Important home inspection tips for your new asset

I wrote this article some time back.
The To-Do list for inspecting your new home (click to read)
 An experienced
real estate negotiator (click here to know him)
 read it and added a few more important points. I do think all are logical and easy to follow tips. Please do read what he suggested and take actions yeah.

#1 KEYs are key

First thing when we enter the house, use all the keys given to us by the developer. Please check the set of keys they gave you. The reason is because during a recent key collection, I noticed developers are getting sloppy and usually 1 out of 3 sets of keys are not usable. (It may not be a major issue but hey, they are supposed to provide USABLE keys!)

#2 Water is a serious issue

Turn on the taps and let the water run. For the sink and the toilets and bathrooms. Try and hear any weird noise(s). Let the water run to check leaks on sinks and check the floor level in bathroom. If the water doesn’t flow fast enough (10 min of constant water), then that’s a defect. (nobody wants to wait 10 minutes after shower for the water to drain properly)

#3 Electric is next on the checking list.

Electric point is a bit hard if there are only light points but no lights. At the least, bring a phone charger and just try and charge using all the available 3 point plug first. Those are the most important ones as any renovation would need to use these points.

#4 – Slanting floor is common too.
(but not for all areas)

Floor wise, bring a water bottle filled with water. Put it on the floor and see if it rolls. If it rolls fast, u know it’s slanting. Of course certain area like kitchen or even shower room might be purposely designed as such for water running purposes. Of course, the living room area should not have a slanting floor yeah.

#5 – Gap in tiles

Tile gaps are usually 2mm indoors n 3mm outdoors. Note down the model and the supplier of the tile for easy future replacement. If it’s timber vinyl, developer nowadays will be giving a thicker 4-6mm ones. Just check for gaps and and floating ones or not. Floating is usually caused by over heating n you know you will need to do tinting for that area. Timber floors are sensitive to heat especially in Malaysia.

#6 – Yards are supposed to hold water

Test the wet area too if you have one. The yard is suppose to handle water n soaks. So test the water point, let it run, see any complains from the bottom unit if you are buying a condo.If landed, check ur water tank area. Usually above the stairs. Many units have water leakage issue as developer did not put enough water proofing. Hence you may be able to see dry marks or fungus marks. For fungus marks, you can usually see with your eyes. Or you may be able to feel wet patches and certain cases powdery ones too.

So, home sweet home guys
 the rest Charles did a good tip guide

— end of tips from Leon. —

Header Image by
Gerd Altmann
 from
Pixabay

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Home ownership should just remain home ownership. Period.

Sometime back, I was speaking to a young crowd. It was a JCI event. Most of the people in the room were 10-15 years younger than me. I reminded the crowd with this statement, “Imagine, all of us in this whole room buys a few properties with ZERO down payment. Have you ever wondered what will happen to our property market?”  It may be booming since the number of transactions will quickly rise. Soon, it will be exploding as the property bubble bursts due to the speculative activities. Yet, so many continue to think property can give super fast profits.

Losses are more manageable.
 Imagine we are investing into the stock market. If we have RM10,000 the maximum we could lose may just be RM10,000. If we have RM10,000 and we invest it into the property market, we may be able to lose RM100,000 if not more.  In fact these days, with many ATTRACTIVE deals, every property we sign up to buy, we may be getting money back. Here is the problem.  We will usually spend all the money and when the property is actually completed and we realised everyone in the whole 1,000 unit development had the same arrangement…

That desperate situation.
 By then, everyone would want to quickly rent out, so they will offer whatever price the tenant wanted.  By then, everyone who could not hold would want to sell quickly.  Assuming just 10% of the whole 1,000 unit development meant 100 units are being sold at a huge discount to the perceived market value. That’s the only way they could sell fast. So, the remaining 900 owners, even if they could hold are now holding a property which could not even be sold at the price they bought many years back. This situation will continue for the next 12-18 months while all these 100 units are being transacted in the market. No one out of the 900 owners could sell anywhere near the price they bought.

Who earns the most?
To people who think they are getting lots of money from these schemes, they are also assuming the risks from these schemes.  The ones who gained the most without the need to assume these risks would be the ones who arranged these deals. Whatever happens, they get to spend their commission yeah.  This is why I disagree that home ownership could either be buy for stay or buy to invest. Buy to stay, please.  If one needs to invest before actually owning a home, go ahead and invest into something else. it does not need to be a property.

As a property owner and investor, I prefer an orderly property market. A strong and resilient one where the investment actually becomes a hedge against inflation and where majority gets a roof over their head when they retire versus having to pay rental for the next 20 years or more. Hopefully there are more thinking like me as well? Happy understanding my concerns and thoughts.

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Looking for a home / investment? Jom carirumah in Sunway Carnival Mall

Many prominent speakers. Just so happen that I have listened to nearly all of them share and have learnt a lot. All are experts in their own fields. No idea why my good friend, Rozalina invited me to speak. So, the whole line-up now includes a blogger from kopiandproperty.com Haha. My topic? I will share how everyone is able to identify some of the usual property bubble bursting signs. From the signs from the banks to the signs you and I could see everyday.

Seriously, whether we are buying for our own home or investment, it’s extremely important to keep learning. Many have started to tell me that this is the best time to buy. Let me tell you that this is the worst advice ever. The best is always to buy the right property, never about the timing. Bad projects will be bad projects whether during good times or bad times. Listen, learn and ask lots of questions about how, when and even what could be a good buy. As long as we have the sufficient downpayment, that’s the time we can think of buying. See you in this edition of Jom carirumah 2017 in Sunway Carnival mall yeah. My slot is as per the itineary below.

More details as follows: (Itineary)

Participating developers and sponsors?

Happy visiting.

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More home loan applications in May 2016, recovery has started?

Many investors, the
cash-rich ones
 are always on the look-out for good deals. First-time home buyers needs more enticement but perhaps May 2016 is a significant month, if the trend continues. Reported in TheSundaily, there is an increase for the first time in 16 months for “Applied Loan for Purchase of Property”. Data is from Bank Negara Malaysia. It’s up just 2% year-on-year or 5% month-on-month. Small number but potentially a significant change. MIDF Research provided more insights. When compared with 2015, it said that the cumulative five months of 2016 is still lower by 6% when compared to first 5 months of 2015.

In terms of
transaction numbers which are falling
, the least fall would be for those houses below RM500,000. For these affordable properties, the transaction value declined 11 percent on a year-on-year basis. For properties between RM500,000 – RM1 million, total transactions value is down 23 percent while for the properties worth RM1 million and above, it declined 20 percent. Do note though that total transaction in terms of units is still over 80,000 units. In other words, people are definitely still buying. Based on the latest Consumer Sentiment Index (CSI) by the Malaysian Institute of Economic Research (MIER), Q1’2016 Consumer Sentiment Index (CSI) has recovered to 72.9 from its all-time low of 63.8 in Q4’2015. This number is however still below the
threshold level of confidence
. MIDF concluded by saying, “We believe that the data suggest some return of interest among property buyers but buyers are likely to remain price sensitive.”

It’s good to note that buyers are still buying and that buyers are also price sensitive these days.
Sanity has returned to the market.
 With this mindset, I think the Malaysian property market should be safer compared to the crazy growth in property prices during the 2009 – 2012 periods. I was having lunch with a colleague today. He has a small condo unit which he had renovated. He said it should be easy to rent out the unit but if he wants to sell, he would need to agree to a
lower selling price
 from what he expected previously. I think most owners are having the same situation as him. Even rental rates are softer these days. Well, as they say, buy when low,sell when high. Hope we know which is which.

written on 12 July 2016

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Start to worry with home loan repayment? Interest rate increase starting…

Start to worry with home loan repayment? Interest rate increase starting.

New Zealand’s interest rate increase

At first it was all those countries outside Malaysia which has been increasing their interest rates to fight inflation. For example? New Zealand increased its rate by 50 basis points and this is the highest ever increase for the past 20 years! In terms of actualy percentage increase, it’s 50 percent! From the previous 1 percent, it has been increased by 0.5 percent to 1.5 percent today.
Here’s the news

Australia’s interest rate increase

Australia has also hiked its interest rate and this is the first time in over 10 years! It’s 25 basis point (0.25 percent) increase. The reason is also to fight against a runaway inflation which was at 5.1 percent annually and this inflation number is the highest since 2001! Actually, this also tells us that inflation has been under control since then and only now that the worry about inflation started.
Here’s the news.

Britain’s interest rate increase

Bank of England has also increased it’s interest rate by the 4th time to 1 percent and this is the highest since 2009. The most major reason is because inflation rose by 10 percent! In fact there are expectations that Britain’s economy may fall into a recession. (Recession means negative economic growth). There are expectations that rates will continue to rise next year as well.
Here’s the news.

Here is Malaysia’s latest move by Bank Negara Malaysia

As for Malaysia, Bank Negara Malaysia (BNM) has also raised the rate by 25 basis points. Here’s the latest article:
Latest: OPR increase by Bank Negara Malaysia

America’s interest rate increase

Meanwhile even the Federal Reserve of the United States increased its rate and this is the biggest ever hike since 2000. It’s half a percentage point and this is to cool the economy and crush the soaring inflation in the U.S.  Inflation increased by 8.5 percent per annum and this is the biggest jump ever since December 1981. News here:
Article in nst.com.my

Why interest rate increase is a double edged sword?

When inflation is high, people will have to fork out more money to buy the same amount of goods. This is going to be very taxing to the people whose income is staying at almost the same level. It means that their qualify of life may be getting worse as well. This is one main reason why governments are scared of inflation. Imagine if all the people are unhappy, do you think the government of the day will get the people’s votes?

Now, when interest rate is raised, it may keep inflation in check but it may not be able to reduce the price of goods and services. In other words, the quality of life remained almost the same BUT… now all those people with loan repayments would start to feel the pinch. They now have to pay more every month. So all these people who had to pay higher loan repayments would now have a lower quality of life too.

This is why interest rate increase can be a double edged sword and it’s not an easy decision to make. Well, it seems that this is not the only increase and the expectations would be that the current rate increase may not be enough to stem the inflation. Please take care.

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MacQuarie Research: Developers will face pressure without Home Ownership Campaign (HOC)

Home Ownership Campaign (HOC) strives to help reduce the number of overhang units in the country. It also hopes to help the potential buyers save money when buying a property. It has ended on 31st December 2021. What has happened to the overhang properties and the developers who owns those units then? We have one latest analysis by Macquarie Research. Happy reading.

Article in nst.com.my
  MacQuarie Research: Developers will face pressure to sell their unsold stocks without Home Ownership Campaign (HOC). Developers would also be under pressure because of pandemic uncertainties, increasing raw-material costs, potential interest-rate hikes and low affordability.

It said, “We reiterate our Outperform call on Sime Property given the potential for its ongoing strategic refocus to grow recurring income streams and its focus on industrial real estate.”

Macquarie Research said based on Bank Negara Malaysia’s January data on loan applications for residential purchases, demand appeared to have started to decline. “We believe the trend will continue throughout 2022.”

Please do refer here for the full article:
Article in nst.com.my

Overhang versus secondary market?

Before we continue, please note that from the residential property transactions every year, secondary properties typically accounts for 80 percent of all the transactions. New properties, the ones sold by property developers, whether it’s newly launched or even the unsold stock typically account for 20% of all the transactions. Thus, when we say new property transactions will drop, it does not necessary mean that the total transactions will drop.

Unsold new properties especially the overhang ones have valid reasons why they were unsold and later entered the overhang category. Overhang means completed units which remain unsold for 9 months. In other words, if the developer has completed the units and it’s unsold, they are known as unsold units and it will become overhang units only after 9 months unsold categorisation.

Thus if we follow what MacQuarie Research is saying, it meant that perhaps we may want to skip buying stocks of property developers except Sime Property. I do not own any property developer stocks as at 16th March 2022. Not thinking of buying any in the near future too.

However, if our conclusion is that the whole property market will be challenging, this is not what MacQuarie Research is saying yeah. Happy understanding that there is a huge difference between property developer, overhang, unsold and even property developer shares.

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Home Ownership Campaign (HOC) SHOULD be OTW back…

It’s been reported in the major medias. I have received a few same messages of the news. Well, just need to wait till next week to know for sure.  What can Home Ownership Campaign (HOC) do IF I have no money to buy a property. Actually, we are not in a financial crisis. Many kept harping on unemployment numbers but I repeat, we are NOT in any financial crisis like 1997/98. However, we may be going into one if the economy is still switched off for a longer period of time due to COVID-19.

To restart, we need to do something about it. So, yes, the HOC 2020 may just restart the “ON” button. Will this then cause property prices to go up too fast? I think this is something which our Bank Negara Malaysia (BNM) or the Finance Ministry will be watching and take appropriate actions when they happen. Based on what they have done thus far (even when compared to many advanced nations), we are doing pretty okay.

Article in edgeprop.my
 One source said this, “The government seems interested in reintroducing the HOC as the campaign had achieved good results last year. The government is expected to make an announcement in June or July.”  This proposal to reintroduce the HOC was made following meetings involving the Ministry of Housing and Local Government (KPKT), the Ministry of Finance (MOF), the Real Estate and Housing Developers’ Association (Rehda) Malaysia and the Malaysian Institute of Estate Agents (MIEA), according to a property industry source.

The length of this new HOC may be until end of 2020. Real Estate and Housing Developers’ Association (Rehda) Malaysia president Datuk Soam Heng Choon said, “The announcement will most probably be made by the Prime Minister on June 5. In the meantime, we are continuing with our discussions with the government to fine-tune [the details].”
Do refer to the full article in edgeprop.my yeah.

In other words, a 6-month window for the stamp duty exemptions from HOC may become a reality next week. Please wait until formally announced and well, gazetted as well. I think many would still feel uncertain but this HOC will definitely be that catalyst for many who have ready funds to grab the opportunity and spur the property market. Once the numbers start to show, then the first-timers will be confident enough to enter the market actively again.

If the question is will I be buying, my answer remains the same. I have never stopped searching for good property opportunities. However, I do not have unlimited funds, so it will have to be really compelling before I can make any decision. By the way, buying a property to start ‘forced savings’ versus buying a property for investment so that one could rent it out are two very different decisions.  Make them wisely and not just because of the potential HOC okay. Happy evaluating.

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Home Ownership Campaign (HOC) ends end 2021. Should be made permanent?

Home Ownership Campaign (HOC) should be made permanent?

I believe Malaysians who could afford to own a home should own a home. Spend less, save more. It’s really possible. No one without a home should be poor forever by paying hundreds of thousands of ringgit for rental even after our income has stopped. When income stops, we would have to start relying on our savings to pay the rental just because we needed a place to stay and this will look scary every time we look at the remaining balance in the bank account every month.

Simple fact about rental yeah. We just assume the rental amount stays the same forever… (does not happen in real world)

RM1,000 (rental) x 12 months x 50 years (assume start work at 20 and pay rental for the next 50 years until the end of the road) = RM600,000.  RENTAL?!

What if it’s really impossible to pay for a home?

Anyway, if any Malaysian could not afford any property, then the government must be ready to let them rent basic homes at a much lower rate than the rental above. Else, they would be spending what they could have spent on other things just for rental alone. RM600,000 is enough for 6 kids to study for a degree in a local private university (not the foreign brands yeah)
. Info Source: Studymalaysia.com

Article in nst.com.my
  LBS Bina Group Bhd hopes the Home Ownership campaign (HOC) will be a permanent fixture in the housing market. Its executive chairman Tan Sri Lim Hock San said that HOC has been a welcome boost to generate property sales as customers became more cautious because of the Covid-19 influence.

He said he is hopeful that the government would announce the HOC and a full stamp tax exemption in Budget 2022, which will be tabled in Parliament on October 29, 2021. He also said that with the correct government assistance, this will lead to a rise in Malaysian homeownership.

Lim said this about MM2H, ‘While the group welcomes its relaunch, we believe that the recent revisions to the MM2H Programme requirements for new applicants may be too stringent and instead deter foreigners from choosing to work and live in Malaysia.” Please do read the long article with more of his views here.
Article in nst.com.my

First-time home buyer should have advantage over the property investors

First-time home buyer does not have the knowledge which the property investor possesses. First-time home buyer may also have less financial capabilities too. Usually property investor may already have tenants who are paying them rental and thus they are able to buy the 3rd property as if it’s their first property as long as they have the necessary down-payment.

First-time home buyer is buying a home so that they would not be poor forever. Property investor is buying a home because they want to get rich in the future. I do hope anyone who’s not having any vested interest can see my logic in helping first-time home buyers, first. As long as we continue to have measures which are supporting first-time home buyers, I am okay if the government also wish to help the rest, especially with the overhang numbers which is actually deterring first-time home buyers from buying due to the negative sentiment.

What would be your thoughts? Happy sharing.

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Home price RM250,000 and rental is RM1,000. Worth buying?

This was a very old question but let’s look at this from numbers perspective for this article yeah.

As we assumed, the home price is RM250,000 and rental is RM1000. Let’s also say the maintenance fee is RM150 per month. Now let’s look at a few scenarios.

How YOUNG is the buyer?

If the buyer is 30 years old, then the bank would approve loan period of 35 years. Usually, it’s 35 years as maximum loan period or up to 65 years old, whichever is lower. If the buyer is 30 years old or younger, then she will be able to stretch the loan to 35 years. We assume a down-payment of 10%. The numbers would be as below.

Thus, it’s RM866 per month plus maintenance fee of RM150, thus total which the owner is paying every month is RM866 + RM150 = RM1,016. So, the rental actually COULD NOT cover the repayment + maintenance. So, if we take negative number as no-buy, then this is a no-buy decision.

However, we can also look deeper into the monthly repayment to distinguish between the interest and principal payment too before we make our decision.

If rental is RM1,000 does it cover the interest payment sufficiently?

The below would be the mortgage repayment divided into principal amount and interest amount every year.

On the 1st year, the total repayment is RM10,391. This is RM307.60 for principal and RM588 for interest payment.

Interest payment RM588 plus the maintenance fee of RM150 is a total of RM738 per month for year 1.

If the rental is RM1,000 then this amount already covers both the interest payment and also the maintenance. So number wise, if the owner looks at this for long term, it is still okay to proceed with the purchase.

In fact, what happens to the principal payment and the interest payment is that every year, the interest portion gets smaller while the principal gets bigger. Principal is actually the capital which belongs to the owner. Interest payment belongs to the bank. So, as long as the rental covers interest fully and can cover some portion of the principal, the tenant is making the owner richer every month, slowly.

Info source:
https://www.calculator.com.my/

What happens if the buyer is older?

If the buyer is now 40 years old, then the maximum loan period may only be 25 years (depending on the bank). The calculations are as follows.

The rental of RM1,000 per month could NOT even cover the monthly repayment, let’s not even talk about the maintenance fee yeah.

It’s RM1,000 (rental) minus the repayment of RM1,067 and the maintenance fee of RM150. This is a negative of RM217 every month!  Let’s look deeper into the principal and the interest as well yeah. It’s in the chart after the repayment one.

The Principal and the Interest portion for the loan

Info source:
https://www.calculator.com.my/home-loan-calculator#.YWGQP9pBw2w

This time, the principal payment for year 1 is RM511.50 while the interest portion is RM555.51.

Interest portion plus the maintenance fee is RM555.51 + RM150 = RM795.51 per month.

Rental per month is RM1,000. Thus, it still covers the interest plus the maintenance fee and some portion of the principal payment.  Thus, if the buyer is taking a long term investment view, it is still a possible buy.

BUT… what about other costs? Renovation? Electrical goods? Stamp duty? Legal Fees? and more?

Yeah, it’s really possible that when we include all these, the actual amount we need to pay is higher than the repayment plus maintenance fee and we will need a much higher monthly rental to cover all these additional costs which is not part of the bank loan. This is why it’s a decision by you, the buyer and not me, the blogger here in kopiandproperty.com

REMEMBER this chart too… okay?

It’s called Malaysia House Price Index (MHPI) and it tells of the typical price increase over a certain period of time. So, while we are obsessed with many of the numbers we discussed above, the home we bought is also increasing in value every year too. Let’s also look at a simple calculation yeah. It’s a comparison of the price change over a period of 10 years. 2010 vs 2020.

Remember the home price we discussed? RM250,000? If every year, the house price increase by just 4%. (much lower than what the MHPI tells us), then it’s RM250,000 x 4% which is equivalent to RM10,000 per year… In other words, the property price increased by RM833 every month. This is why when we buy the right property, chances are we would gain profits when we sell and we could use the profit to continue our next investment and so on.

There are no property listing in kopiandproperty.com

We do not have any property listings. For that you may need to go to iProperty.com.my or PropertyGuru.com.my and take a closer look.  We also do not run any property clubs where we offer you any special discounted property. We are also not an agency or have a REN tag, so if you like to buy a property look for your friends yeah. We just want to share with you all the necessary numbers but the decision is ultimately yours. We also do not have any special deals with banks. Please find them yourself.

Disadvantages are also aplenty

There are a lot of disadvantages of property investments too. If you prefer a faster investment return, please do skip property. It’s super slow. In the mean time, do enough study before sign on that Sale and Purchase Agreement yeah. This is not like buying a fish from the market. That one, if you make a mistake, buy again. For property, if you make a mistake, it is a setback of many, many years. Happy reading and please do share any article you find beneficial to you.

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Home prices going up, chance of cooling measure goes up too

When home prices move up too fast, the government needs to do something about it. Else, the people would soon not be able to afford to buy a roof over their head. Or the property market crashes and that’s an even bigger problem.

It’s an advantage to have lots of information from all the advanced property markets and then to think about what may happen here in Malaysia too. Sometimes, being a follower is a good thing too.

Article in channelnewsasia.com
   Private home prices in Singapore rose by 2.9 per cent in the first quarter of 2021, according to official flash estimates released by the Urban Redevelopment Authority (URA) on Thursday (Apr 1). In the previous quarter, it was a 2.1 percent increase and in 2020, despite the COVID-19 pandemic, the private home prices went up 2.2 percent.

According to OrangeTee & Tie senior vice president of research and analytics Christine Sun, this rising home home prices in Singapore are in tandem with the uptrend observed globally. She said, “Pent-up demand bolstered by massive fiscal stimulus and still-low mortgage rates is propping up home prices worldwide.”

Mr Lee of Huttons Asia reminded that the chances of the Government introducing cooling measures to keep prices in check have been raised “a notch” The full article
Article in channelnewsasia.com

The world is on a positive trend (not all countries of course)

Remember yeah, a rising tide when it happens will bring up all boats and Malaysia is definitely not a sampan no matter how we look at the market. The vaccinations are now in full swing in many countries and words such as travel bubble and even increasing flights are becoming common. Malaysia received over 26 million international tourists in 2019. Think about it very seriously.

The government has to step in once things start to go out of hand

When the home prices increase every quarter, this is definitely not sustainable. The reason is a simple one. Salary increments happen only ONCE every year. People need to afford homes. Imagine what happens if home prices move up 4 times a year and salary only moves once a year? I think you get the picture. So, all those terms such as cooling measures, RPGT would also be on the way back too.

Happy Learning and Understanding that whatever happens outside Malaysia would also affect what’s happening inside Malaysia too.

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When price is affordable, should we try it

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Property prices in 2013 for MANY countries – falling or rising?

I just read this news in propertyguru.com.sg. According to Global Property Guide, Singapore home prices fell 0.9% in 2013 after a 1.13% dip in 2012. This meant that prices has been falling for two consecutive years, albeit marginally. I personally think this is a good sign. I have at least 3 Malaysian friends working in Singapore who has spoken to me every time we met that the prices of houses in Singapore is going through the roof. I think they are now happier?

What about Malaysia? Many have predicted that the prices of luxury properties may fall in double digit this year. I seriously think this may be true though other than that I have yet to feel any price change. The condo I am staying now is still at it’s same price range which meant that the secondary market has not been following much of the trend in primary market. The condo that I bought 6 months ago has also maintained its price at almost the same level when I refer to online sites. Thus, for mid level condos, its status quo.

The report however said that in most parts of the world, residential price are still growing in 2013, especially in US and Asia Pacific. It said that all 20 major US cities saw prices increase. I think this has been reflected in the many good news we hear these days about the US economy. In fact, the tapering may happen sooner rather than later by the new Federal Reserve Chief, Yellen.

Australia’s home prices continued its climb and if you google ‘property bubble australia’, you would notice there are more predictions about the potential bubble there. In Taiwan, prices increased by 14.5% in 2013 despite already growing 7.7% the year before. If you are saving, you have to save at least 25% extra if you did not buy in 2011. Pretty tough.

Many other European housing markets registered strong price growth too. Ireland (6.18%), Turkey (5.73 percent), UK (4.88 percent), Riga in Latvia (4.64 percent), and Iceland (4.33 percent). Typically, during financial crisis, prices of properties would drop. Can we conclude that the world economy is indeed better than previously? Perhaps not yet entirely, I still read about Spain and Greece having an unemployment rate of 26% and 27% respectively, a very high number even in comparison to majority of other European economies.

Suffice to say however that whatever investments we may want to do, it pays to understand the whole picture rather than just your own country. Many times, crisis may sometimes be a crisis of confidence, thus when sentiment turns bearish, everything becomes negative. For now, majority are in the black, so I think we are safe. Hope that I can do an update in another 6 months time and by then, everything will be even more rosier.

written on 21 March 2014

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30 million population, urbanisation and new properties – long term view

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Home prices jumped 14.6% yearly is not something to be happy about.

This home prices increase is definitely not in Malaysia yeah. We are much closer to ‘nothing moves’ versus a double digit price increase.

The typical pay increase for America in 2020 was 3% or less. This is as per PayScale’s 2020 Compensation best Practices Report.
Do read the full article in thebalancecareers.com
 So, how much could one afford when it comes to buying a home after the salary increment? Hopefully the home prices stay almost the same or maybe go up a little… okay? So that even with the small salary increment, one could still afford a home.

This was not the case though. As per latest data, U.S home prices have jumped the most in more than 30 years! I repeat over THIRTY years. Means the last time they have an increase this high was way back in 1988. In 1988, I was just entering secondary school. That’s not all, this double digit price growth has been around for over 10 months. Wow. (with a negative sigh…) Read on.

Article in theedgemarkets.com
   Nationally, the S&P CoreLogic Case-Shiller index of property values climbed 14.6% from a year earlier. This is the biggest gain in data going back to 1988. This number came after a 13.2% increase in March and this is the 11th straight month that prices gains accelerated. Meanwhile home prices in 20 U.S cities jumped 14.9% and this beat the median estimate in a survey of Bloomberg economists. Please do read the article for more information.
Article in theedgemarkets.com

When property prices rise by double digits, this is not something to cheer

When property prices rises way higher than the salary increments, it may also mean that the property price bubble has started to build. It will continue to build until a time when the salary just could not support the property price any longer and we would then have what we call a property bubble bursting and the prices would suddenly fall by double digits too.

Just need to note that some markets could continue to go up if the environment continues to be conducive and someone people could still force themselves to afford a property. They may have decided that a cheaper car is fine and put the extra money into a home. They may have decided that a holiday overseas could just be a domestic travel.

 All these would continue to happen until at a point when nothing else could be cut and there’s just no way anyone could pay that asking price. That’s when the music stops. We need to always remember that in 2008, what happened was a mortgage crisis. Hopefully the banks have learnt their lessons and would not continue to lend to ever riskier buyers. Happy understanding that property prices which rises way above fundamental is not good news. Not at all.

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“Risk worth taking” to get a home of our own?

This article was in
MalayMail.com “Peer-to-peer money lending for homes a risk worth taking, says finance minister.”
 Finance Minister Lim Guan Eng says that the government will only proceed with peer-to-peer crowdfunding to help first-time home buyers only after all factors are considered. He added that Bank Negara Malaysia and the Securities Commission (SC) have conducted their own evaluations and have not objected to it. He said, “So I would say that we would not be approving this until all factors are considered, but definitely we welcome the concerns. We got to go to the mechanics in the SC. The important part is the exchange platform. That is the critical point. So once that is done, everything else follows.” Once this scheme becomes a success, it would raise the bar on large-scale home ownership.

He added that this scheme is part of the government’s promise of 1 million affordable homes for Malaysians. As for the approval by both the Bank Negara and Securities Commission for rollout to the public, Lim hopes the peer-to-peer scheme will be approved for rollout by early next year. As for the criticisms from the Home Buyers Association (HBA) on the peer-to-peer scheme which said that it may lead to the possibility of a mortgage crisis due to too-easy financial aid given, Lim said he will be meeting with the HBA soon. He added, “If the HBA is not concerned, and just taking two paragraphs from my statement, then there is something wrong with them.”
Full article in MalayMail here.

Regardless of the scheme being offered, the risk factor mentioned here should not only be for the buyer of the said property. It should include the risk to the property market as well. Bank Negara Malaysia has always been vigilant and asked banks to exercise responsible lending. Cooling measures were also implemented so that property bubble would not start building and eventually leading to a burst. At the moment, we are doing just fine. BNM said in an article in
TheStar here. “In the household sector, new household borrowing remained high quality with about three-quarters of new loans approved given to borrowers with debt service ratios of less than 60%.”
  Happy waiting for SC’s approval on the process then.

written on 4 Nov 2018

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What is a home sweet home? It’s about me, really.

Do we buy a house because our friends say that area is awesome when our current office is 47 minutes away in the morning? If we think there’s something wrong about this, then let me tell you that my ex team-mate bought a home which is 55 minutes away because she said for the same amount, she could not buy even a house which is half the size within a gated and guarded development in PJ. She’s very happy with her purchase and I went to her home for house warming. Even her husband was happy with the home and told us many advantages about the buy despite both of them working within the city centre.

Sometimes, alternative solutions exist

Do we stretch ourselves like crazy for a home which is 300 sq ft bigger because we plan to start a family a few years later? (300 sq ft x RM600 per sq ft = extra RM180,000 a substantial amount). If we think this is too crazy, then let’s understand that when we put it into a monthly mortgage perspective, then this RM180,000 is just RM700 plus. What if we could rent out the master-room for now and only take it back when the day comes? By then, we have a much bigger home and yet the tenant had subsidised the purchase for a few years.

Many times, it may not be what you think because everyone is different

Do we buy a small unit for a very high price per sq ft because it’s within walking distance to our office?  Again, many slightly older people including me would not like this idea very much. However, a close friend of mine who’s a senior manager did just that and she’s very happy with her choice. She wakes up at 8am and could be inside the office by 830am. It’s not even about the 30 minutes. It’s about the 8am! There are not many areas in the whole Greater Kuala Lumpur where we can afford to start our journey after 7am! Yet, she wakes up at 8am….

With time, good property always a good investment

Occasionally, my wife and I will talk about the first property we bought in 2002. Yea, 18 years ago. It was a 730 sq ft apartment with very minimal facilities in Relau, Penang. The swimming pool was a highlight though. Nothing too fancy but it’s huge! I enjoyed it roughly 10 times during the 4 years I stayed there. Haha. From the swimming pool, I could see my our 2nd property in the next neighbourhood, a 1,258 sq ft condo being built. My wife and I were happy there. In fact my sister stayed with us for 2 years and later on my brother-in-law stayed for 2 years too. It was a small and simple apartment but this was the apartment which started my property investment journey.

It’s about me, really!

Personally, I think the best house does not really concern the area, the type and even the developer. It’s the one that makes us feel the most at home. Happiness is usually inside this mix.  We may be saving for the next upgrade, so this first home should not be too expensive. We may want to think very far ahead and thus prefers to stretch now because a few years later when our salary is up, then it’s no longer a stretch and yet at the same, homes like this will be much more expensive. In fact, some times that secondary property really does not look modern at all but it’s nearby the in-law’s home and they help to care for the kids. Do not head too many people giving too many ideas. Going back to the WHY helps tremendously. Your home sweet home is your home sweet home. Happy buying one.

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Here are 4 reasons why our home sweet home will keep changing.

What is a home sweet home? The answer to this question is could have been whether it’s a landed home or a high-rise unit. Most people think of landed home as that home they want or they eventually want or they believe everyone wants. By the way, it does not matter whether landed or high-rise, think about why you need that home. Once it fulfills all of our needs, then it becomes a home sweet home, temporarily. Here are 4 reasons why our definition of home sweet home is really temporary.

#1 When income changes

When we finally got the keys to the very first apartment we bought, my wife and I were extremely happy and proud. It was our home sweet home and we could now do any renovation we like. We could also put up kitchen cabinets and more. That was in 2002. By 2006, we were thinking that perhaps it’s possible to have a new home sweet home. A bigger one with better facilities. More contemporary and within a growing neighbourhood.

While all these were what we were looking for, the trigger was really just the fact that both of us were earning higher incomes and that opened up an opportunity to buy a bigger unit and get more comfortable. That first home sweet home was not as sweet anymore.

#2 When needs change

Someone who loves to be single may prefer a home which is close to the working place and all the usual places one frequents every week. A home sweet home for a couple may just be one where there’s a balcony to watch the sunset every evening. (how romantic…). However, it is no longer the same when this same couple have two babies. They may now need one where there are more rooms, for the babies and for the parents who would visit the babies every other week. When the babies have turned into university students, this same couple may want to do some travelling and prefers a smaller home with good security instead.

#3 When trends change

More applicable to  KL city centre but as long as it’s one of the major cities in Malaysia, it would also be applicable too. There were those years when everyone just loved the city centre to buy a home sweet home. It provided convenience, it made perfect sense. Travelling to and fro work should not take 2-3 hours daily, so no one wanted to stay so far away. Most office towers, most of the best jobs and most opportunities were usually within the city centre.

These days, office towers need not be within the city centre. These days, the availability of good paying roles does not need to be centred only within the city centre. In fact, travelling to work does not need to be hours because office was not necessarily in the city centre anymore. This is why homes further away from the city centre could also become a home sweet home too.

#4 When property prices change

I asked this question when I was giving a property talk in KLCC once. “If there was a property launch right across this hall where a condo of 1,000 sq ft within walking distance to KLCC is priced at RM450,000 would all of you want to get one unit?”  Majority of everyone put up their hand or nodded in agreement. However, there are no such properties because typical prices per sq ft for such a property would definitely be higher than RM1,500 per sq ft. Thus, a 1,000 sq ft place may be RM1.5 million instead. Or higher for newer places.

Property prices would continue to drive how we define a home sweet home. This is how developments continue to move slightly further away but comes with a more affordable price versus the city centre. Then, the next development moves even further away and comes with the same affordable price as few years ago. This continues and suddenly we realise people have started to accept that buying a RM500,000 property does not need to be a tiny little place in the city centre could be a double-storey terraced home somewhere 35km away from the city centre.

#5 There are definitely other reasons

My parents are not used to high-rise. They feel it’s not convenient. After parking the car, we need to walk to the home. My kids who have stayed in high-rise units and have enjoyed the facilities are not used to a home without facilities. They think it’s inconvenient. A home sweet home for my parents and my kids are not the same but of course could be bridged if we could get a place which is landed and comes with a full-facility club house too. This is why the home sweet home could change all the time. I am not very sure what would be a home sweet home to my kids in the future but I can safely say that it’s likely to be different from what my parents think and what I believe. Happy getting a home sweet home yeah.

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[Sponsored Post]
Young, Growing and Multi-Generational Family in need of a Home Sweet Home. 8 Important Considerations.

People say, the nicest home is a home where the heart is. It’s that home sweet home we like to come back to every day. The smiling face of our partner and the hugs we get from our growing children. It’s that place we like to come home to after a vacation is over and we needed a rest before starting work.

These days, working from home is more of a norm versus uncommon for many of us. It’s also by far more common for a home to house a few different generations too. It may start with a newly married couple but it may soon be catering to new babies and their grandparents too. Thus, a home of today will have to cater to the different demands.

Gone were the days where buying things meant it is compulsory to drive out. 2G technology has been long forgotten and even 3G is no more. Today it’s the 5G rollout. Watching the latest movie may even be just a few clicks away. This is why a home is no longer just a property. It has to meet at least the 8 Important Considerations as below.

#1 Entry Price, Potential Price Appreciation and Inflation Matters

As someone who has been investing in properties and currently having access to private swimming pools in 6 cities / towns in Malaysia, let me share that the single most important factor for property investment is the entry price.

No, it’s not the location because if the location is great but we bought at the highest point for entry price, it will take a long time for the price to appreciate even higher that the highest point. However, any potential location with the right price is far more important instead.

If we entered at a price which is considered affordable, it also meant that there are more potential buyers in the future as the price have room to move upwards. This is why many of my purchases were into growing neighbourhoods versus fully mature areas without much further developments possible due to land scarcity.

Secondly, with inflation affecting all the cost of production including but not limited to land, construction materials and even manpower, it is inevitable that property prices will continue to move up with every passing year. Below shows the property price movement since the 1990s till recent times.

Info source:
https://tradingeconomics.com/malaysia/housing-index

By the way, inflation is real and will always be around. That bowl of noodle which was RM3 many years ago could have doubled in price today. This is the same for land cost, construction material cost and even price of construction workers. All these would then push up the price which the developer could sell over the years.

#2 Developer matters a lot.

I have bought properties from established developers and I have bought properties from the secondary market as well. From the purchases, I do realize that buying from an established developer reduces the potential headaches we may have.

Let’s be real. It may not eliminate all the possibilities of poor workmanship and other problems but with an established developer, it’s much easier to deal with them for remedial actions should problems occur.

Many times, it’s very sad if the developer is nowhere to be found when we found problems with the property we bought. This happens by the way, if the developer is a small one and may not be developing homes as their main business.

One good indicator of an established developer would be publicly listed and showing profits even during these two years when we are affected by Covid-19 lockdowns. This tells us that the developer is well managed too. One such developer is
Matrix Concepts Holdings Berhad. (click here to know them better)

Matrix Concepts Holdings Berhad was crowned Best Township Developer and received three special honours at the Asia Property Awards 2021.
(Click here to view the Press Release which kopiandproperty.com is an official media partner)

Besides this Best Township Developer award, Matrix Concepts Holdings Berhad’s Group Managing Director, Ho Kong Soon was also awarded the 2021 Malaysia Real Estate Personality of the Year title.

Below shows why developments of today needs to be planned well. People need more than just more empty spaces.

#3 Size versus Distance is not just how far is it from the city centre

If we look at advanced property markets, the term suburb is a common theme. Suburb is defined by Oxford Languages as, “an outlying district of a city, especially a residential one.”

In Malaysia, we could see that people are no longer just staying within the city centre, especially growing families. Parents with a new baby would prefer more space, not just space within the home but also space outside the home. Walk out of the home and into wide lanes within the neighbourhood.

Instead of the usual 800, 900 or even 1,000 sq ft home in the sky, it’s possible to have a home on the ground with double the size if not more for the same price if one were to look further.
Here’s one such potential home at Bayu Sutera within the Bandar Sri Sendayan. (click to know)

#4 Importance of Self-Sustaining townships

Township developments are not an easy development to do. It takes a developer who wishes to be in the home development business for a very long time to even think about township developments. It’s just not possible to finish a few hundred units and bid farewell.

This is the reason why many developers may prefer to just buy one small piece of land, build a few hundred units, sell it all, take the profits and then move on to the next project. In this way, the developer does not need to do long term planning of making a self-sustaining township comes to life. In fact, the development planning ends as soon as the construction begins.

This is why whenever I buy any property from a developer, I do check them out. It’s easy to do these days via the internet.

#5 Multi-Generational Needs

These days, it’s getting more common that homes would also need to cater to multi-generational needs. Kids may need some space to run around safely outside the home. A purpose-built playground versus just a grass field. The home may also come with bigger room for kids so that they could also have a desk and enough private space to do their homework versus doing it in the living room.

Image is based on artist impression only

Parents who came to visit or stay for a while would also prefer to have some space to stroll in the morning or in the evenings. Some chairs to sit down along the jogging paths and perhaps greet some of the friendly faces.

They will also prefer a room on the ground floor with enough space versus having to climb the stair case every time. This is why some newer homes have a bigger room on the ground floor versus a small room for the maid like previously.

 Image is based on artist impression only

#6 Physical vs Online Norms

Covid-19 has indeed changed many things. Working from home is today more common than previously. Buying things online was already popular but has now become more common than dropping by the nearest mall every time we needed to buy something. Today we go to the mall to do things we could not do online. If it’s just to buy something we already know, buying it online is usually the choice.

 Image is based on artist impression only

Meanwhile, due to the flexibility to work from home, many developers have taken this into their consideration as well. For example a fully-equipped club house, incorporation of the need to work from home; dedicated space for the work station and even the availability of high speed broadband coverage right from the beginning. I still remember the days when newer areas usually have to wait for years for internet coverage. (Yes… I am not that young)

#7 Accessibility and Convenience

Actually, for this part, it’s best to look at the overview of what’s available versus writing in words.  Generally, a good master-planned township should have sufficient accessibility to places one needs to go to.

It should also have all the conveniences for the owner and the loved ones. Whether it is an internationals school or entertainment and even malls, petrol stations and all the diversity of F&B outlets too. The below shows what the owners of Bayu Sutera would be enjoying access to currently. It’s growing too as this is part of the Bandar Sri Sendayan master-planned township.

#8 Future-Proofing property as an asset

Everytime someone asked me if property investment is the only investment I have because I am the founder of kopiandproperty.com, I would tell them that we must always diversify our investments and not put all our eggs in one basket.

However, when it comes to all investment choices, property investment is compulsory because we could decide to buy a good home sweet home, get a home loan and pay for it for the duration of the mortgage and stop paying after that duration or we could choose not to buy and keep paying rental forever and ever even if we have retired and income have stopped.

A good property will always be an asset. Happy understanding this fact even if investment diversification is always needed. If you love the images in this article, feel free to take a closer look at
Bayu Sutera and ask them for more information. (here’s their website)

Note: All Images / Photos in this article is based on artist impression only

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The soon to be homeless generations? Which generation?

I have seen a few sharing earlier in Facebook about the potential of Gen-Y becoming a homeless generation. These would occasionally pop up. One time, I even saw it as headline in a
 ‘mainstream’ media.

I have to say that I disagree with these generalisations as well as predictions without understanding what’s available in the market. Plus the actual capabilities of really awesome Gen-Yers versus the Gen-Yers who always spend but seldom save and invest. Looking a little further, there are also many Gen-Xers who are still renting / “homeless” today.

Well, even for the Klang Valley new properties, I have started to see properties being advertised at sub RM400,000 recently. Let’s not talk about the size. Basically, it’s enough to house a couple or a small family okay with a little smaller space. Hey, is the market dynamics changing? Yea, I think it is. More powers are going to the buyers these days. Anyway, if we are talking about one homeless generation it would also mean most developers would cease to exist. Else, if they could still build and people could still buy, then how would we have a homeless generation? Currency exchange rate aside, the prices in most of the
advanced nations are definitely extremely high
 today. I am not sure if they already have one whole homeless generation yet. 🙂

Dear future writers for this topic, the only homeless generation that we should note would be those who believe they should be safe even as they spend everything they have today. The homeless generation would also be those who continue to give excuses like
property prices too high
, bank loans hard to get or even I need a car first since the public transport is very bad in KL. These may even be people whose parents are very rich and they have not understood the real meaning of earning their own money today. No one could guarantee what would happen in the future however it is almost certain that the homeless generation would be more related to little or no financial investment instead of a generalised generation. Happy reading.

written on 18 Aug 2016

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Homelessness can also happen in advanced property markets

I saw a Facebook post by a good friend showing a picture of the homeless in Australia. His three-word comment? “Malaysia’s Not Alone.” To be honest, this is the first time I saw such photos. When I was in the UK many many years ago, I know many homeless seniors would face real life-threatening danger whenever winter comes. They have no home and no heat to keep themselves warm. I remembered when I had to sit right next to the heater just to do my university assignments because it was so cold inside my room in Bristol. This is despite Bristol already considered of the warmer cities in Britain during winter. Take a look at the post. The full article in
the edge is here.
 The first few sentences were both positive and negative at the same time. It said that the Australian economy has been growing well and has NOT had a recession for 26 years! Not in 2008, not in 1998! However, the number of people falling behind despite the nation moving forward is increasing. According to Homelessness New South Wales (NSW) chief Katherine McKernan who spoke to AFP, “If you compare it to London and New York, the numbers of people seeking homelessness support are comparatively higher. We think that homelessness is increasing in Sydney and Melbourne due to the lack of affordable housing.” According to the stats, Australia’s agency for health and welfare statistics AIHW said demand for homelessness services reached a record high of 279,000 people in 2015-16. (Based on current total population, this represents around 1.2 percent)

The median home price in Melbourne is currently over AUD750,000 (
as per REIV
) The current median salary for Melbourne? Median income for Melbourne workers is AUD56,137 (
as per Point2homes
)  If we calculate the affordability, the median home price versus the median income is around 13.36 times. This is considered severely unaffordable. As for Sydney, the median home price is AUD995,804 (
as per domain.com.au
)
. The median income for Sydney workers is AUD89,900 (
As per housing.nsw.gov.au
) Using the same calculation, the home price versus the median income is 11 times.  In comparison, Sydney folks would find it cheaper to own a home compared to Melbourne. This is despite the higher home prices. When we google, we can even get articles comparing the property prices in some Australian cities to some U.S. cities. What it shows is that with the same prices, people can get better homes in some U.S. cities. Let me be clear however that if given a choice, I would prefer Australia. Many reasons lah. Haha.

Is Malaysia moving towards the same direction? The only statistics for homeless people in Malaysia I could find showed that there are over 2,000 reported.
Here’s that link.
However, according to Khazanah Research Institute, the home prices versus income numbers also shows that theme prices in Kuala Lumpur is severely unaffordable.
To be affordable,KL homes must be RM280,000

In 2015, it was 5.4 times. Hopefully all those affordable projects by both the government and the private sectors have helped or will help? Names like
PR1MA,

Rumah Selangorku
 and even
RUMAWIP
?
Let’s own a home because the advanced property markets have shown to us that not owning a home, even a small one a further away from city one may be a necessity after all. Okay, for the younger generations, perhaps even a small unit may be what you need. After all, in Hong Kong, the apartments are already
as small as 180 sq ft these days.

Happy following.

written on 20 March 2017

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Only smaller units can be affordable

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Buying A Home – How Much Am I Able To Borrow

Under a content sharing arrangement between
loanstreet.com.my

and kopiandproperty.com, we will start to exchange suitable articles for the benefit of visitors to both sites. Below would be the first article which I think is of utmost importance to everyone. “Buying a Home – How much am I able to borrow.” Happy reading and if there are loan related articles that you would like loanstreet to write exclusively for you, do
write in to me
 yeah. Happy reading.

Before starting out in search of your perfect home you should check what your maximum loan eligibility is. This is to avoid disappointment at the final stage of the process when you find out that you are not eligible to borrow the full amount required to make the purchase.

An easy tool to help you with that, is our
Housing Loan
 Eligibility Calculator!

Contrary to popular belief, the amount you are able to borrow is not solely based on your salary, several other factors are considered when a bank is assessing your eligibility for borrowing the amount you need to buy your dream house.

These are a few factors besides salary that determines your loan eligibility:

1. Your Debt Servicing Ratio (DSR) –
DSR is a percentage of the debts you are servicing over the income you earn (DSR= commitment/income). Different banks will have different methods of determining your DSR despite it being based on the same information that you provide. To find out more on your DSR, you can read the article
How Much You Can Borrow Based On Your DSR
.

2. Risk Profile –
Other than your credit records, banks would assess your creditworthiness based on many things which could include your job stability, spending habits and etc. The likelihood of defaulting which is your inability to pay off your debts or service it (pay interest) is an important factor when you’re borrowing a mortgage loan.

3. Value Of The Property –
Properties that are on the market can be overpriced and so banks need property valuators to confirm that the property you are applying a loan for is worth the money that you are paying for. This is done because in the event of your default, the banks would still be able to recoup the amount you borrowed by reselling it back into the market.

4. The Maximum Loan-to-Value (LTV) Ratio Or Margin Of Finance You Can Access. –
Commonly, 90% LTV ratio can be anticipated on a Malaysian residential mortgage loan. But if you hold more than two existing housing loans then the LTV ratio on the following housing loan is lower and is capped at 70%. Meanwhile, LTV ratios are even lower for foreigners as these are restrictions to those that have less attachments to Malaysia.

5. Age –
Loan repayments period is usually up to 35 years from the first day of your loan or until you’ve reached 65/70 years of age (depending on the bank), whichever occurs first. A younger person (e.g. 21-25 years old) might have a higher chance of getting the house loan approved compared to somebody in their 60s.

6. Number Of Dependants –
The number of dependants affects your eligibility because they will be spending portions of your income. It will also affect your capabilities to pay off your housing loans. If you’re a husband that has a housewife and five children dependent solely on your salary it may raise a concern with banks.

7. Your Joint Applicant(s) –
The housing loan which is supposed to be borne by you and your joint applicant(s), thus banks will access them to judge your joint creditworthiness before approving the loan. Your relationship with the co-applicant may also matter, it is less likely for parents and children or spouses to have disputes compared to other type of relationships such as siblings or friends.

8. Nature Of Business Or Profession –
This information will help banks determine whether your have a stable income. People with full time, fixed salary paying jobs are considered as more stable. As opposed to those who own their own business, which is considered less stable as there is no job security and as their income is not fixed.

9. Past Relationships With Banks –
Applicants who are loyal customers of the bank they are applying to may have an added advantage. But if you’re not, it’s not a concern as long as you do not have significant conflicts with any of the banks (e.g. CTOS or blacklisted from banks).

Other than that when you’re purchasing a house, it’s necessary to have enough money to pay the down payment, valuation fees, documentation fees, legal fees and stamp duties on the housing loan. Some banks can provide up to 5% (for insurance) and 2% (for legal fees) additional margin of finance to finance your valuation and documentation costs.

Conclusion

You can use the
Housing Loan
 Eligibility Calculator to find out what the maximum you can borrow on your mortgage loan is before you go house hunting. Followed by finding attractive loans that would be available to you on your new house using our
Home Loan
 Comparison tool.

Happy borrowing successfully.Any feedback on this article is appreciated, do
write to me
.

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Homeowners are selling for cash flow. Property supply growing.

Press Release:
PropertyGuru: Malaysia Property Supply Records 34.5% YoY Growth,More Homeowners Selling Property for Cash Flow

Overall asking prices are stabilizing at the current low with no QoQ changes, indicating prime opportunity for cash-rich buyers and savvy investors
Market recovery likely pushed to next year when improvements are expected on both the COVID-19 and economic front
Home Ownership Campaign extension and 6-month loan moratorium to help soften blow to property market

Kuala Lumpur, 29 July 2021:

According to

PropertyGuru’s latest
Malaysia Property Market Index (MPMI) report
, the overall property supply in the market spiked by 34.53% YoY and 11.94% QoQ in the second quarter of 2021. This data, which is tracked based on PropertyGuru’s extensive listings, represents the highest volume of YoY supply growth recorded in two years.

The surge in property supply in the country in Q2 2021 is likely driven by an increase of homes being put up for sale in the secondary market under the current economic climate. This upward trend in property supply is also observed across four key regions covered by the MPMI, namely Kuala Lumpur, Selangor, Penang, and Johor, which saw a YoY increase of 16.91%, 48.95%, 40.32%, and 17.47% respectively.

Sheldon Fernandez, Country Manager of PropertyGuru Malaysia
 shared, “The pandemic has caused many Malaysians to lose income whether it’s due to pay cuts, furloughs, or layoffs. While the introduction of a six-month moratorium on bank loan repayments will offer some measure of relief to some, those who are cash-strapped may still resort to selling their properties. As such, we may see more residential supply making its way into the secondary market, resulting from those who wish to cash out on their property investments to alleviate current financial burdens.”

Meanwhile, property supply volume from the primary market may be affected in the coming quarter, due to the recent implementation of a total lockdown nationwide in June 2021, which has disrupted the construction and property development sectors’ operations. Data from the National Property Information Centre (NAPIC) revealed that the number of newly launched residential units had already dropped significantly from 14,865 units in Q4 2020 to 5,919 units in Q1 2021.

Property Asking Price Stabilizing at Current Low

The prolonged COVID-19 situation has significantly impacted the property market, as reflected in the asking prices of primary and secondary property markets tracked by the MPMI. The PropertyGuru Malaysia Property Asking Price Index has been on a declining trend since Q2 2020 with a YoY drop of 2.16%, coinciding with the onset of COVID-19 cases, and the implementation of Movement Control Order (MCO) restrictions. While certain sectors of the market initially showed some measure of resilience, the extended restricted environment, growing economic hardship, and weak consumer sentiment have contributed to sustained downward pressure on prices over the past four quarters.

However, a point of consolation is that house prices may have already plateaued at its lowest point, given that existing building costs allow very little room for further drastic dips. Illustrating this, the MPMI found that the Price Index saw no quarterly change between Q1 2021 and Q2 2021, holding steady at 87.86 points.

In three of the four key markets covered by the MPMI, positive growth was observed for asking prices in the second quarter of the year, indicating some form of price stabilisation for Kuala Lumpur, Selangor and Penang. Asking prices moved upwards by 1.56% QoQ in KL, 1.18% QoQ in Selangor, and 0.95% QoQ in Penang. Johor was the only state that registered negative growth, dipping slightly by 0.15% QoQ in Q2 2021.

“With the uncertainty surrounding the new Delta variant of the virus and the rising infection rates across the country which has led to a fresh wave of lockdowns, we believe that the property sector outlook will remain gloomy for the rest of the year. Looking ahead, any significant signs of recovery to the property sector can only be expected once the nation is better positioned to achieve herd immunity with the ramp-up of COVID-19 vaccination, resulting in a more liberal economic environment,” said Sheldon.

To support homebuyers looking to purchase property as well as contribute to the recovery of a negatively impacted property market, the government has extended the Home Ownership Campaign (HOC) incentives until 31st December 2021, which will help to keep demand alive among financially-sound home seekers and investors.

Sheldon remarked, “We expect property asking prices to stabilise at the current low, before gradually moving upwards again in tandem with the progress of the national vaccination programme, as well as when lower new infection rates are recorded. As such, savvy investors and home seekers may see the current climate as an opportune moment to purchase prime property at attractive prices, while taking advantage of low interest rates and financial incentives offered by developers and the government through the HOC.”

— end of press release —

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When over 30 percent homeowners reduce selling price?

It is usually alarming when we read some property related article telling us that the homeowners are slashing their selling price just to sell. What if this is compounded by revelation that the total homeowners who are reducing their selling prices are over 30 percent of all sellers? According to property website Zoopla, UK homeowners desperate to sell their property in a slowing market have slashed their offer price by an average of £25,562 (RM139,000). In fact a total of 35 percent of the homeowners are slashing their selling prices. Coming to London, considered a major property market of the world, the average prices in London are being cut by more than £50,000 (RM272,000). 39 percent of the property listings were reduced in price. This average reduction is about 7.4 percent.

For Chelsea Football Club supporters, perhaps you can get a property there now. Prices in Chelsea were facing discounts of 7.9 percent or £129,559 (RM706,000) on average. Lawrence Hall, spokesperson for Zoopla, said the increase in the number of reduced properties currently on the market is good news for first-time buyers. He said, “A slight rise in levels of discounting is to be expected at this time of year when house hunters are likely to be delaying their property search until activity picks up in January.”
(Before everyone thinks that reduction in selling prices meant dropping property prices, it has not happened yet.)
 According to the article, recent figures from Nationwide show that house price growth edged up in November, with average monthly property prices up 0.1 per cent. It was up 0.2 percent in October and 0.4 percent in September.

Dropping property prices may not work when the whole market is not in the mood to buy. In fact, it may be counter-productive because potential buyers may think that property prices are going to soften further.
Panic selling may still not work
.

When we look at the overall stats showing property prices still inching upwards, we could already see that there are many properties which did not have to resort to discount and buyers were still buying them.
Perhaps it’s because of location supply scarcity?
 Even within the Klang Valley, it is easy to see that while some areas have seen dropping prices, there are many in-demand areas for which property prices stayed almost the same.

A good friend who’s already 50 years old said that there has been occasions where his offer and the seller’s willing price is pretty far off, still. He concluded by saying that the sellers still have strong holding power. I replied, “usually the properties we like are those that some other people like too. That is why owners will try to hold on. As for desperate sellers, usually their neighbour or relatives will get the unit first…. As for opportunity dropping down from the sky, that depends on luck n effort. Keep looking at listings n call as soon as u see an awesome one. As for holding power, this is summarised by job market. Holding power will only start to waver when a lot of ppl lose their jobs. Only personal tots.”  Happy viewing and negotiating. It may be a good strategy to expand the choices too.

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written on 21 Dec 2017

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Homestay better than long term rental?

If we could earn RM1,000 per week by renting out your current property, would we do it? I would, of course. As per an article in TheStar, quoting numbers from AirbnB, the RM1,000 per week may be more real than a dream. Take a look at the image. The lowest happened on the list happened to be Kota Baru Kelantan but the rest of the usual locations I normally visit, from
Langkawi
 to
Melaka
 and Cameron Highlands means that I would have been pretty wealthy if only I had a property in these places. I think this is a sign for me to think a little more seriously. I have been thinking way too much instead of actions. Yes, I have told my wife about owning an apartment / condo in Langkawi, Melaka and Cameron Highlands.

Coming back to the possibilities. RM200 per apartment / condo per night for a family of 4 and renting out just 4 nights out of 7 per week is already RM800 per week. Note that RM200 is only enough for a 3-Star hotel room for 2 pax per night. No wonder hotels all around the world has started to complain against AirBnB. As of now, I am still relying on hotels more than AirBnB. Sometimes, the home that I like, the owner is either new to the renting business or did not have much reviews. I am a little more cautious too as this is an individual whom I do not know much about. A hotel meanwhile is already an established accommodation provider.

What about possibilities of taking care of these
rentals by ourselves
? Well, it’s not that easy. We need to somehow pass the key and explain the house rules, followed by inspection and cleaning up for the next guest. If we have just one apartment or condo, it is clearly not sustainable even if it’s RM800 per week which is only RM3,200 per month. No doubt, RM3,200 is by far higher than the
usual monthly mortgages
 but I do not think we will do this full-time. I think it’s best to find an agent who can do this for us and agree on a deal with them. Yes, I sort of know the rates that these agents charge and I think it’s still worth it even if they are not the owners of the home. As of now, I am nowhere near these kind of rentals yet. Perhaps I should try it out if any of my tenants do move out in the near future. Will update.

written on 5 July 2016

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Hometown Hainan coffee,  SS two mall

It was 430pm and as usual, we were hungry yet again. With baby in my body hugging carrier, we went in search for some snacks and perhaps a cup of coffee. I remember I saw an Old Town just now my wife told me. It must be that side, she pointed and we walked as per her suggestion.  As we walked nearer, instead of Oldtown, it was ‘HOMETOWN’. Haha. We went in and a menu was presented to us. The waiter wiped the baby chair for us! First time ever. Ok, scored excellent here. The prices was no huge difference from Oldtown but there were no promotions / sets which made it lose out here. Hope the owner sees this comment.

I ordered the Hainan Coffee, hot. My wife ordered soya bean and then some toasts. The coffee came in a traditional cup. Slurp. First taste of the coffee. Good enough as a good cup but not good enough as soon as you compare it to Old Town White Coffee side by side. The toasts were good though and the kaya is the pandan type. The steamed toast was very good. Better than Paparich for sure. Not sure about Oldtown, never ordered such an item before.

We continued shopping in a shop selling famous brands at huge discounts followed by FOS where we bought quite a lot of clothes for Chinese New Year. When dinner came, we chose… Oldtown. Actually, there were not many other choices and it was raining heavily and there were no dinner sets in Hometown Hainan Coffee cafe, so… Oldtown wins yet again.

written on 4th jan 2014

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Hong Kong is VERY expensive. Fresh cooling measures!

At a time when China is implementing ‘warming’ measures Hong Kong is thinking of more cooling measures. Some countries are feeling the effects of cooling measures implemented earlier including Singapore and Malaysia and the developers have started to ask that these cooling measures be relaxed. Latest one would be Singapore where its developers asked for ‘help’ in the luxury segment where prices have been falling. One country is a huge exception. Hong Kong is continuing its cooling measure. Hong Kong’s latest measure is needed to cool down one of the most expensive real estate markets in the world. The home prices in Hong Kong rose to record high last year due to very strong local demand as well as the very tight supply. Since 2012, it has risen 35 percent. Thus, double digit growth every year. Read here:
Already MOST unaffordable but prices will continue rising?

Latest measures include reducing the amount that home buyers can borrow as well as capping the amount of debt that they can assume. The amount they can borrow is now 60% and if you are buying a second-home, the debt servicing ratio is now lowered to 40%. This is a very tough measure and if implemented today in Singapore or Malaysia meant the end of property investment for many people. From 2012 till to date, prices in Hong Kong have risen 35%. In other words, double digits every year till end of 2014. The household debt to GDP has risen to a ratio of 64%. High but still lower than Singapore and Malaysia. Singapore is at 76.3% while Malaysia’s at 86.8% to GDP.

Hong Kong is a small city state, just like Singapore. The difference is that Hong Kong has over 2 million more population. Now do you know why the shortage of housing in Hong Kong is worse? Do not forget the fact that Hong Kong property market is also attractive to many mainland Chinese investors. Hong Kong is bigger, slightly over 1,000 sq km while Singapore is 716 sq km. Many years ago, I went to Hong Kong and was driven around by my friend who is a Global Staffing Director for an international MNC. His home? 550sf. When he got to know that my condo then was 1,258sf, he said, it’s impossible to buy such size in Hong Kong. I did not tell him that today my condo is over 1,700sf. 🙂  I seriously do not think Malaysian property prices would be anywhere near Hong Kong anytime soon. Mainly because we have more land and can always build further, as long as we have MRT. I think in this aspect, we are lucky. Let’s hope the Hong Kong administration is able to build more affordable homes then for Hong Kong people’s sake. Happy reading.

written on 2 March 2015

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Hong Kong property market? Dropping in price and transactions…..

My Hong Kong classmate told me that due to the size of her home in Hong Kong, every time they wanted to play mahjong, one of the player would be sitting inside the toilet. That was 19 years ago. I think since then, due to the vibrancy of the Hong Kong property market, the size of the homes have been getting smaller while the prices climbing higher. Transactions continue to increase because everyone wanted a roof over their heads, regardless of size. Some chose to stay much further away from the CBD for bigger size and lower price. The situation has changed.

According to an article in South China Morning Post in February 2016, the property sales transactions in Hong Kong has dropped 41 percent month-on-month or down 62 percent on a year-on-year. Part of the reason is because developers have slowed down their launches due to negative sentiments. Recently, the same publication revealed that another developer, Sino Land has cut prices and sweeten its mortgage terms to boost sales because of the slowing market. It raised its discount on the 30 units of its The Mediterranean project in Saikung by up to 26 percent. It was at 14.5 percent in December 2015. Buyers would now be able to borrow up to 85 percent instead of the earlier 80 percent. Read the full article
here
. As for buying a unit after discount, buyers would need to pay HK$9,989 (RM5,044) per square foot, down from
HK$12,331 per square foot. Actual price per unit ranges from HK$5.89 million to HK$11.39 million. For example, a 666 sq ft unit on the first floor of Block Five will be HK$6.65 million (RM3.36million)

I think it’s very clear that when markets really do slow down tremendously, the developers with existing projects would be under tremendous pressure as well. This is true even for Malaysia.  That’s why we see many developers delaying their launches since last year, even for the bigger names. In Malaysia however, I have seen just a few advertisements about discounts. I think majority area focused on rebates and incentives instead. In other words, situation is considered still ‘moving.’ Hopefully, this is because majority of the investors are on the sidelines while those who would buy are actual occupiers. Happy following.

written on 2 May 2016

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Hong Kong home prices to drop 20 percent? What are the reasons?

Hong Kong home prices is the highest in the world and it’s always been there for many years. There is one latest prediction that it’s on the way down. Do read about this prediction by Goldman Sachs Group Inc about the Hong Kong property market. There are a few key reasons being stated for this and we need to take note of these because if similar reasons happen, it would also affect the property market here in Malaysia as well.

Article in themalaysianreserve.com
  Goldman Sachs Group Inc says that residential property values will drop by 5% every year from 2022 to 2025. The reasons include a worsening economy as well as rising interest rates which will hit the demand for homes.

With the current battle with the fifth wave of Covid-19 infections, the effects will hit the financial hub and will contribute to a shrinking economy in the first quarter of 2022. Goldman expects mortgage rates to more than double and be close to 4% in 2024 from about 1.5% currently.  According to Centaline Property Agency Ltd. Prices are down more than 3% since the beginning of the year, and are at the lowest in 12 months. Please do read here for the full details:
Article in themalaysianreserve.com

Without the economy, there’s no property

Anyone telling you about the property market must also share with you about the state of the economy. If this person says everything bad about the economy and then tells you to buy a property, let’s just note that the person understands little about how the property market moves; it will always be affected by the economy. This is why when the economy is not doing well, the confidence to buy a property will not be present.

In fact banks would also be more conservative because they already have to start making plans to ensure all their lendings are safe and that people who borrowed could continue paying them too. Economic growth drives employment and employment drives demand for good and services including a property. Happy understanding about what Goldman Sachs is really saying which is applicable to all markets and not just Hong Kong.

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Now… it’s lower interest with Malaysian properties, in comparison yeah. Then and Now.

Recent couple of weeks, we have been reading many news about the interest of Hong Kong buyers with the Malaysian property market. Just recently:
Hong Kong buyers buying 50-100 Malaysian properties weekly
 (click to read)

According to one latest article quoting the Malaysian Institute of Estate Agentc (MIEA) CEO, the interest has slowed down with every passing month. This was because the Hong Kong buyers came here because of issues at their home and not because Malaysia is a property market they traditionally has been buying.

Article in themalaysianreserve.com
 Malaysian Institute of Estate Agents (MIEA) CEO Soma Sundram Krishnaswamy said “Based on the feedback from MIEA members, there was a big influx of Hong Kong buyers into Malaysia, (but) right now after a few months, it has slowed down.”

Jones Lang Wootton ED Prem Kumar explained that Hong Kong buyers come to Malaysia because of what happened there and not because it has been a traditional foreign market in Malaysia. He said, “That trend is continuing. How long it is going to continue is depending on the situation in Hong Kong. If the situation improves, we might not have that kind of influx anymore.”

Soma added however that the influx of China buyers coming into Malaysia will continue. He said. “There is one project targeting China buyers into Malaysia. That is the trend. I think China buyers will come because there is too much money in the country.” There are more details. Please refer to:
Article in themalaysianreserve.com

Okay, lower interest from Hong Kong buyers now if we compared then and today. It may mean that many months back, the buying was even higher than today! By the way, I do not wish Hong  Kong buyers are buying us simply because of bad things happening there. I prefer them to think of Malaysia as a great place to stay and that they would prefer to stay here versus other more advanced property markets.
Expats are happy in Malaysia. Of course.
 I do want to visit Hong Kong in the next few months with my family. Have already checked the flight tickets. Looks like there has been some droop.  Happy following.

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Hong Kong MTR, a potential bidding partner for HSR.

I was in Hong Kong a few weeks ago and would most probably visit it again in a few weeks’ time. Their Mass Transit Railway (MTR) is good. MTR would be known as MRT here in Malaysia. We are about to have a fully operational MRT Line 1 by July 2017. MTR Hong Kong is in fact, extremely good. The stations are easily accessible and if we miss one, it’s really possible for a short walk and we will get into another station. When I read the possibility of MTR as a potential partner in the bidding for
HSR KL – SG,

I am naturally happy. I think this helps tremendously with the China ‘stigma’ that many of us have. Full article in

South China Morning Post here.
 As at today, there’s one friend who told me that if a Chinese (China) company wins the bid, he will not dare to take the High Speed Rail from KL – Singapore. I think he will have no choice.  Haha. Just kidding, I have no idea which country would ultimately win the bid. Tender opens end of 2017.

According
to the article,
 MTR Corporation Frederick Ma Si-hang said that the company was interested to partner with China Railway Corporation to bud for a contract to build a 350km high speed rail between Kuala Lumpur and Singapore. Ma said, “We want to expand into new markets under the ‘Belt and Road’ initiative,” Ma said. “But we are careful in considering factors such as financial viability of projects and risks.” Ma also shared that MTR corporation has gained some overseas experience in developed countries and it sets a very stringent set of internal requirements on risks and returns, which are not easily met. He shared that risks relating to politics, financing and corruption had to be mitigated. In terms of financing, it would be resolved through Asian Infrastructure Investment Bank (AIIB).
This is AIIB.

Completion for the HSR is expected to be in 2026 which is just 9 years away.

It’s a positive factor when we have one very established company becoming a partner to a bidding party. If you ask me, I will NOT be giving to the lowest bidder simply because it is the lowest bidder. I still need to know who’s bidding because ultimately if a wrong bidder wins, any hiccups would mean a long delay. Of course, I hope AIIB would provide the financing which meant that I would favour ASIAN bidders before bidders from out of Asia. We should also note that for this HSR, there are two countries involved. This was what was reported by
Straits Times of Singapore
 about MTR’s announcement. It said that besides China, the other potential bidders include Japan, South Korea, France and the United States. I think one country within these few potential bidders is already out. Which one? Let’s just wait and see. Haha. Happy following.

written on 19 May 2017

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