price at all.

Ann Khee said...

Hi Sin Leong,

I came across your blog few months ago. Since then, occasionally I will drop by to check out new post. Do you have an email or contact me form so we can communicate? I wish to invite you as guest writer in my blog. Or perhaps you can drop me a mail to annkhee.lau@gmail.com. Thanks!

Cheers!

sinleong said...

Thanks, Ann. My email is sinleongng@yahoo.com

Anonymous said...

I had the pleasure of bumping into your blog when researching property prices in Malaysia and was pleasantly surprised to see a viewpoint more in line with mine - all other sources pipe gross optimism to the tune of prices ever increasing for a long more to come.

I have been of the belief that things are grossly overvalued and certainly does not sit in tangent with earnings both individually and nation wise. Looking at the prices all over the place I've wondered where people are getting the money to pay for such exorbitant figures+interest, or whether it's just a boom from speculation and cheap credit.

I was wondering what your thoughts are on the subject and hoping you could share some insights.

Thank you.

sinleong said...

hi,
It's all packaging. Developers are packaging loan interests and giving some money back in guaranteed returns. whether they can rent out or not is not the issue because they are basically giving back what they've charged on top of the actual price. I am surprised how they can get away with valuations - perhaps banks take these into account when valuing properties. On top of that, the upfront is low. For a RM500k property for example, I dont think many Malaysians have RM500k. But they sure have RM50k or in some cases, just need RM5k to buy a property. Whether they can afford or not later is not the concern because their main aim is to flip anyway.

Anonymous said...

That said a lot of houses out there are priced way over bank valuations, some even 200-300k over bank valuations for high end areas from my enquiries. that said how do we know 1. it's in a bubble and 2. why do you say 2012 is the day of reckoning for malaysian property market?

Thank you.

sinleong said...

Feedbacks from most analysts seem to point towards a 2012 meltdown.

Live Long MU Fan said...

Hi Sin Leong,
I would like to know the reasons people think there will be a hugh price correction in 2012. The possible reasons I can think of are the possible economic recession (sparked by Europe), bursting of property bubble in China and Hong Kong, some overgearing by local investors and oversupply of expensive new properties. Anyone have any idea about the quantity of new supplies coming onstream in 2012 onwards? However, the low to mid-range market may not be affected much.
Appreciate your views

Phoenix_142 said...

think that 2nd half 2013 would be better bet for a meltdown...you would see the most number of VP-ed condo's in Klang Valley's history.

It's time to bear the brunt of nonsense like DIBS and 5/95 deals - and let's see if the secondary market can absorb the premium pricing demanded by these punters.

Capitalism without bankcruptcy or default is like Heaven without Hell...kekekeke....quoted by Klye Bass.

Live Long MU Fan said...

It is August 2012...no sign of market meltdown yet...
However, transaction volume is coming down...
I was just reflecting...that 2008, 2009 was also expected to be property downturn...but property prices continue to rise...
Well, every year delayed is a year closer to the inevitable?