Property Investment? You better have TIME.

It’s true. There are people who may never find property investment as attractive. Imagine the share market. Today, if you need to trade shares, you can do it online, at the comfort of your home with just mouse clicks. There is no need to do the following if you intend to invest in property.

Time:  You need time to view the property. Typically, you would need to view no less than 10 properties before you decide. You need the time to think if the purchase is worth it. You need to have the time to meet up with the banker to get a loan. You need time to meet up with the lawyer for your sale and purchase. Time which you may not have a lot, especially if you are working full time.

Time:  Again?? Yes. When you intend to sell, you need time to sign the documents to sell. If you are not engaging agents, you need to show your property many times to prospective buyers. If you engage one agent, you need to show the agent once, give the keys and if the agent is unable to sell, you need to engage the second agent. If you engage more than one agents but you do not want to give them the keys, preferring to open the door yourself, then more time!

Time:  AGAIN?? Yes, when you need to sell the property for profits / money, the typical period that you will get your full payment is 4 months, or more if it is leasehold or incomplete documentation. So, you may not be able to know for sure, exact time that you would ever get the full payment when you sell your property.

So, you see, property investment is not easy. No time? Don’t think property and don’t dream money. If you simply MUST invest in property but still want to have flexibility? REITs are your key. REITs in short is Real Estate Investment Trusts and it is exactly the same as buying shares in the share market. While it’s not exciting but the last I checked, the typical returns are still double that of FD. Decision is yours. 🙂

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Property investment: Price Appreciation, Yield, Risk and Diversification.

I am sure stock market returns are amazing. Some say they can easily earn double digit returns. As I have friends who could actually do so, I do believe this claim. However, these are minority and definitely not the majority. Else, everyone would now be in the stock market and not in the job market.

However, to some of these over eager people, there’s really no need to stereotype property investments as low returns yeah. Or even that it’s no longer a great asset for retirement.
Please read here for the full article about property as a retirement asset.

Today, we just look at 4 parameters when it comes to investments yeah. They are price appreciation, yield (rental maybe?), riskiness, and diversification.

#1 Price Appreciation

Let’s not talk a lot lah. Let’s just show the actual number. 10 years historical numbers from NAPIC as below. The worst performing would be detached homes, usually also known as bungalow. It only went up by 72.3% after 10 years. if we use a simple calculation, that’s roughly 7% per year.

I am sure there are many stock(s) which price has appreciated more than 72% after 10 years… Just do not assume majority of all the listed companies could achieve this same number yeah. I meant, AVERAGE wise…

MHPI

#2 Yield

I believe everyone would think the yield refers to the dividend from stocks we hold or the rental yield from a property. Are all stocks providing positive dividend yields? The answer is a firm, no. Some provide better yields than the fixed deposit but it’s not even common that all stocks would provide dividends every year!

Are rental yields positive? This is best answered by people who bought properties and rented them out yeah. If they bought an undervalued property, the rental yield is definitely positive. However, more often than not, many investors paid much higher for a property than what the rental could yield. Is this about the property… or about the buyer…?

Rental will increase slowly over many years. This is why property owners who have owned the same property for over 10 years, their rental yield is definitely positive. Example? RM312,000 condo (current price is RM550k) with monthly rental of RM1,600. Another RM338,000 (current price is RM400,000) condo has a rental of RM1,500 per month.

One more is RM188,000 walk-up apartment (current price is RM250,000) and being rented out for RM1,000. By the way, all these are REAL numbers. However, it did not happen suddenly…. So price appreciation happened and yield has also been positive.

#3 Riskiness

We can accept the risks from buying into a company we may have never stepped into… Or a company which we do not even understand what they were manufacturing… or a company which we did not even know where their production plant is…

By the way, even for people who bought into banking stocks, do they know how the banks actual derive their profits? Is it from home loan? Personal loan? Or is it from their investments? If we did not know anything at all, it means we assume it’s low risk because it’s a familiar name? Erm…

However, we think property investment is risky? We can compare similar properties… We can view the actual property… We know what’s the typical rental… And we think this is more risky than the stock market? Of course… if we did NOT do any due diligence, when we bought an overpriced property… when we bought a property without even driving to the site and relying only on 360 virtual video… when we believe whatever the real estate agent told us about the rental potential… Come on, if we did no due diligence, is it the property or us…?

#4 Diversification

Diversify our investments yeah. For kopiandproperty.com followers, you would know that I do not just invest into properties yeah. Just do enough due diligence regardless of what we invest in to be safer. Remember, no matter what happens, we will still need a place to stay. That’s why that FIRST PROPERTY must be purchased earlier and not later because property will always be a hedge against inflation.

The price of RM85,000 may seem small for my Ipoh home today but 30 years ago, this RM85,000 is a LOT of money for my parents. By the way, RM500,000 will seem small 30 years later yeah. All these are caused by inflation. Just one property at least. Diversify if you must for everything else

Conclusion

I love the stock market too but there is really no need to keep putting the property market down… (so that you get more people to invest into the stock market?)  Hope the above explains with real numbers what happens with property investment when it comes to the 4 things often mentioned by many other investments;  price appreciation, yield (rental maybe?), riskiness, and diversification.  Thank you.

Yes, this is kopiandproperty.com’s views and we are NOT stock brokers, not property developer, not real estate agent and not even affiliated to any financial institutions. There are also no links below to join any property investment course yeah. Cheers.

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Which is better for your property investment’s security? MRTA or MLTA?

Secure whatever we own, literally. Perhaps a lock or even a safe could do that for some valuables that we have. Protect what we have right from the beginning. As they say prevention is better than cure. Health is wealth, agree? Well, without investing a bit, it’s hard to protect our wealth if something happens to our health. Perhaps a medical card could help tremendously when something negative happens. So, how do we protect our property investment? In fact, how do we protect our only home sweet home which is also shared by all our loved ones? There are  two mortgage life insurance that we may consider. They are the Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA). What would be the differences between them? Let’s look at them briefly.

Mortgage Reducing Term Assurance (MRTA) is a life insurance plan with decreasing sum assured over period of time and it helps to cover our remaining home loan. This is usually offered by banks when we take loans from them. If something were to happen to us during the mortgage loan period and we could no longer repay the loan, the MRTA kicks in and takes care of it.

Mortgage Level Term Assurance is for borrowers who prefers to buy a life insurance which offers both protection plus savings and maybe even returns on the premium. So, this can act like a personal insurance designed to protect you and your dependents in the event of death or TPD which had befallen the borrower causing him / her the inability to continue repaying the home loan. So, which one should we take then?

Let’s look at the cost FIRST. Please take a look at a comparison when it comes to the premium sourced from
imoney.my
   Okay, it’s around 11 times higher even if by the end of the 30 years, the person who took up MLTA may get back an amount which is higher than the premium paid.

Source:
https://www.imoney.my/articles/mrta-vs-mlta-need

Differences Between MRTA And MLTA

MRTA

MLTA

What’s inside?

Protection

Protection, saving and cash value

Protection

Sum insured reduces according to loan tenure

Sum insured remains the same on a fixed level sum assured basis.

Nomination

Beneficiary is the bank itself

Beneficiary can be anyone

Transferable

Not Available

Yes

Financing

Usually financed into home loan

Usually self-financed

Premium

Low

By far higher

Payment

Lump sum

Periodic (monthly, quarterly, semi-annually or annually)

Cash value

None and with the reducing cash value, at the end of the loan tenure, it drops to RM0

Guaranteed fixed cash value throughout the loan tenure

Claim

Banks receives the remaining loan amount from the insurance company. Beneficiary gets the home.

Bank receives the remaining loan amount Beneficiary receives the home plus cash.

When we look at the amount, it’s cheaper to get the MRTA.  However, always remember that MRTA provides protection on a reducing balance basis and the beneficiary basically gets just the home. If homeowners are already protected by life and medical insurance and does not have other financial burdens, MRTA is suitable. MLTA meanwhile provides homeowners with extra financial protection in the event of death or TPD because it has a cash value at the end of the policy. For families with kids or even a housewife spouse, this would provide a better protection. Remember though that we should always protect our wealth. There are certainly other types of insurance which we should have beyond just these two; MRTA or MLTA.  If you need recommendations of good agents for MLTA, do let me know. Cheers.

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written on 29 Mar 2018

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Property investments? My children and their future.

Decisions about property investment is not an easy one. Buying properties when we have no full-time employment is even more risky. However, it’s definitely possible to make rational and objective decisions when we have evaluated all the options and understand the market. No one can predict the future but when we look at property investment as a LONG TERM decision, it’s usually a correct one. The below is a story of a mother who saw a trend and decided to do something for her children. The place is Canada. The
full article in TheStar.com here. (not the Malaysian one, it’s in Canada)

A single mother lost her full-time marketing job during the 2008-2009 Great Recession. (U.S. market predominantly). She started contract work and when she realised that home prices began to rise, she was alarmed.  Her fear was a simple one; her young children may never be able to eventually afford to buy a house on their own. She is also worried that when the time comes, she may not have the finance or even an inheritance to help her children. Fortunately for her though, she has a mortgage-free family home. She used this home to buy houses for each of her pre-teen children. She looked for properties she could afford. For her son who loves sailing, she could a detached house nearby Lake Ontario. For her daughter, she bought a postwar bungalow. She said, “We’re country people and we like suburban living.”

The two new homes were rented out at $2,500 and $2,150 a month. The rents however could not fully cover the mortgages. She said,
“I’m subsidizing the houses by $1,000 a month.” She added, “I’m short-term cash poor, but in 20 years each of my kids will have a house and I can move into one of their basements.
It’s FORCED SAVINGS.”  Her hunch was correct. Since she bought them, the prices have gone up
$500,000 collectively. She said she will not be selling them. It was bought for her kids. As for tenants, she has these three rules:
pay the rent; take care of the house; get along with neighbours. Now she involves her children in all decisions, and work, regarding the homes. The children have to help clean up after tenants move out, and assist in choosing new floors, for example, when they need replacing. She drives an older car and seldom eat out. Please refer to the full
article in TheStar.com (Not the Malaysia one yeah,it’s the Canada one)

Someone in Canada showed it could be done.She chose to buy a property each for her children and renting it out today. The rental could not yet cover the mortgage but she is persevering. She has a sound tenant management policies which meant that the likelihood of her meeting a tenant from hell is lower compared to one without. She drives an older car because this ensures she does not spend too much on the unnecessary. She knows her children will not be able to afford a similar property in the future because of the property price increase happening today. Well, she has shared her experience with us. Perhaps time to evaluate and take actions? Happy believing.

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written on 15 Sept 2018

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Property Investor Clubs – the speculators?

Let me summarise an article I read in The Sun about how property investor clubs are the actual reason why speculations happen. According to National House Buyers Association secretary-general Chang Kim Loong, these property clubs are buying en-bloc from developers and they are usually led by a leader who is a property guru. Due to the fact that they are able to buy in huge numbers, they are able to get huge discounts from developers. Some even get 25% discounts on purchase prices. Once these units are  sold at such a hefty discount, the ‘losses’ are then passed to the average buyer in subsequent phases of the project to compensate for the much lower profits or perhaps none during the first phase. In fact according to Chang, there are at least seven such clubs in Klang Valley and this may be growing.

I am not a member of any investor club. However, I have advised a few of my friends who said they wanted to invest immediately to join these clubs. Truth is, I would have preferred these friends to read more about property investment, view more units, visit some property fairs before they actually buy any property. However, if they just want to follow the crowd, instead of following just anyone, it may be best to follow these investor clubs. The reason is because typically these investor clubs are pioneered by someone who has had some experience in property investment or even someone well connected in the property scene. Thus, you may have access to properties to buy almost immediately. Some have commented that they have special discounts on certain projects in KL while some told me that they do not learn much about the property market but more on the properties that the investor club leader have access to.

I believe if these clubs are really buying up a substantial amount of units in any development, say 30-50%, the effect is huge and perhaps we can term them as speculators but truth is, this is no big different from a group of 50 people who does not know each other and all of them have just one thing in their mind. Buy and flip. The only difference is perhaps these investor club members might have already gained tremendously if what Chang said about the discount is really true. I seriously hope that developers should really think if they wish to sell such a huge quantity to these investor clubs. Perhaps some units but 50% like what Chang mentioned? If I get any first hand information about this, I do not think I will tell my friends to join the mentioned property investor club. It’s bad for the market.

written on 25 Jan 2014

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Buy this book: Property Investors’ True Stories

I buy books and I read books every month. The experience of many years from someone who has been there, done that is extremely valuable and within a few days, I could learnt from the writer(s). There is no substitute for continuous learning. The people whom I would normally stay away would be property gurus who tell you they are experts. Whether they are good or bad, it should come from all the people who has learnt from them. One property guru who uses facts and research and maps in all his books and presentations would be Mr. Ho Chin Soon. I have learnt a lot from him and I feel humbled that he is so down to earth and willing to share.

Anyway, he has learnt to enjoy his life nowadays and has passed the baton to his son Ishmael Ho who is now the CEO of HoChinSoon Research. His new book which is due to be launched shortly have a compilation of property investors’ true stories. Within the book, there are over 100 real life lessons for everyone. It should be available in book stores soon. I have also shared my personal property adventure in the book. I am looking forward to learning from all the other writers too, some of whom are seasoned property gurus, some are owners of businesses and even authors. Happy buying one and reading!

written on 27 Nov 2015

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You are selling but you are not a property investor. Oh…

Some scenarios to imagine. A seller and the product the seller is selling

Imagine someone selling you a medical insurance plan. When you asked if they have a medical insurance plan, they tell you, ‘Nope.’

Imagine someone selling you Proton X70 and tells you that this car is way better than a Honda CRV. When you asked what car he drives, he replied, ‘Honda CRV.’

Now imagine someone selling you a property and tells you that if you were to read this article in kopiandproperty.com, it tells of many good reasons to buy a property. Then, when you asked if they also have invested into a property and the answer is, “I do not have any property investment.”  Okay, the reason may be that the real estate negotiator (REN) is a newbie, so they may need time to save up the down-payment.  However, if the person has been a REN for a long time…?
Here’s the MUST-DO for real estate negotiators. Happy reading this earlier article.

At least, believe in property as an investment and become a property investor?

This is just my expectations for Real Estate Negotiators (REN), they should also at least own ONE property. It can be their own home, can be for investment but if one truly believes in what one is selling, then one should also be showing the confidence for the product which one is selling. Yea, I am just one person yeah. Maybe 99% of all other buyers / potential buyers may not share the same opinion as me. 🙂

If you are a property investor, your sharing will be more credible

A REN cannot sell something they do not know enough. If we are doing so, then why should the potential buyer be paying the professional fee? Is it because we help to open doors to the property the potential buyer is viewing? So, potential buyers paying a big commission so that someone could unlock the padlock for them?! Then do not complain why potential buyers do not think there’s any value to go through RENs lah.

RENs would have better access to good deals versus normal buyers if they are a property investor

When a seller wants to sell, the first person they talk to would be the REN. This is why RENs have the first-hand information about properties for sale and if the deal is a really good one (please do not cheat the seller yeah… hanky-panky is forbidden), then the REN could have gotten it first. This is why REN should not waste this opportunity. The only issue is, does the REN know an opportunity when they get one. This is why RENs must read more, know more and be ready for potential opportunities.

It does not have to be 5, 10 or even 15 properties yeah.

Just as some property speakers would tell you about all the properties they own so that you believe them more, the REN should own one property to show the potential buyer that what he say, he is doing it too. An important note is this. This has got nothing to do with asking RENs to buy 5, 10 or 15 properties. If the REN is able to do it, by all means go ahead. However, this is to tell the REN to at least own a property which he is staying or buying a property for investment while he continue to move up in the world of real estate.

I am very sure every year we will have more and more successful RENs. Hopefully, when asked what’s their property investment, their answer is not this, “I do not buy any property as I believe renting is better than buying.” Oops…

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Remember. Property transactions happen only when property is still affordable

Are property prices too high already?

Many years ago, someone asked me if property price is too high here in Malaysia. My answer was a simple one. Once people could not afford to buy, then property transactions stop and of course even property developers will stop building. Property transactions will only happen when people could afford to buy.

In actual comparison however, Malaysia’s property price versus median salary is still considered positive whether we compare it to advanced property markets or less advanced ones within ASEAN for example. Briefly, people could still afford to buy. It’s just a matter of type, distance, duration or even preference. As for actual transactions, every year we do have probably around 300,000 property transactions. Or probably a little lower than 300,000 for 2021 total.

By the way, there are just two ways when property prices went up too high. One, the whole market collapses. Two, the market readjusts itself via a downtrend in transactions and maybe a little on the price side. I always hope it’s the latter. One market is showing that when it becomes unaffordable, property market has to adjust itself accordingly.

Article in edgeprop.my
   Seoul’s unaffordable housing market show signs of cooling down. An average apartment in Seoul is estimated to cost around 18 years of South Korea’s median annual household income.
(Means one has to work for 18 years, save up every cent and that’s the amount for a median home price)
 In 2017, it was only 11 years.

In December 2021, property transactions dropped by 62% to 53,774. This was the lowest transaction recorded since the global financial crisis in 2008.

Park Hab-soo, a professor of real estate studies at Konkuk University said, “A sharp downturn is unlikely, but it does look like the market has turned a corner with interest rates set to rise further.”
Article in edgeprop.my

Seoul property market is not the only one

This was predicted for the Australian property market which has been super hot in 2021; property prices will drop by double digits for 2023! Read the full article here:
Prediction for property price to fall 11% in 2023

NZ House price has dropped. Do take a look at what the average price is to understand why adjustments are necessary.
NZ Price Dropping.

Hong Kong property prices have been the highest in the world versus the median salary for more than 10 years.
HK sellers cutting their asking prices because of Covid-19.

Would prices rise again?

The answer remains the same. Property transactions happen only if people could still afford to buy. Just look at Hong Kong as an example. The property price is already the highest in the world and yet transactions continue to happen. Property prices in some of the mature neighbourhoods in KL / Selangor are already higher than the less popular areas but the prices continue to rise because some people could still afford to pay for it.

One day, when no one could afford to buy anymore, then the property price will suddenly drop… until a certain point when people start to buy again. Then, the property market will slowly recover. Happy understanding.

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Property as a key retirement asset is no longer true today?

There was an article which went viral recently. It was shared to me in Whatsapp and I saw it again in
Facebook too. This is the article in businesstimes.com.sg
  The article’s title is:
“Property may no longer be pot of gold for retirement, says DBS.”
 The article gave many great numbers about why property investment is no longer a golden wealth accumulation strategy today versus earlier generations.

It says that prices of the properties have increased faster than salary growth and even an evolving demographics. It also showed the property versus other asset classes too and it does seem that property as an asset does not give the best returns! To cut the long story short, the conclusion from the article is that property is no longer enough to attain one’s financial goals.

So, please do read the article to learn about all these numbers yeah.
This is the article in businesstimes.com.sg

A little story about kopiandproperty.com

kopiandproperty.com is a niche property blog and it happened to be the leading independent property blog here in Malaysia. So, it does seem that everything I write is to support property investment. Yes, I support property investment but I will never agree that property investment being the ONLY asset we invest in.

Remember what may happen if all our eggs are only in one basket yeah. No one could control unforeseen circumstances. Now, for that question, “Property as key retirement asset is no longer true today?” If you like to also know some reasons why property investment is so important, read earlier article here:
10 reasons for property investments

Property price then and property price today?

In the 80s, my parents bought a semi-detached landed home in Ipoh. It was RM85,000. It was a very tough decision to be made because RM85,000 then is like RM500,000 today, if not more. My brother bought a similar unit from the secondary market a few years ago for RM540,000. He has no choice because that unit is just in the next lane. So, if he stays there, he will be extremely close to our parents.

By the way, Ipoh has not changed a lot BUT you can see the property price which my parents bought and the property price which my brother bought has increased from RM85,000 to RM540,000 and I think one major reason is INFLATION. So, in this sense, inflation has helped tremendously.

Is the house now a key retirement asset?

That RM85,000 home has been fully paid many years ago and today my parents are retired. Is this house considered a key retirement asset for them? Actually, not really. You see the property does not give them any rental income because they are staying in it. However, it also does not take away their savings which is no longer growing as they have both retired.

They also cannot sell the property because if they did, then where would they stay? I would love to have them to stay with me but they prefer Ipoh by far as all their friends are there and all the neighbours have been neighbours for over 30 years easily. So, if it’s not a key retirement asset, perhaps they should have rented a home instead over 30 years ago? Then, use all the savings into some other investments which could have
given better returns as per the businesstime.com.sg article?

How come total paid for mortgage is so high at the end?

The below shows how much one has to pay at the end of the property loan. The interest rate was much higher then versus today. Now it’s probably 3%.
Very briefly, RM561.33 x 12 months x 30 years is equal to RM202,079.  This meant that even though the loan was way lower than RM100,000 the actual amount paid at the end was over RM200,000Looks like a bad deal, right? Considering the fact that one has to also paid a lot of other taxes etc. Plus the renovation cost, the repair for wear and tear etc?

Info source: calculator.com.my

No rental income versus no rental forever

Now, we imagine the same family paying rental of just RM500 per month and this does not change at all for as long as they live.

RM500 rental x 12 months x
INFINITY
 years yeah…  The reason is because no home owner will allow you to stay for free after the end of 30 years or when we retire.

So, if we paid rental for 50 years , that’s RM500 x 12 months x 50 years = RM300,000. This rental does not stop even for the next generation. Please also remember we assume rental remains totally unchanged which does not happen yeah. Unless any of you here tells me that if you are the owner, you will always charge the same rental forever.

However, if we assume rental only doubled after 50 years, then it’s RM1,000 x 12 months x 50 years (the next generation) and that’s RM600,000.

Now, do we know why in many countries, a poor generation who pays rental will almost certainly remain poor for generations to follow until disruptions happen?

Property may not be the best investment but property is compulsory

If we do not want to make property investment as compulsory, then do our best to earn by far higher income(s) than all the amount stated above so that the earnings from all other investments could cover all the rental easily.

If we do not know how to do so, then please fall back to the minimum which is tried and tested. Buy at least one good property so that the wealth continues to increase for us (simply follow inflation is perfectly fine) and not being paid out as rental forever and ever.

Thank you for understanding and happy diversifying your investment.

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Property sales down 9%, only 40% of launches sold

In a latest survey from the Real Estate and Housing Developers Association (REHDA), it has shown that sales for the first half of 2015 is 9% lower than same period last year. A further breakdown revealed that out of the 10,877 units which were launched in H1 2015, only 4,374 or 40 percent were sold. In case you think the
housing bubble in Malaysia
 is building up, do note that this kind of stats do not reflect a bursting bubble. Best selling were all LANDED ones. They are the double and triple-storey units but the apartments and condominiums are facing a bad time, only 779 units sold out of 4,259 units which was launched. This is unbelievable, it meant only 18 percent were sold? No wonder REHDA said that the developers are now feeling neutral at best and naturally pessimistic on the local property market. Their two main reasons are due to increasing costs and rising number of unsold properties.

I have a friend who has only bought landed properties thus far and is thinking of high-rise moving forward. Totally opposite of me who has no landed properties thus far. However, based on latest stats, the take-up rate for apartments and condominiums was not even 50%. The survey also showed that unsold units have risen to 78 percent for the first half of this year compared to 64 percent in the first half of 2014. Most of the unsold units are in Kedah, Penang, Selangor and Johor, and mainly in the category of RM500,000 to RM1mil price range. Loan rejections has also increased to 35% compared to 29% previously. Many banks were now only offering between 75% to 80% loans, which meant many may not have built up enough downpayment.

According to President of REHDA, Datuk Seri Fateh Iskandar, 71% of the respondents said that costs had gone up by up to 11% and almost all respondents said that GST had increased cost of doing business. This in turn has pushed up house prices. Besides this, with the weakening of ringgit, certain materials which are imported are also becoming more expensive. Final conclusion however showed that the developers believe that the level of pessimism will reduce in the next 6 months. This is because they would have gotten used to the impact of GST. Of course, I think they are anticipating the buyers would have also gotten used to the GST too.

In the Federal Territory, Selangor, Penang, Johor and Malacca, the properties launched were mostly priced between RM500,001 and RM1mil. Actually this is quite high and I think this may be the reason why many are still thinking and why banks are also pulling back from simply lending. Even majority of all the junior managers may not be able to simply afford a unit between RM500,000 to RM1 million. By the second half however, the residential properties in the Federal Territory will surge to between RM1 million to RM2 million from the current level.

I think unless the sentiment turns more positive, the tough times will continue. Want to know if situations would be better? Read the Facebook comments. Even with a growing economy, a slowing but still growing retail and continuous trade surplus compared to even that largest economy, the current sentiment is considered very negative. It was like Malaysia is already in a crisis. Well, if Malaysia is already in a crisis, the developers would be facing a bleak future because their unsold stock was said to be 78 percent. Will continue to monitor Facebook for the latest sentiment analysis. All the best to the developers.   🙂

written on 18 Sept 2015

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6 developers with a total of over RM6 billion new launchings

Businesses can only continue to exist if they have profits or if they kept getting fresh funds

from investors even when they keep losing money year after year.

This is the case even for ‘not-for-profit’ organisations These organisations must still have surplus so that they can grow what they do and hire good people. Let’s be real, not many rich people are willing to work for free. For the rest of us, a salary is a must even if you are working for a company looking to save all the animals in thee world or alleviating poverty for example. When it comes to property developers, the modus operandi is quite straight forward. Launch and sell. When they finish selling, then launch new projects. What happens if they could not finish selling? Well, if it’s very earlier on, some developers may choose to return the cheques and stop the project. If it’s later on and they have already started construction and still not fully sold when completed, we will see the advertisements to sell after the keys have been handed over. ‘Limited units available for sale,’ or even the ‘You are lucky, we still have a few units left.’ kind of message.

By the way, this does not mean the project is not good yeah, it may also be due to their insufficient marketing activities (especially to those developers who think only newspapers is enough…. 😛 ) or somehow the market was too slow then and later on when the market improves, buyers were attracted to newer projects instead. So, what’s up with the market currently? It seems that some developers remain very positive. 6 of them are lining up to launch RM6 billion worth of projects nationwide. This is despite that never ending viral news about
‘unsold units which is actually increasing.’
Let’s also not forget the
slightly painful with a higher interest rate not too long ago.
The six developers who are launching more even with these negative news include Ideal Property Sdn Bhd with over RM550 million of launches, IJM Land Bhd with RM987 million, Mah Sing Group Bhd with RM2.2 billion, Aspen (Group) Holdings with RM959 million and Eastern & Oriental Bhd with RM1.6 billion.
Here’s that full report in TheStar for reference yeah.

Reported in the article, Mah Sing says that it is focused on units within the price range of RM328,000 and RM550,000. ItsExecutive chairman Tan Sri Leong Hoy Kum says that Mah Sing will leverage on the digital marketing to reach out to the younger target audience.  Based on HSBC Housing Survey 2017, Leong says 94% of Malaysian millennials have yet to own a property and plan to do so in the next five years, which effectively means there will be “long-term demand”.  EcoWorld (north) general manager Chan Soo How says that 2018 will be tough but, “Malaysia’s strong fundamentals bode well for the outlook going forward. For example, Malaysia’s population is young with an average age of 30 to 31 years old. Unemployment remains low at just over 3%. GDP is projected to grow further. The GDP was 6.2% in the third quarter of 2017.”

E&O senior general manager (marketing and sales) Wayne Wong says this year’s outlook is positive but muted. (In brief, it meant that demand is there but people are unsure if they want to buy currently) Wong shared,
“On the whole, properties in strategic locations are expected to be in a better position to weather the challenging times. Moving forward, we will be stepping up our marketing strategies by structuring appealing packages with tailored financing that may include best price packages, zero cost packages as well as deferred payment schemes.”
At IJM Land, senior general manager (north) Datuk Toh Chin Leong says the group anticipates a pick-up in the second half of 2018.
Here’s that article in TheStar for reference again.

An ex colleague just asked me if it’s safe to buy property because his daughter who’s working in KL is thinking of buying one. I laughed and asked him, ‘where is your daughter staying currently and is it a rented unit?’ He says yeah, that’s why his daughter is thinking whether it’s better to buy. I replied that as long as his daughter found an affordable unit which she is comfortable with, it’s quite advantageous to buy now. Perhaps two air-conds can be extra gifts from the developer too. Always remember that

when we buy to stay, it’s usually pretty okay because we would have put much more thoughts

into it. Can always upgrade few years later too. So, in brief, the property market is still vibrant yeah.  Just the belief may not be there plus the fact that these days, it’s everything about election…. Happy following.

written on 12 March 2018

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Property investment? Keep learning, even if opinions differ

I love to ‘debate’ with fellow property investors. I also love to learn from many of those who have done well in property investments. Sorry, I do not like flippers who over-stretched and got lucky and thus earned huge money. I wish them well.  My simple financial goal is to retire earlier and to travel the world, with the family. One small issue, I have not bought enough properties or have enough in my bank account that I can stop working yet. Haha. Within kopiandproperty.com, my sharing is based on only my personal point of view based on my experience thus far. Thus, it does not necessarily be the best for everyone. Some may even go against the usual norms.

Many mornings ago, someone I consider as very knowledgeable in property investment gave me a few thoughts. I think his points are valid for many investors even if maybe not necessarily for me. Here, I share with everyone.

My personal portfolio has just condos and no landed and I have no intention to buy any landed, yet. I believe condo is better than landed. My friend’s comment:
Condo being a better investment than landed house. Both has different investment strength and SOMEONE will be rich enough to BUY your landed properties no matter how high the price gets as long as he loves the location! Don’t worry about not enough rich people around…

2. My personal view that larger sized condos are better than SOHO units. Especially with a growing family size.
My friend’s
comments:
I
t’s not true that investing in a larger size condo is better than small SOHO units.
(I think I understand where he’s coming from because I have more than a few friends who has been successful with SOHOs. Only thing is, buy objectively)

3) My personal view that many people are paying way too high prices for those homes nearby LRT / MRT and the idea that maybe a lot of people still will not use public transport.
My friend’s comments:
LRT / MRT is hyped up marketing ploy to sell at high price without people really going to use the public transport. Wrong.

4) My personal view that property investment is not the only thing I like and that we should diversify, especially into stocks and I refuse to touch my EPF, not even for unit trusts.
My friend’s comments:
Diversify investment to other options such as Stocks and Keeping your EPF to gain high dividend. That will prevent a salaried employee such as yourself from getting into the big league of property investment or realise your potential.

Honestly, there’s no such thing as the only way or the best way. I think everyone should just follow their own assessment and learn from everyone and then make those investment ideas theirs. I also have friends who are only looking at more popular and connected areas and doing very well because the appreciation has been really good these few years. A few other friends focussed only on landed and they are doing well too. Of course, the areas they buy are also those where lots of people want to buy as well. Luxurious homes in slightly lesser popular areas would be under pressure when the market slows like today. Happy buying.

written on 3 Mar 2016

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Property wise, Malaysia’s not that bad. For how long? Well…

A few years ago, a good friend told me that she was moving to Singapore. I congratulated her and told her to do her best. She asked me to also go Singapore because the life there is better. I fully agree that there are lots of aspects that Singapore is superior than Malaysia. Since kopiandproperty.com is a property site, let’s just focus on property for this time. Debates on all the other stuffs would take forever. For property, it is clearer. In Malaysia, she was staying in a full facility condo. (two car parks too) When she move to Singapore, she would be looking to buy a resale HDB flat / apartment. Probably within the range of S$550,000 to S$600,000. (Image as per latest listings from PropertyGuru Singapore) She did not tell me her salary but I am very sure it is quite decent for a managerial standard there. Actually, it’s really not that cheap when it comes to HDB flats, even for a Malaysian with a PR status. Here’s an earlier article 2 years ago:
Flat for SGD1.2 million

In other words, it did not just happen recently. There were already earlier cases.

Yesterday, reported in
The StraitsTimes : Three HDB resale flats breach S$1 million mark.
 That’s about RM3.08 million. Before anyone start to say that they earn S$, so it should be okay, just be reminded that an accountant in
Singapore is earning S$47,319 (per annum)
 and an accountant in
Malaysia earns RM60,936 per year.
 Both are stats from Payscale. I do note however that HDB flats are cleaner and much more conductive as a place of stay if we compare it to the typical flats here. As for that Malaysian accountant, if he does not have a bad credit record, his salary is enough for him to afford a mortgage of a conservative RM2,600. According to LoanStreet, it’s possible for close to RM3,000.  That’s for a loan for a typical high-rise unit of RM580,000. If this accountant is a single, perhaps it is better to buy a cheaper apartment instead.

If he is getting married, then the joint income should be enough for a decent-sized high-rise in some mature neighbourhoods or for a bigger space in new neighbourhoods. (Usually over 45 minutes from city centre). Yes, RM580,000 can really get you even a gated and guarded home, but we must be prepared to change our lifestyle because the distance is also going to be further away than usual. Still okay because I have many colleagues who travel from Seremban daily, for a few years already. ( I would not lah..) Actually, in most countries except for a couple of awesome European nations, the
salaries would usually lag behind the property price growth.
 This is the reason why despite a stronger currency which meant much lower cost of living (from food to drinks to toilet papers and more),
Singapore is still ranked one of the most expensive places to live in the world.
My staff in Hong Kong also earns much higher salary than me but she told me that it would be impossible for her to buy the current place she was staying even if she was earning more than what she was earning.

I think property wise, Malaysia has advantages as at today. If we look at the current growth and availability of land for Greater KL and extended to even the Malaysia Vision Valley, it does seem that as long as we are willing to buy much further, there are still choices. Or even to buy in less favourable areas. However, properties within the usual hotspots are already much more expensive than the S$1 million HDB resale flats of today. Please do not convert okay. Just use the same figure but in RM. How about working in Singapore and buying in Iskandar then? That’s a good decision but

until the RTS comes,

it will be tough because not many are willing to totally change their lifestyle for it. Happy working and enjoying, whether it’s Singapore or Malaysia. Both are good countries and I hope both would continue to prosper. Cheers.

written on 12 Nov 2017

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Property Malaysia severely unaffordable, still? What’s the action then?

“Ringgit Malaysia is really not  good,” a friend was lamenting many weeks back. The major reason? That smartphone model is now launched at EVER higher price than the price for its previous model last year. “Property prices are beyond the reach of most Malaysians,” many friends continue to give this comment every now and then. Needless to say, most of them have yet to have any property to their name.  We love to blame, we love to criticise and we love to justify everything negative which has happened with everything else, except us.

Most of the time, we give up and refuse to find a solution to it. Okay, now back to the topic of Malaysian properties under the “severely unaffordable” category. By the way, I have been sharing this since last year and well, things have not really changed then. Those properties everyone wants are STILL grossly expensive. Those properties which are NOT popular has remained unpopular and prices remain stagnant or moved lower a little. Latest news as below.

Article in themalaysianreserve.com
 World Bank Group said that housing affordability in Malaysia has worsened over the years to a level of “severely unaffordable” in severel states. Meanwhile government housing policies such as Residensi Wilayah and Rumah Selangorku are having adverse effects on housing supply and affordability.

World Bank senior economist Kenneth Simler said these two housing schemes — out of the total 16 — in part drove developers to build new housing at different price points in response to these policies.  He said, “This resulted in the increasing number of high-end units compared to lower-priced units in 2019, as developers overcompensated by building high-end units first to subsidise the subsequent construction of lower-end units in the Petaling market.”

The group lead economist Dr Richard Record said, “Finally, wages have not increased as rapidly as housing costs have. While the cumulative salaries and wages increased by 59% from 2010 to 2018, the cumulative house prices increased by 87%.”  For more details please refer
Article in themalaysianreserve.com

Guys, please understand that this is Malaysia. We are not such an unique country versus the world. Based on the model developed by Demographia, there are MANY advanced countries where the people earn HIGHER salaries based on even currency exchange but that “Severely unaffordable” tag is also related to them and their numbers may be even higher!

However, this is not even the main point. The main point is that do we sit around and wait for something to happen? Or do we start understanding that affordability is also based on duration, distance and size? Buy further for bigger sized homes. Change the lifestyle. Buy nearer and accept smaller sizes so that prices will be something we could afford. If we continue to spend a lot more money than we could and continue reading all these negative news from researchers, the one who will be impacted the most is us… Happy understanding that the world continues to move and changing ourselves are usually easier.

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Separation of boards for property managers better for the industry

Press Release by
The Malaysian Institute of Estate Agents (MIEA)

Petaling Jaya, October 30, 2018:
 The Malaysian Institute of Estate Agents (MIEA), a professional body representing 5,000 real estate practitioners, supports the call for the creation of a separate board made by the Malaysian Institute of Professional Property Managers and Facility Managers recently.

MIEA president Eric Lim today said it was time for the government, after 32 years of the passing of Act 242, to review and evaluate the effective managing of the profession and determine its future direction, adding that MIEA has long made the call for the creation of a separate board for real estate agents, to more effectively regulate its practitioners.

The profession is currently regulated under Act 242 by the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVEAP), which comes under the purview of the Finance Ministry.

Lim said the current board was overwhelmed regulating the four professions under the real estate services industry, namely property managers, valuers, appraisers and real estate agents.

Lim also said real estate agents, who made up the majority of the profession, were not adequately represented at the board level. “The real estate profession should be regulated by its practitioners, similar to other professional bodies in Malaysia and Singapore” said Lim.

“MIEA set up a task force, comprising prominent and longstanding members of the industry, in 2010 and then in 2017, to study the matter of a separate board. The task forces had unanimously agreed that having a separate board would lead to better outcomes for the profession as a whole.”

“We need a regulatory body whose representatives better understand the realities of the industry, and we are concerned about the future of the profession. In terms of practice standards, we are 25 years behind developed countries like the United States and Australia,” said the special task force chairman and current MIEA chief executive officer Soma Sundram.

“The task force believes that each profession should be regulated separately in view of the different sets of challenges faced by these professions. These will lead to better enforcement measures and drive the development and growth of real estate practitioners in the country,” said Sundram, who added that the matter of separate boards was mentioned by Housing and Local Government Deputy Minister Datuk Raja Kamarul Bahrin Shah recently.

“In Singapore, there is 1 registered real estate agent for every 200 people. Malaysia has 1 registered real estate agent for every 1,264 people. We are concerned that the industry is not growing, as every year, only around 100 new registered estate agents come into the market. This number can’t meet the needs of the industry. Sabah and Sarawak, for example, are very much underserved,” said MIEA secretary-general Chan Ai Cheng.

“We would like to engage all stakeholders, including the government and relevant professional bodies, to better grow the real estate services industry,” said Chan, who added that out of RM139 billion in property transactions recorded last year, 60 per cent were carried out by real estate practitioners.

The call for separate boards to regulate the real estate services profession is in response to a statement by board of valuers, appraisers, estate agents and property managers (BOVEAP) President Nordin Daharom yesterday, who said in a statement that there was no need for separate boards regulating the real estate services profession

“The future of the 25,000 real estate practitioners in Malaysia will be under threat if nothing is done to address these concerns. MIEA therefore proposes for a dialogue with the Minister of Finance to establish solutions that addresses the many frustrations our members are facing in a sector that supports the nation. A separate board would enable real estate agents to be relevant and progressive, and determine the future of the industry,” said Sundram.

— end of press release —

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Property market expected to rebound, supported by demand for affordable housing.

Opportunities continue to exist in the property market

I believe opportunities continue to exist in the property market. I think many people agree with me because the total transactions for H1 2021 is pretty “huge” yeah. Please do take a look below. Some would point out that property transactions for H1 2021 was the second lowest when compared to years from H1 2017. I am sure they are right, statistically. However, close to 140,000 transactions is still big and does not show the market is in a deep sleep… right?

Article in nst.com.my
  Mah Sing founder and group managing director Tan Sri Leong Hoy Kum says that Malaysia’s property market is expected to rebound in 2022 but demand for property would be skewed towards affordable housing. Mah Sing is cautiously optimistic of the property market because of demand from the young demographic.

Mah Sing also said that it expected the pace of recovery will depend on global and domestic economic growth. It said that positive business environment could be sighted in the coming months because of the recovery of the employment for sectors including hospitality, airlines, tourism and corporate. In fact what will happen with opening of travel borders is that demand for rental market will be increasing in 2022. Please do read here for the full views of Mah Sing.
Article in nst.com.my

Affordable property will always be true

Before everyone thinks affordable property means a property below RM300,000 then I need to tell everyone that my affordable property and your affordable property will be different from someone else’s affordable property. The reason is a simple one. Everyone may have a different monthly income or even have a different level of support from their loved ones or most of the time, parents.

If majority of people could afford RM400,000 property, then this is considered affordable property and if property developers build based on this demand, property transactions will continue to happen. We also need to be savvy to the fact that new properties account for just 20% of all transactions yeah. If affordable properties continue to be available in the secondary market, then the transactions will also continue to happen too.

There are still those affordable ones too

Just a quick check in any property listing site would reveal to us that choices remain aplenty for options below RM500,000. Perhaps the location and the type is just not to everyone’s liking. That’s why transactions can still happen because just because we do not like does not mean everyone else in Malaysia also dislikes them too. Happy knowing and happy choosing.

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Property Market.  6 years ago, today and 6 years later.

Is Johor Bahru expensive? Perhaps I should ask about whether Iskandar is considered expensive instead? How about Klang Valley or even greater KL or just Kuala Lumpur itself, are they expensive? In an online article from a news site, it said that five or 6 years ago, people can still find terrace houses costing RM150,000 – RM250,000 in Kuala Lumpur and Johor Bahru. However, today just a good terrace house in Kuala Lumpur and Johor Bahru would be priced between RM500,000 – RM700,000. I do not wish to doubt the numbers. However, is it true that every single property, especially the landed once are already so highly priced and none could be found today? Let’s use iProperty and PropertyGuru for this. iProperty for KL and PropertyGuru for JB.

Yes, we are only looking at KL because if we include Selangor, the list would be never ending. I also exclude high-rise because if I did, the list would again be endless. As you can see, these landed properties are not the best we can find. It may also not be walking distance to MRT stations or malls. However, if you really must have landed and has a little budget to renovate it, I am sure it can still be a home sweet home for you. Take a look, go online.

What about Johor then? Well, let’s take a look at propertyguru.com.my this time. JB has much larger numbers of available landed properties for RM300,000 or lower. I chose only Johor Bahru. Hope everyone understands that whatever being said by the many parties with interest may not be true. In fact what happens is that most of the time, everyone just wanted places where everyone else wanted to buy. Thus, the prices for these places would have already shot up higher than the sky. Properties are a little bit special. Even if you have to pay RM50,000 extra, you can hardly feel it because the number of repayment years may be stretched to 35 years. Due to this, properties in hotter areas continue to inch up transactions after transactions.

Let’s be very clear. There are places which may not be the best but if everyone who is really intending to make it his home buys that same area, with higher occupancy, the prices would also slowly recover. When we look ahead, say six years later, what would happen to the value of these landed homes? All new homes would depend on land price and the cost of construction. When we look at these two, we can be assured that it is already not possible build any landed properties for RM300,000 or less in Johor Bahru. Unless the property developer intends to ‘bleed’ to death or selling for charity. Think objectively, act rationally. What do we really need? A home? A landed home? Can we afford one? Answer is yes. For now you can still find RM300,000 landed homes in  KL, Selangor and even Johor Bahru. Only question remaining is, would you be willing to buy one and transform it into your home sweet home.

6 years ago, we may have missed those landed that we wanted. 6 years later, we may even miss landed properties altogether. By then, I think perhaps only high-rise would still be available and even those may not be our first choice anymore.

written on 17 Mar 2015

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Property market Australia showing a drop for the first time since 2018. Negative?

Property market Australia showing a drop for the first time since 2018

The main reason stated for the decline in home values is because the demand has dropped and this was caused by the rise in interest rates by Reserve Bank of Australia (RBA). In other words, buyers may have deemed the rise in rates as making the repayments too high for comfort and thus they are now taking a look and see attitude. Sellers meanwhile may have had to drop prices in order for the repayment to be lower in view of higher rates.

Article at focus-economics.com
 At its monetary policy meeting on 7 December, the Reserve Bank of Australia (RBA) hiked the official cash rate (OCR) from
2.85% to 3.10
%.

Meanwhile in a report via an
Article in corelogic.com.au

“
The -5.3% drop in housing values through 2022 marks the first time since 2018 where national home values fell over the calendar year.
The 12 months toDecember also mark the largest calendar year decline since 2008, when values were down -6.4% amid the Global Financial Crisis, and successive interest rate rises.”

“
Despite the downturn across many areas of the country, housing values generally remain well above pre-COVID levels.
Across the combined capital cities, dwelling values remained 11.7% above where they were at the onset of COVID (March 2020), while values across the combined regional markets are still up 32.2%.” Read more here:
Article in corelogic.com.au

Are the home prices in Australia considered low after this annual fall in 2022?

I think the answer from the potential buyers is a firm No. Do take a look at the prices below for some ideas yeah. Median price showed that New South Wales price in the capital, Sydney is above AUD1 million. Meanwhile in melbourne, the median price is close to AUD800,000.  Reference:
Article in corelogic.com.au

High property price and falling property price can be at the same time

Some people get too carried away with property prices falling and failing to understand the actual happenings on the ground. Property prices cannot keep rising because if it does, very soon, it will suddenly crash. This is not to anyone’s benefit. Thus, any property price increase sould be moderate and should correspond to the economic growth and salary growth too. Else, more and more buyers would be stretching themselves too much and the whole market would be full of risky transactions.

Hopefully this gives a good perspective for everyone when it comes to property price and falling prices. I have zero idea if property prices would move up or down yeah. Happy deciding.

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Property market will be ‘slowed’ down if it has been moving too fast

Property market will being ‘slowed’ down if it has been moving too fast.

DIBS, once upon a time

If you did not know, once upon a time, everyone can buy properties. Not property yeah, I wrote properties; more than one unit easily. It was called Developer Interest Bearing Scheme (DIBS). Google for it to read more if you like. The property market became speculative and DIBS was banned.

Loan application, once upon a time

My good friend who’s a
mortgage exper
t
, Miichael Yeoh
told me that once upon a time, the loans were all based on gross pay. Today, all the loan applications are calculated using net pay and if commission is involved, the bank will only take 50% of that number or lower into calculation for the loan approval. Again, this is to ensure only the ones who could pay the loan actually gets the loan.

Now, China property market will start to have curbs.

Article in bloomberg.com
  Chinese authorities look set to tighten property sector policy and tame prices this time, in order to reduce wealth inequality and boost the falling birthrate, economists led by Lu Ting wrote in a report Tuesday. Policy makers will be willing to sacrifice near-term economic growth to tame house prices and divert financial resources out of the property sector, which accounts for a quarter of China’s gross domestic product, they wrote.

“Markets over the near term need to be prepared for a likely marked growth slowdown, more developer defaults and home foreclosures, and perhaps some turmoil in stock markets,” the economists wrote. Please do read the full article with more details here:
Article in bloomberg.com

Wealth inequality because of property?

Every time people tell me that our food price is more expensive than Hong Kong when we look at salary versus food cost, I will explain slowly why the food price is really secondary in terms of cost of living if they are my good friends. In fact I can say the same for many other major cities too, especially the ones where the property price has reached an ‘unreacheable’ level for many.

If they are not friends, I will just nod my head and smile. Please always remember, the reason why poverty continues to happen in many countries throughout the world is because of property. When people could not afford to buy one, then they will have to rent. When they have to rent, usually they will be at mercy of the owner.

Rental will be forever

That’s not all, all the rents they pay, no matter for how many years or how many generations are all lost. Imagine paying just RM1,000 for rental but it’s for 10 years? That’s RM1,000 x 12 x 10 =  RM120,000. This one we assume the person rents a very small property and rental stays the same for 10 years.  What happens if this rental is over 40 years? What if it’s for generations?

This is why I disagree that property market is left to just the market without government intervention yeah. Happy understanding and hopefully China is able to control the property market and help more people own a home too.

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Property market crash? 4 factors to watch out for.

Source: canstar.com.au

Every now and then there would be news about the potential for property market crash. It’s therefore important to always note all the potential signs for that to happen and then to be wary about them at all times. Today, we look at what
yourmortgage.com.au
 has highlighted for the Australian property market. As
per similarweb.com,

yourmortgage.com.au
 has over 232k visits per month. This means it is a very popular property related site in Australia. According to the article, in reference to Markets and Money, 4 factors were identified as potential causes. First one is due to increasing interest rates. Take a look at the typical home loan rates in Australia today. Actually not that big difference from the rates we get in Malaysia yeah. Perhaps 0.5 percent lower and since there is a chance for Bank Negara to adjust the rates upwards, then the difference may be between 0.5 percent to 0.75 percent?

Source: imoney.my

Why is increasing interest rate a cause for concern? The reason why a higher interest rate is a worry is because the ratio of household debts to disposable income is currently at 193.7 percent in June 2017 versus 98.6 percent way back in March 1997.  It says, “The problem is, the increase in house prices has not only multiplied debt but is also causing something called ‘wealth effect’. It basically means that, as households perceive the value of their assets increasing, it makes them feel like they are sitting on a lot of money…so they spend more.” The report concluded by saying that this is however sustainable as long as interest rates are kept low. The home loan rates for Malaysia based on a search via
imoney.my

reveals that we are not that far away, where rates are concerned.
imoney.my is Malaysia’s no.1 comparison site

and has 1.85 Million visits per month. There is a
potential for rates to increase in 2018 though.
With regards to the household debt vs disposable income, do note that Australia’s numbers has always been higher than every other nation since 2002 and not just recently.

Source: edgeprop.my

A comparison with other nations as per the image from Edgeprop.my  The second reason for a potential property market crash as per Markets and Money is slow wage growth. Wage stands for salary. It says that many households had massive property value gains but 77 percent says they do not have enough cash to cover a quarter of their debts. It said, “The truth is that low wage growth, paired with higher living costs and even larger mortgages, is taking its toll. And the RBA may be keeping rates on hold, but commercial banks are slowly raising rates. People are spending much of their income on paying off debt.”  The household debts of Malaysians vs GDP is quite high, at around 84.6 percent.
One latest article in themalaysianinsight here.
 In essence, what is important is for wage to grow faster than the homeloan rates and it should still be okay. Do take a look at the potential increment in the new year as a comparison yeah.

The next threat contributing to property market crash is unemployment. The unemployment rate in Australia is considered low currently, at around 5.4 percent. However, there is a record high of ‘UNDEREMPLOYMENT’ In other words, there are people who has jobs but are not paid enough and thus suffering from mortgage stress. Last but not least would be the overexposure of banks to the mortgage market. A report on the Sydney Morning Herald said over 60% of Australia’s banking system loan book is on residential property, translating to $1.51 trillion in mortgages. (I could not find any recent numbers for the home loan to total loan for banks in Malaysia. However, based on the Non-Performing-Loan (NPL) numbers for Malaysian banks, the number is still very healthy. It’s around 1.6 percent.
Here’s a recent report quoting S&P published in TheEdge Financial Daily.
) Happy understanding.

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written on 27 Dec 2017

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Property market depends on the economy. Agree?

Imagine everyone worried about losing their only job. Imagine companies delaying their hiring because they are not confident with potential future sales.  Imagine those who lost their jobs struggling to find a new one. Imagine factories asking their employees to take unpaid leaves because orders from the end customers have dropped. Now after all these happen, imagine a booming property market where the property transactions are trending higher and the prices moving upwards. This would not happen in reality and in fact if it does happen, it’s time to be very careful as the property bubble is about to burst.

Photo by Karolina Grabowska on
Pexels.com

kopiandproperty.com readers would know that I have actually written about this a few times but today let’s just listen to some analysts speaking about it yeah. They are after all, experts while I am after all, just a blogger. 🙂
Article in themalaysianreserve.com

MIDF Research analyst Jessica Low Jze Tieng said, “Data from the National Property Information Centre (Napic) shows unsold completed residential units in Malaysia increased 6.6% in the second quarter of 2020 (2Q20) to 31,661 units, after posting four consecutive declines from 2Q19 to 1Q20. Hence, we are having a ‘Neutral’ call on the property sector.”

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen says that low-interest rates and reintroduction of HOC helped to improve sales of properties in 2020. He said, “Without these incentives, the sales could have been considerably lower. These incentives encouraged the least affected prospective buyers to buy their first property or to upgrade their existing residences.”
Do read the full article in themalaysianreserve.com for more comments yeah.

Unsold completed property versus total property sold, statistically speaking.

Imagine this. The property is priced attractively. The property design looks contemporary. The location where the property is located is full of amenities. Tell me frankly, do we think this property would still be unsold? If your answer is YES, it should be unsold because the property market is SO SLOW, SO BAD and SO SAD… then I would also remind everyone that just within H1 2020, the total residential property transactions alone top
75,000 units yeah. Read here.
 Within 6 months period of which 2 months were under MCO…

There are certainly major reasons for the unsold properties to continue languishing inside the unsold property numbers. In fact some reasons such as NOT attractively prices, NOT properly designed, NOT at a good location would be some of the reasons for these unsold properties of which the number is at 31,661 units yeah. (Refer to what was shared by MIDF Research’s Ms. Jessica above)

Low-Interest rates and HOC boosted the property market, statistically speaking

Imagine this, the interest rates are at record low. There is also the incentive of Home Ownership Campaign (HOC) where the buyer is exempted from paying stamp duty.  Is it a buy for everyone then? Actually, the buyer has to feel confident about his financial capability, first. If he felt that his job is not secure, he would not proceed even if rates are low and there is HOC. This is why if we look at the property market, we better start with the economic outlook yeah.

Conclusion

I think 2021 will still be a good year even if things do seem bleak at the moment. My reasons for feeling positive? Vaccinations have already started in some of the COVID-19 worst-hit countries. It’s also on its way to Malaysia. That sudden turnaround can happen in a few days as soon as everyone feels safe again yeah. Watch the unemployment numbers too okay. That tells a lot too. Just remember to note that unemployment rate has always been around 3.5% yeah. So, if currently it is at 4.5%, that’s 1% higher and NOT 4.5%. There was never 0% unemployment before. Take care and stay safe.

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piandproperty.com FB page
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Property sector recovery starts in Q4 2020?

I was speaking to a Chinese national working as a regional manager based in Shanghai, China just a few days ago. He was sharing about the situation in China after the COVID-19 situation. He said that he has been back to work in his office for 2 months. Nevertheless, he is still wearing a face mask to work everyday even currently. He said that Shanghai was not as affected as Wuhan.

Then, he shared that with the easing of the lockdown, Chinese tourists have flocked to many tourist sites. One of it is Huangshan mountain park in Anhui province. I did a quick search and I am not sure what to say of the image below. It seems that everyone has totally forgotten about COVID-19?  Where is the normalisation period we are all anticipating? The image below happened on 4th April 2020.

Image source:
https://edition.cnn.com/2020/04/06/asia/china-coronavirus-tourist-warning-intl-hnk/index.html

So should we feel a little more encouraged that perhaps the normalisation may just take a little faster than what we thought? Perhaps we also listen to some views from panelists in a webinar organised by the Malaysian Institute of Estate Agents recently?

Article in edgeprop.my
   Hartamas Real Estate Group founder and group managing director Eric Lim said that property developers remain strong because many development projects done had been financed through equity financing rather than bank borrowings. As for the COVID-19 pandemic bringing with it corporate debt crisis, he said, “So, on that basis, exposure to gearing is much more manageable. I would think this time around, we will be better prepared”

Lim also shared that he expected the property sector to recover in Q4 2020 and will normalise by 2021.  He said, “Some even expect the property sector to surge by 2021, a jump from where they are now. So, the banks’ six-month moratorium is a relief both to the individuals and corporations.  This will cushion the (Covid-19) impact at least for the next six to nine months and probably until the end of the year.”  He also think the economic stimulus packages would also help especially to the small and medium enterprises (SMEs).  Please do read the full article here:
Article in edgeprop.my

Actually, if I am speaking to the first-time home buyers, I think there is still a window of opportunity for them to buy a choice property currently. Interest rate is at one of the lowest point since 2010 I think? Image below shows that the interest rate was at 2% in 2010. Currently, it is hovering at 2.5%. Banks meanwhile has money since the Statutory Reserve Requirement
(SRR) was just reduced recently and that alone released about RM30 billion into the market. (click to read)

The only word of caution is this. Read more, understand more and really do sufficient due diligence before buying. Once a wrong decision is made, it will set the person back many years where financial standing is concerned. If the purchase was because someone said so, then please continue saving up the money instead yeah. Only invest when we understand what we are actually investing. Happy hoping that the property market recovery will start sooner than later.

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Property market down but bigger developers fine

Many say when your company is smaller, it is more nimble, more flexible and can react to changes faster. Quite true. However, for property developers, size does matter. The bigger you are, perhaps the more resilient you are. In fact with the right planning, during current slowdown you may be able to focus on affordable projects instead. Imagine a developer with many pieces of lands in many different states. They can now focus on the easier to sell ones first. Imagine a developer with 7 different projects. They would be able to delay some, pull in some and this allows the business to continue earning a profit even if the pace and the margin is slower and smaller. Now imagine if you are a developer with just 1 or 2 projects. What can you do during slowdown? Well, not much. Going ahead, it may not sell well. Not going ahead, cashflow problem. It’s just not easy when you are a smaller developer.

Before you now think then everyone should buy from bigger developers, do note that there is no such relationship. We buy because we like. We like because it meets our expectations. That’s all. Do not think too much about whether these developers get better ratings from an international rating agency or not. In a local english daily, Moody’s said that Malaysia’s property market will be slowing down this year but the expectations would be that the bigger developers who are listed would do just fine. They said these bigger developers are more resilient. Again, one major reason was also because these developers are now targeting the middle-income households with their projects. Everyone knows demand is still strong but without the right price, it’s going to be quiet.

Moddy’s also outlined many other reasons why they do not see a strong Malaysian property market for 2015. However, it said, “Despite these headwinds, our central scenario is for a soft landing in the Malaysian property market. Housing demand from middle income households will remain resilient.” Now we can heave a sigh of relief. Property market is slowing down but nowhere near breaking down. Opinion from an international rating agency always carry more weight than when I said so many months before. I hope Moody’s analysis comes true. I do not mind a slowdown or fall in prices. I hope it falls too, for the sake of many first time home buyers.

written on 6 Mar 2015

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Property market down cycle may be longer than usual

Another not so good news about property market Malaysia. Reported in theedgeproperty, Kenanga Investment Bank Bhd head of equity research Sarah Lim said, “The property market is going through a structural change as key property market drivers are also experiencing structural changes.” In brief, she mentioned that the property market down cycle may be longer than usual. Explaining further, she said that one major market driver; the number of first-time home buyers has peaked and is likely to decline. The other one is the
banking sector which is not as supportive
 to the property market plus the mismatch of supply and demand due to affordability issues.

She further shared that she is expecting a more flattish U-shaped down cycle. This was due to the tightening property measures which has already ‘cooled’ the market. In fact she said the issue is not on the interest rate but lending liquidity. For this to be better,
Bank Negara Malaysia
 would have to address lending practices such as loan assessment methods, loan-to-ratio caps, and valuation of properties. Besides, the
lack of affordable projects
 in urban areas also meant that many did not buy since the projects being offered are not under the RM250,000 to RM500,000 in urban areas where demand is highest. (I think these days, most launches are below RM500,000 but perhaps the size is a stumbling block since these days, the sizes being offered is normally below 1,000 sq ft. Yes, I do agree with her that these day, the launches may not necessarily be in areas loved by many.)

Anyway, I think she has her points based on a lot of research. Allow me to share my findings from many conversations with people who has yet to buy a home today. The number of
first-time prospective home buyers,
 just within my colleagues remain huge. Most of the Gen-Yers have not purchased their first-home yet. However, for now, they are worried that if they buy now, prices may start dropping. Sentiment is also pretty negative. They have heard about home loans being rejected. Last but not least however, most harbour hopes buying in areas which they could barely afford. In other words, if they do push away all the negative sentiments, somehow got their bank loans approved, they would still be stretching their repayment number near to the maximum.

One thing is certain. It does seem that the
negative sentiment
 which I felt should subside before the end of 2016 is still here. With the worsening world economy, I do not think it’s all rosy only in Malaysia. If she is right, then this slow period will be here not just in 2016 but in 2017 too. Start monitoring the profits from local banks in order to get a good gauge. When profits start falling, we know pressure has started building. As of today however, Public Bank just declared an even better dividend than last year in 2015. Happy following.

written on 28 July 2016

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Property market forecast on April Fool’s day

Reminder. This is a prediction made on 1st April 2014. Accuracy or even reality may be far away from any truths whether yesterday, today or tomorrow. Read and then please forget about it.

Property launchings. There would be queues stretching kilometres in all the launchings today because no one would believe what the developers are selling. Some could not believe it when told that developers no longer give discounts. Now you buy One, you get Another one FREE. The second one must be same price or lower. Every new property booked would entitle you to free fried mee hoon and black coffee. No food if you do not sign.

Property prices. It is forecasted that the buyer price and the seller price are now way too different from each other. Seller are asking for 20% above market rates while buyers are asking for 20% below market rates. Due to the 40% difference in price there has been zero transactions today. Some buyers were seen debating with sellers on whose price is the right price.

Property agents. They are all on strike and demanding for an increase in agent fee. They said due to professional work being done by then and that the exams are getting harder to pass, the agent fee should be at 20%. With this rate no one would need to moonlight as security guards. It does seem that they may get this adjustment! Today, there’s a march towards the MIEA office, together with their family members to show off the many mouths they ned to feed.

Property developers. Today all the developers are going to climb Mount Kinabalu as part of the 2014 Developer’s Award. Every developer is represented by their CEO and the first ten CEOs to reach the peak would win this year’s top ten best developers in Malaysia. The last ten in this climbing contest would be crowned, top 10 worst developers. For them, better not develop anything this year. It is rumoured that some companies are promoting their junior staffs who can climb fast to be new CEO.

Last but not least, the rumour that kopiandproperty.com may be writing an article which holds no truths whatsoever on 1st April 2014 may turn out to be true. To those who can read until this last sentence, thank you. Happy April Fool’s Day!

Written for fun.

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Property market from property developers’ results.

The banks can only earn good profits if people continue to borrow and is able to pay back on time. If the borrowers did not pay back on time, then the Non Performing Loans will go up and the banks will have to allocate more of their funds for this purpose. If the banks are not lending and people are not borrowing, they will lose money because they need to pay for their fixed operation costs.

If the banks are not lending, then property transactions also could not happen because I do not know that many people who buys a property of a few hundred thousand ringgit by cash. In other words, the property market needs the banks to lend and the buyers to borrow and pay on time. Another measure of whether the property market is doing well or not would be to look at the developers’ results.

Article in themalaysianreserve.com
 MIDF Amanah InvestmentBank Bhd (MIDFResearch) analyst Jessica Low said, “Overall, we think the performance of property developers should be better in 2019 due to the recovery in buying interest from property buyers. Nevertheless, we reckon that the recovery is marginal as overall buyer sentiment remains cautious due to the lingering overhang issue in the property sector.”

 Affin Hwang Investment Bank Bhd senior associate director Loong Chee Wei expects the developers to report better results. He said, “Sustained revenue growth and a slow recovery in profit margins should drive core EPS growth of 7% YoY in 2020. We believe most property developers’ financial positions improved with lower inventories reducing average net gearing to 0.38 time in 2019 from 0.4 time in 2018.” Please do go ahead and read the comprehensive
Article in themalaysianreserve.com

Briefly, it seems that financial year 2019 is a good year for the developers, especially after a weak performance in 2018. It also meant that the developers have sold enough of their units from their launches and the construction is progressing well too. Perhaps we could also stop thinking of the property market as totally negative and see those silver linings as well?

Alternatively, look at the property developers mentioned in the article and perhaps buy some of their stocks and wait for better performance in 2020? It does not need to be just property investment yeah. That’s always very expensive. It could have been just a few thousand units of the developers’ stocks too. This is especially when they could still perform well under current market circumstances. Happy deciding.

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When the property market gets hotter, people get divorced to buy one. Erm…?

What do people go when property market gets hotter or as per what people say, starts to recover? Well, more people will be tempted to buy because their friends, their colleagues, their relatives may be telling them about the property market as well. Briefly, when sentiments get positive, everyone feels that the time is right. People feel confident that what they buy will be a good buy.

When the property market is not hot, sentiment is also negative and when no one buys, most of the time, even fewer people buys. Haha. Today, we look at how property prices are also encouraging a spike in divorce numbers. Funny as it may be, this is seriously true. Not in Malaysia, fortunately.

Photo by burak kostak on
Pexels.com

Article in nst.com.my
  Chinese government is doing its best to keep the property market in check because of the resurgence in real estate prices in Shanghai and Shenzhen. Their cooling measures include plugging a loophole long exploited by buyers using FAKE DIVORCES to become eligible to purchase more properties or obtain mortgages.

The reason for this divorce case is because most Chinese cities limit home-buying demand by capping the number of properties a family can own. Thus, divorce becomes a way to bypass the restriction. Under the new rule, the number of homes owned by people who have been divorced for less than three years will be counted based on the total they had when they were still married. To read more of this entertaining news, please read here:
Article in nst.com.my

Yes, some property markets are getting hotter again.

China is not the only country with this thought; cooling their property markets. Singapore’s top leader has also mentioned that low interest rates are causing too high interest on the property market and this is not a good sign. Earlier article here:
Too high interest because of too low interest rate is a big issue
. Of course the same sign which both these countries have would be that they have managed to put COVID-19 under control and both have started mass COVID-19 vaccinations too.

Look for opportunities in all markets

Personally, I do not think too much about cycles. The reason is a simple one. Do we want to conclude that there is nothing to buy / overvalued during an up cycle or that everything is good / undervalued to buy during a down cycle? If we say we want to wait, then have we identified anything that we want to keep an eye on?  If we say we wanted to sell, have we decided on the lowest price we could accept?  Thinking is easy, doing is much harder. This is why many may miss the potential opportunities.

Happy understanding yeah.

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Property market is slowing. Agree. However, there are today MORE interested people.

Last year, during the The Star property fair in Penang there were around 39 developers / exhibitors participating. Actually, in terms of numbers this has gone down. I remembered the last one that I went, there were easily 50 over booths including my former company which had a prominent one too. Perhaps this reflects the current slowdown status for the property market. It may also be because there has been a property fair, be it small or big by the many organisers and even other newspapers. Many developers also love to pay the few hundred Ringgit for a desk and two chairs in Tesco / Giant and have staffs there for the whole day distributing leaflets.

OR, is this also caused by the many Online sites? For example, propertyguru.com.my, property.com.my or even Penang specialised sites such as penangpropertytalk.com and apartment-penang.com?  If you were to refer to some stats available, these sites have a huge following and it is already extremely updated. There were even listings for property developments which has not been launched yet! 🙂  Yes, I am serious. Amidst all these, there are also the many property buyers’ clubs mushrooming as well as the many seminars / workshops which are also attracting participants in the hundreds?

The market is really alive. Look at the above examples. It has yet to include the many property blogs, be they independent ones or with lots of advertisements in the blogs. These days, everyone I know talks about property but do not worry, majority of those talking to me either owns one or owns none. Very few owns more than one. I think the major reason for this is due to the current bearish sentiment. Everyone is a little worried about the sustainability of the property market, some even believe that the market is due for a big correction. I think there are really some overpriced properties, so just be careful and not buy because everyone of your friends are buying.

In actual transaction numbers, the property market is slowing down. In terms of share market, it is getting a little pricey when compared to the region. In terms of your Fixed Deposit Rate, it has adjusted a little higher. In terms of unemployment rate, it is at 2.8%. Sorry, I can’t make the decision for you. First thing to do? Since The Star property fair is happening in Penang this weekend, do visit and take a look. Happy investing.

written on 26 July 2014

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