IMF’s warnings: ‘risk of a sharp tightening of financial conditions’

When stocks are overvalued, stop buying them as if we are in a ‘never ending’ best-seller movie. When properties are overpriced, stop buying as if they are an asset. An asset is also defined as “an item of property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.” In brief, if we buy a property and sells it in the future, it should give us positive returns. An overpriced property is NOT going to give us a positive return yeah. It will only be negative. In one sentence? Assuming all similar condos in the area are RM700 per sq ft and this project we are about to buy is RM900 per sq ft but they give us 20% rebate which reduced it RM720 per sq ft. This is definitely an overpriced unit and we need to pray that the market is good in the future for us to sell it and call it an asset…

Before we move further however, there’s this thing called GLOBAL ECONOMY. Something that happens in some other parts of the world will usually affect all other parts of the world too. We are talking about the potential of a crisis. Reported in
TheStar is this article about the potential of a sharp tightening of financial conditions.
  Specifically, International Monetary Fund (IMF) is talking about the United States. It (IMF) says, “Asset valuations appear to be relatively high in some markets, notably in the United States.” In its latest Global Financial Stability Report, this was one general conclusion, “Overall, market participants appear complacent about the risk of a sharp tightening of financial conditions.”

Other things reported included:

1) Short-term risks to global financial stability have increased “modestly.” (not considered negative yet)

2) Interest rates remain low by historical standards, and financial conditions are still supporting growth (considered positive)

3) U.S. equities have risen “well beyond” the valuations they enjoyed before the global financial crisis (RISKY yeah…)

4) Housing prices appear frothy (means inflated / bubbles) in several advanced economies, including Australia and Canada as well as Nordic nations.

5) “In some advanced economies, some investors have grown overly confident and even possibly even complacent.”  (People are taking far higher risks without any safety nets)

6) Credit conditions in emerging markets have tightened since mid-April, driven by a stronger U.S. dollar, escalating trade tensions, and political and policy risks unique to individual countries. (Negative sign, meaning harder to get financing)

7)
Overall risks in emerging markets remain “moderate compared with historical levels,” (neutral yeah)

8) Central banks in advanced economies raise interest rates.  (When this happens, the funds invested in emerging markets would usually return to their home market)

9) There’s a 5 percent probability that emerging markets other than China could face debt-market outflows of at least $100 billion, on par with the capital flight during the financial crisis. (Still very small percent of it happening)

Full article in TheStar here.

This warning is not something we note only when it’s issued by the IMF.  As a working professional, it’s important to have an emergency fund of 6 months just in case we lose our job and needs time to find a new one. As the breadwinner of the family, we should be sufficiently protected by insurance so that we do not need to spend so much of our savings every time we need serious medical attention. As for what could happen to the world economy, no one is able to give us an exact answer. We just need to be prepared all the time, somehow. A good point to note is that tough times do not last, tough people do. In other words, a crisis may ‘kill’ many of our competitors but when the crisis is over, we will be a very strong player in the market.

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written on 10th Oct 2018

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IMF: The world is NOT going to grow FAST.

According to the International Monetary Fund, the potential growth for emerging markets has slowed compared to before the 2008 crisis. Between 2008 – 2014, potential annual growth fell to 6.5 percent which is about 2 percentage points lower before 2008. In the next five years, 2015 – 2019, this is expected to drop further to just 5.2 percent due to the aging population, structural constraints and even slowing productivity. I think this would also also apply to Malaysia  as well because the forecast for Malaysia’s GDP growth is around 5% for majority of all analysts with forecast for 2016 even lower at 4.5%. No, it is clear that Malaysia is not currently in danger of a sudden recesssion or even a technical one. (negative growth for two consecutive quarters).

Should we then be worried about this slower growth? Well, if you want to know, the projected growth for advanced economies would only be 1.6 percent and this meant that even these economies would continue to show high public and private debt. Just look at the US or Japan and we can see this kind of typical growth numbers.Even the second largest economy in the world, China is showing a slower growth as it starts to transition into a consumption based one from the previous investment-led one. Remember the world was pumping everything they have into China to get a foothold due to the huge potential market?

For Malaysia, the current slower growth may actually present an opportunity for property prices to moderate. Transactions have also moderated and many have chosen to wait instead of buying one. Many have indicated that renting may be a better option until prices drop to a level they are comfortable with. I personally do not believe this ‘comfortable’ level would ever happen. Perhaps if they re waiting for a more affordable level for the higher priced condos, it may happen. To wait for a RM250,000 property to dip below RM200,000? Well, this may need another financial crisis and a prolonged slow growth.

In fact if the crisis should suddenly happen tomorrow, all the small developers or the weaker ones together with those who were not so experienced may all be wiped out. They have bought lands which are too expensive to build and sell at a lower price. This include those who bought land at exorbitant prices around KLCC for example. By then, with the much lower prices across all types of properties, I think the current affordable property plans by the federal or the state governments would all have to be delayed or stopped. Even these low to medium income people that they are targeting maybe too fearful to buy a big item like a new housing. Is another crisis due soon? I think we better focus on the US or Europe for some signs. Not likely to start from Asia would be my personal opinion.

written on 8 Apr 2015

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New Budget 2015 and 1998 crisis

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Budget 2019 & The Impact on Properties: Strategies Moving Forward

Last week,
Miichael
 asked me about Budget 2019 and we had a good conversation on what we thought about the property market beyond Budget 2019. The government’s focus is focused on helping first-time home-owners get a property. How would it affect the unsold properties in the market today? Should I sell my property which I had kept for over 5 years and pay the new RPGT of 5 percent? Perhaps I should wait until the government changes the RPGT back to zero in the future  before selling? Let us share with you these and more in a ‘Duet-Talk.’
Register here: https://budgettalk.eventbrite.com
  See you on 25th November @ 11am.

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Impact of COVID-19 to the Malaysian economy is RM5.9 billion. Big dent?

Just over a week ago, this article was clicked and viewed by many.
6 more weeks and the COVID-19 will affect the Malaysian economy badly
  Fortunately, there has some positive news from China where COVID-19 started. The number of recovered patients are higher than the infected ones. This has been ongoing for at least 5 consecutive days. Okay, elsewhere, Italy and South Korea seem to have some negative news but the centre of it all has shown positive developments. So, how hard would COVID-19 hit our economy? (our = Malaysia yeah)

Article in themalaysianreserve.com
  AmBank Group chief economist and head of research Dr Anthony Dass said using the estimated GDP forecast of 4.6% and minus 0.4% point, the drop is equivalent to RM5.9 billion. He said, “Slower growth would affect business cashflows and orders. It will add pressure on retrenchment as more companies downsize.”

World Bank said sectors which are impacted by Covid-19 in Malaysia are tourism, foreign direct investment (FDI), supply chains and commodities, which include palm oil and oil and gas (O&G). Hotel room cancellations are up to 157,000 rooms valued at RM66 million and these cancellations mostly come from visitors from mainland China, Singapore, Hong Kong, Taiwan, Vietnam and Europe.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said he foresees growth coming in at around 3% to 3.5% in the first half of 2020 (1H20). He said, “This would mean the economy is operating below its potential level as there are unused resources (labour and capital) in the economy. As such, policy responses from the fiscal and monetary authority are warranted to ensure economic growth can be stabilised.” Please do read the full
Article in themalaysianreserve.com

Yes, with a weaker economy, it will definitely affect the demand for property too. I think it’s not so much about people losing their jobs but it’s more of the fact that people do worry about the potential uncertainty.
(Plus the political uncertainty these few days which hopefully will be resolved within the next few days)
 So, for those who believe they have a stable job and found a good property to buy, I think it’s still a go-ahead. A good friend who’s in the IT line just told me that she found a nice large sized-condo in Bangsar and will be buying it. Yea, 7-figure priced and prized property and major reason she is buying is also because it’s close to her parents too. Happy understanding that whether great times or bad times, both do not last forever.

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The importance of size vs affordability

Hong Kongers love bigger space. However, they are also acutely aware of the affordability factor in their home purchase. Thus, if they have a roof over their head and that small space can be turned into a wonderful home sweet home, they would buy. I am not sure if this is starting in Malaysia but according to an article in a local English daily, one project sold over 150 units within one weekend. This is despite the fact that the sizes ranges from just 466sf to 769sf. The project is Parisian Tower in i-City, Shah Alam.

The project as per the name is modelled after the French-styled homes. According to the developer, these units offer a combination of great location, proximity to facilities and amenities, affordability and the unique style of its decor. Prices start from RM380,000. These units already come with the following which of course added to its attractiveness: Chic interior design, kitchen cabinets with hood and hob, wardrobes, bed sets, air conditioners, TV and other interior furnishings. Do note that for the small units, no matter what hood and hob, it is not going to be great for any real cooking. Perhaps some instant noodle cooking would be great but not anything else unless you would like to smell like your food everyday.

I have personally been to i-City as well as Shah Alam a few times. I think in terms of location, it is ok. Not as near as we would want but with a good price, these can be pushed to second place. i-City also have a few other attractions currently and it does seem that more attractions are coming including the 1.5mil sq ft Central Plaza Mall @ i-City by Thai developer Central Pattana PCL and the world-renown Hilton Hotel. Yes, the residents can walk directly into the mall in future. It is linked by the New Klang Valley Expressway (NKVE), Guthrie Corridor Expressway, and the proposed West Coast Highway and the Light Rapid Transit Route 3 – i-City station. For the last one, always wait until the construction starts before using this as a reason.

However, to choose between staying in Shah Alam versus my current place next to Sungai Buloh, it’s an easy choice for me. I would opt for my current home anytime. I currently have huge space plus affordability and proximity to the highway meant going back to my hometown Ipoh is a savings of another 30 minutes. Do note though that Shah Alam continue to attract lots of new developments and I simply love what SP Setia has done to their Shah Alam development, including that
Setia City Mall
 which as I have stated before, I rate it above Paradigm Mall. Another friend is also moving to Shah Alam from Puchong while another told me that he would love to move there because the roads are wider and the jam seems to be nearly none. When we look at the current generation which may be marrying later and would like to stay in a more chic place, I think we can see why these type of developments may continue to attract lots of positive attention. Happy buying.

written on 29 Mar 2015

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RM1,480 psf only, Shah Alam, I-City

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Important message on COVID-19 for Malaysians. (As at 12th March 2020)

Please do read this yeah. Latest update on COVID-19.

News from thestar.com.my
   All mass gatherings should be postponed to minimise the spread of Covid-19, says the Health Ministry.

Health director-general Datuk Dr Noor Hisham Abdullah said those experiencing respiratory infection symptoms were advised not to attend programmes that involved crowded places, including religious activities.

“Those with symptoms are advised to adopt social distancing by standing at least 1m away from another individual,” he said when asked what advice the ministry would give after the World Health Organisation (WHO) declared the disease a pandemic on Wednesday (March 11).  Here’s the
News from thestar.com.my

Hope everyone will take care and at the same time, stop forwarding unverified news. We need to understand what’s really happening. We do not need to keep all the speculations alive.
For more updated information, here’s the Ministry of Healthy’s website.

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Important sign(s) for the market, not just property.

How’s the electronics manufacturing industry doing? It’s not just waiting for official statistics. I could check with a few engineer friends from different companies. If all of them say they are working hard and expects a good increment, then I know the situation’s okay. I even bought a company’s stock when I learnt that most of its engineers were working late for the past few months. Yes, it gave me good returns a few months after that. How’s the property market doing? Actually, we could ask real estate friends we have and it will give us an idea. What will provide an overall picture would be the banks. Most home buyers will need to get a bank loan when they buy their properties. Therefore if the banks are having a tough time (Non Performing Loans are up, loans growth is subdued) then their results would reflect the market condition.

These are predictions by analysts about the banking sector for 2019.
Article in TheSunDaily.my here.
 The general conclusion by analysts is that the banking sector will be able to maintain its earnings potential this year as margin pressure is expected to ease and continued loans growth with stable asset quality. MIDF Research said while the industry’s loans growth moderated to 5.6% year-on-year (y-o-y) as at December 2018 due to moderation in business loans and loans for the purchase of residential properties, the growth was still slightly above its expectations.  “As for CY19, we expect a moderation in loans growth to 4.7% y-o-y due to the high base effect. We also believe that deposits growth will moderate to 5.3% y-o-y due to lower growth in fixed deposits growth this year.” Its top picks for the sector includes Maybank, CIMB and Public Bank.

AmBank Research said it expects that the foreign fund inflows into emerging markets would benefit the share prices of the liquid banking stocks as the US Fed rate hike is tapering off. It maintained its “overweight” stance for the sector with “buy” calls on RHB Bank, Public Bank, Alliance Bank, BIMB Holdings, Maybank as well as MBSB. Its tops picks include Maybank, Public and RHB Bank. The reason it likes Maybank includes dividend yield for the stock continues to be attractive relative to peers with its high payout ratio while potentially offering investors higher returns with the reinvestment of their dividends into additional shares under the DRS (dividend reinvestment scheme). Full article
in TheSunDaily.my here.

Banks are doing fine for 2019, results wise. Property market should not be worse than 2018 perhaps? Let’s keep following the development from the banks because this reflects the economy too.

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Important. Stay INVESTED, regardless of economic situation.

Nope, the advice in the title did not come from me even if I agree wholeheartedly. Before we read the person comment in full, let’s assume the economy is now doing extremely well and we have many investments which is now in positive territory. So, do we sell everything to take all the profits and then wait? I mean wait for the next crisis?  How long do we have to wait no one knows, really. Not even some prominent economist yeah.

What about if it’s the other way round. The economy is doing badly, many potential “investables” like stocks are trading at low Price to Earnings. Many property owners are willing to sell their properties for 20% lower. So, do we buy everything we could get hold of? Actually, in both situations, we need to ensure we are not over-stretched but we should continue to remain invested whether it’s during a boom time or during a crisis. If you agree with my views, read on. Else, skip to the next article yeah.

Article in thestar.com.my
  Studies have shown that more than 60% of Malaysians who retired at the age of 55 did not even have at least RM240,000 in their EPF accounts. GAX MD managing director and chief executive officer Ronnie Tan shared that 60% of those that were declared bankrupt were aged between 25 and 34 due to personal loans, car loans and credit cards. The reasons he said are because of the need for instant gratification, the lack of discipline and the easy access to personal loans.

Tan shared that if one were to save RM300 per month, it may become RM60,000 in 10 years. Over a period of 30 years, based on a 10% returns per annum, this amount could become RM640,000. He shared this based on his company’s past performance. He also shared more about how his company helps investors invest better because, “We take the nitty gritty away from the investors. We do the necessary buy and sell on a discretionary manner and the intention of getting good returns so you don’t have to pick individual ETFs.”  Read on for more:
Article in thestar.com.my

I have also been investing into ETFs and just forgetting all about it because I do not wish to touch it for at least many years. Then, hopefully it may give me a pleasant surprise. No idea if it could reach 10% per annum but I think anything double that of FD rates at a manageable risk level looks good enough. This was what I invested in:
I started investing via Stashaway
  Yea, long time ago, I wrote this article too:
Forced Savings would be one way to start investing.

Remember, most of us have limited wealth. Whether it’s a monthly salary or even some extra money we have from our parents. This is the reason why many times, our money is gone with the wind and after 30 years, we realise we have almost saved nothing. Where has my money gone to? Well, here’s that article:
Where has all my money gone to!?
Happy understanding that no one owes us anything.

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Impossible to afford a property? Never.

Anyone has this thought on their mind?  What happens when property prices become higher than ‘severely unaffordable?’  Basic idea is that when the median property price is 5.1 times the median household income, it becomes ‘severely unaffordable.’  Calculation as follows:

Median Income per year (RM100,000) x 3 = RM300,000 (This is affordable but usually not achievable)

Median Income per year (RM100,000) x 4 = RM400,000 (Moderately unaffordable)

Median Income per year (RM100,000) x 5 = RM500,000 (Seriously unaffordable)

Source: NAPIC

Anything higher than 5.1 is Severely Unaffordable. Prices in different states in Malaysia? Please refer to image. The numbers at the bottom is the multiple of median home prices versus the median income. Having seen that, in comparison
Hong Kong is at 20.9 times. Here’s one latest report.
Sydney’s median home price is at
11.7 times. Latest article here.
London’s median home price vs household income is lower than
both Hong Kong and Sydney. It’s at 8.3 times. Latest article here.
In all these markets, the governments continue to assure everyone that a property market crash is unlikely to happen. One latest article posted yesterday on
JLL’s prediction for 2019 says the same thing.

Image source:
https://www.mamee.com/brand.html

What this tells us is that property prices do not correct itself just because it’s under the severely unaffordable category. It will only correct itself when the economy is in trouble which will cause loss of jobs and thus, the rise in number of mortgage defaults and then the selling from desperate home owners start. It also tells us that just because property prices are above 5.1 times the median income does not mean people stop buying properties. People may choose to buy SMALLER sized units to make it affordable or people may choose to buy FURTHER from the city centre in order to make it affordable. This is why some suburbs in major Australian cities are 45km or more from the city centre. This is also why developers will continue to build and will not close shop just because the multiple is already above 5.1 times. Remember. That Mamee pack that was 20 sen when we were much younger is around 20 sen today. The difference is the size. Mamee is still selling today. Happy understanding.

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written on 23 Jan 2019

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It’s impossible to keep up with the richest

Richest will be richer, poorer ones may be poor for a long time unless something substantial happen. I have accepted this fact long time ago. There’s no way that I would be richer than my CEOs (all the three organizations I have worked for and still working) or in fact majority of those people who already own enough for generations. One latest report by Oxfam reported in many medias confirmed this. It said that based on its latest 2015 report, the richest
62 billionaires of the world already owns as much wealth as half of the poorest world’s population.

That’s 62 versus 3.5 billion people.
 Yes, this is happening everywhere in the world and not just within my beloved Malaysia. Go google for related articles even for Singapore, UK or even the US and understand more if you wish.

Oh yeah, Oxfam also reported that 1% of people own more wealth than the other 99% combined. The poorest 50 percent meanwhile saw their wealth dropped by 41 percent between 2010 and 2015. It did not offer any further breakdown but if we assume their earnings being almost the same, it meant that the rising prices might have eroded what they were earning versus what they could afford. One word, inflation. The more important point from this information is this. Do we want to remain within the world’s poorer half? Quickly jot down on a piece of paper, how much did we have in 2010 and how much do we have today, as at end 2015? Minus out all the ‘useless’ depreciating stuffs that we have?

Oxfam proposed the following to tackle this issue effectively. They are to crackdown on tax dodging, to pursue for higher investment in public services and to provide for higher wages for the low paid. Most importantly, close down tax havens tax havens which are increasingly used by rich individuals and companies to avoid paying tax. This has deprived governments of the resources needed to tackle poverty and inequality. There’s no need to start debating about which government would do better or which would do worst. In fact I am very sure that most of us would be able to form a better government than most of the governments of the world, right? Haha.

I think Oxfam is fighting battle they could never win. However, it’s important that we take note of these findings and quickly realise that if Oxfam could not help us directly, it’s best that we help ourselves. Read more books about the different types of investments that is available in the market. Upgrade ourselves to get a promotion for higher pay and thus more investment ‘ammunitions.’ Let’s keep updating ourselves of whatever is happening today and be savvier in whatever we do. It’s tough to change the world, it’s slightly easier to change ourselves. Happy changing.

written on 19 Jan 2016

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Impression U-Thant: Just starting from RM1.3 million or RM1,700 psf

Sometimes we need to have a place where we do not need to drive 45 minutes to arrive, even if it has a mountain behind it and a majestic lake in front of it. We may just need a place which we could go home to when we feel like going home and just need a luxurious pool side to relax and just do nothing. I meant within the KL city centre. Okay, I do not qualify for this kind of lifestyle yet but when there’s a demand for it, then the supply would have to follow. A developer from Melaka, Yong Tai Bhd is entering the property development scene in Kuala Lumpur with their first residential project in Kuala Lumpur called Impression U-Thant. It is a joint development with KOF Holdings Sdn Bhd. As the name implies, this project is in a freehold site along Jalan U-Thant and this is a high-end, low-density condominium project.

There’s a coverage by EdgeProp.my recently.

Yong Tai CEO Datuk Wira Boo Kuang Loon told EdgeProp.my “It is a single-block project with a GDV of RM210 million. It only has 10 floors including the facilities floor on the top level,” There would be a total of 108 units available for sale. Built-up sizes ranging from 782 sq ft to 1,632 sq ft. Prices start from RM1.3 million or RM1,700 psf.

Design.  Impression U-Thant has many facilities which will encourage residents to enjoy both outdoor and indoor recreational activities. Facilities include the barbecue pavilion, the community garden, foot reflexology path, convenience shop, poolside party pavilion, indoor and outdoor gyms, aqua gym, swimming pool, Jacuzzi, social and picnic terrace, sunset bar, and the Pilates and yoga deck.

Dual-Key. All the units within Impression U-Thant comes with a dual-key design, are semi-furnished and equipped with a smart home system.

Location. It’s along the Jalan U-Thant overseeing the Royal
Selangor
 Golf Club and is near the Embassy Row. It is well connected by major city roads such as Jalan Tun Razak.

Boo also shared that he is confident of a 50 percent take-up rate during the official launch on 14th April 2018. The development is expected to be completed by end-2020. He says, “Impression U-Thant is a significant property development for Yong Tai in its pursuit to offer unique lifestyle experiences to its homebuyers. We are confident it will set a benchmark in the property development market with its unique and new offering,”

Yong Tai’s flagship development is in Melaka called Impression City
Melaka
 with a GDV of RM7 billion. It is a 138-acre development comprising residences, hotels, DIY experience centres, commercial hub as well as an international standard indoor theatre with a 360-degree rotating auditorium — the Encore Melaka. ABout Encore Melaka, Boo shared, “Encore Melaka theatre in Impression City is going to be completed this May. The construction for Dawn and Amber Cove is in progress. Terra Square, the shopping mall located next to the theatre, is also under construction and currently open for lease” Encore Melaka is a franchise and the 10th Impression Series from China and, notably, the first outside China.  Do refer to the
full report in EdgeProp yeah.

Happy buying one and enjoying yeah.

written on 14 April 2018

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New stuffs @ Plaza Premium Lounge (even better)

I wrote this article earlier:
A little luxury is easier to get these days
 I think these days, even more credit cards offer these extra privileges; access to Plaza Premium Lounge. I know, there are ‘better’ lounges than Plaza Premium Lounge but I do not wish to pay many times higher for my flight ticket just to enjoy those lounges. I am still carrying these two main cards which I use concurrently; AMBANK World Mastercard and CIMB Preferred Visa Infinite. The advantages for both have changed. One got worse, one got much better. Haha.

Some of the bank credit cards which provides Plaza Premium Lounge access are listed below. Do note that all cards have their own terms and conditions. Some are only in selected airports and most are usually only for KLIA. Some requires you to be travelling OVERSEAS before you could use the access. If there are cards which are much better than below, please share and I will add into the list as well. Please do not ask me how to apply yeah, google for it online. ( None of the banks have affiliate marketing programme with kopiandproperty.com at this moment. 😛 )

The below are the latest photos of a newly renovated Plaza Premium Lounge in KLIA2 Gateway. I just dropped by today.

Briefly, the food choices have expanded. From croissants to doughnuts and pancakes all the way to porridge with condiments, main dishes with rice and more. Latte is at the tough of a button and after meal, get a yogurt please. Beyond just the food.The area is now larger and there are many big LED screens to watch your favourite show. There’s even a chef who will do your eggs just the way you like them. Happy applying for a card of your choice and visiting the Plaza Premium Lounges when you travel yeah. A refreshing shower is possible too!

written on 1 March 2019

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Sellers, market is good. Think about it when you buy.

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Improving from 2019 onwards; means BOTTOM already? :)

This is the assessment from Valuation and Property Services Department (JPPH) director Ahmad Zailan Azizuddin.
Article in edgeprop.my here.
 He predicted that the property market in H1 2019 to be resilient and then followed by a gradual improvement in market activity. This prediction is backed by JPPH’s data which showed positive increments or only marginal declines in the movement of property market activities recently.

Ahmad Zailan said, “In 2018, the residential sub-sector had continued to lead the overall market, with a contribution of 63.4% in volume and 53.7% in value. Residential properties in established areas with efficient connectivity continued to experience capital increases. However, the occurrence of overhang and unsold completed residential properties significantly increased in certain areas which involved mostly high-rise residential units.”

For the commercial sub-sector, there has been a slight improvement in 2018. “The occupancy rates of both purpose-built offices and shopping complexes were encouraging, with most states attaining rates of above 80%. The industrial sub-sector also showed a substantial increase in value in line with the sentiment of Industrial Revolution 4.0.”  He stressed that the government will have to continue its role via economic growth, accommodative monetary policy as well as to provide continuous incentives for the housing sector as this will then help to sustain the momentum in the property sector. The government’s top priority is to ensure that houses are made accessible and more affordable for Malaysians.

He then added something which I agree fully as well.
He shared JPPH’s proposal to the government to have a committee to monitor the cost of development components to see how housing prices can be made more affordable in the country. He said, “I believe it will benefit the M40 and B40 groups greatly. However, the government should not be seen as controlling the price of residential property but to ensure that the housing price offered is more competitive and affordable to all people.”
Article in edgeprop.my here.

When this ‘committee’ understands the cost of development components thoroughly, the government would be able to come up with better policies which can help ensure more Malaysian households own / start to own a property. We will see if this JPPH’s proposal is taken up and implemented. Happy following.

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written on 15 Feb 2019

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Income has to catch up because prices will not fall

When it comes to Personal Finance, it’s down to PERSONAL issues. It is usually not determined by Budget 2019 or the government. For example, I wish my job is easier. However, at the same time, I wish my salary is also higher. Briefly, when someone in a cheaper cost country could do what we do for a lot less, we will lose our jobs. The world is getting smaller and much more connected. Serving customers via phone in an European country does not mean the person on the line has to be stationed in Europe.

I hope I could save more money for my own property in the future. However, I also hope to buy that latest smartphone to have some standard when my peers show me theirs. Unfortunately for most of us, that monthly salary per month could never keep up with the new smartphone prices every year. Assuming we earn RM3,000 per year and the increment was 5%, that’s RM1,800 increase per year. Latest iPhone XS retails for RM4,999. Latest Samsung Galaxy Note 9 retails for RM3,999. Even if we change a smartphone every 2 years, we are still NOT saving any money for property yet.

Property prices have been increasing by around 6.5% per year from the periods of 1990 – 2016. (26 years).  If we assume that it will now slow down and will only rise by 4% per year, then it’s extremely important that our income moves at a faster pace; it has to catch up with the property prices of today. When our income moves faster, we SHOULD have more savings because as demonstrated in the example above, it is usually not about the salary increment. It’s much more about the ‘devil’ in wanting to own something that destroys our potential to save, own a property and start building wealth.

Remember, it’s much better to BUY a property and WAIT instead of the other round. Remember also to push ourselves to earn a higher income. Usually it’s through taking up additional responsibilities and rising up the ranks through working more diligently. A point to note is that based on the examples of all the more advanced property markets all over the world, property prices do not usually fall for long periods of time. They will fall but they will recover and new highs will be reached and then they will fall and the cycle continues. Our income has to catch up because property prices will not fall to a level to match it.

written on 7 Nov 2018

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If income is higher today, will unsold units be cleared faster?

Perhaps this is a chicken and egg situation? Should I believe that the higher our income is, the more affordable the properties would become? Or perhaps AFFORDABILITY drives property demand instead? Of course, if we happened to be earning salaries within the T20 households here in Malaysia and the home prices are usually targeted at the M40 and the B40, then of course the higher the income, the more affordable the home would become. This is assuming the T20 did not aim at the homes targeted at the T20 which will definitely be priced much higher and in the end, the percentage of salary that the T20 will be using to pay for their homes will be almost the same as those buying affordable homes instead.

In brief, if income of Malaysians are higher today, the number of properties unsold and completed should be on the way down. If this is the case, should demand also be picking up? Personally, I think the current issue of unsold units are due to just 3 things. First one is that the property price is really unaffordable to the many households which wanted to buy that home but the bank refused to approve their loans. Fortunately, this is changing. The new launches are now much more affordable even when compared to just a few years back.
 Earlier article here: More affordable launches.

Second one is that households are still stretching their home loan limit to the peak; they do not view cheaper homes. That’s embarrassing (in their minds). They view homes which they believe is the BEST MATCH for their current income level. It’s like “I will buy just ONE home in my lifetime anyway…(untrue!)”  Thus, it’s either they barely scrape through the loan application or they got rejected by the bank. It’s really important to just listen to our former Bank Negara Governor ok? Here’s that earlier article:
Stay safe, buy within affordability and stop bubble building

Third thing is the idea that since property is already so expensive, better not think about it for now. At the same time however, people go for holidays and spent the savings, they bought the latest gadgets to earn the praise from peers and refuse to be seen with a cheaper car because that would tell people that they were not successful. I guess we watch too many movies showing super-duper lifestyle. By the way, in all countries, majority of the population are in B40 and M40 where earnings are concerned.
Here’s an earlier article about B40, M40 and T20.

Think about it. This is not something new. Many personal finance guru said we should spend within our means. if we could afford a RM500,000 home, buying a RM400,000 one would give us space to save more for future upgrades. It’s easier to get the loan approved too. Not buying that RM4,800 phone since our current one is still usable will save us RM400 per month for the next 12 months. RM400 is enough to pay for a property which is RM80,000 higher. Last but not least, that 1.3 litre car second-hand car will not just be cheaper by RM15,000 over the next 7-9 years but it will also mean much lower expenses for petrol too. My personal conclusion? Clearly the issue is not just the market but also us. Happy following.

written on 18th Oct 2018

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Lots of ‘cuts’ for salary earning Malaysians. Positive cuts yeah.

The more we earn, the higher tax we will have to pay. My mother enlightened me on this fact when I complained that I was paying ever higher taxes. If we intend to pay lower taxes, that’s easy. Just ask for a lower salary. 😛 Just kidding. We should earn as high as we could and then try and get as much tax exemptions as possible. Better this way right? Now this is the question for Malaysian working professionals.

Ready to pay that yearly tax for the income you earned in 2019? You have a wife who’s working? What about a wife who’s a housewife? How much could you claim for each child? You had a baby in 2019 and you bought breastfeeding equipments for own use? Yes, that’s a deductible item too! What about parents’ medical expenses? If you are upgrading yourself via a Master degree, is this deductible as well? Please refer to the image below. Courtesy of
Crowe Malaysia
 PLT.

Have a great time identifying everything from the image which will make our final tax payable number become smaller yeah. Just have to remember to be happy every year that we pay ever higher taxes. That proves that we are growing our wealth well. (tongue twister?) Please always remember to protect our wealth with life insurance and medical insurance. The amount payable is going to be small when compared to the premiums to be paid. Be responsible and not burden our loved ones if we suddenly need a lot of cash from them simply because we refuse to buy sufficient coverage yeah. Happy understanding and ‘cutting.’

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Income tax waivers for ratepayers and companies? Already proposed.

Anyone here loves to pax tax? Well, I do like to pay ever higher tax because it also meant that I earn more and more year after year. What about this question then? Do you want income tax waivers? Means whatever tax you are supposed to pay, you pay much lower for one year? Wrong question, right? Everyone’s answer would be a yes. Even for companies, they would love this tax waiver too.

Recently, we also have this question, ‘Would you like the moratorium to be extended another 6 months?” I do not know if anyone would object but moratorium is NOT going to be extended for all yeah. I mean Bank Negara Malaysia will not order the banks to do so anymore. However, our Finance Minister Tengku Zafrul said,
Banks could extend if they wanted to, selectively
. As for income tax waiver, well, it has just been proposed by the National Housebuyers’ Association of Malaysia.

Article in nst.com.my here.
The National Housebuyers’ Association’s honorary secretary-general Datuk Chang Kim Loong said the government should consider wholesome waivers or at the least offer 50 per cent rebates on personal and corporate income tax for the first RM100,000 of chargeable income in the next two years. (He meant for 2020 and 2021 years of assessments)

He explained further that this is needed because the current stamp duty waivers would only, “entice buyers of high-end overhang unsold residential property, benefiting a meagre segment of society in an attempt to revive the economy”. He also did a calculation on how the tax exemption would impact the loss in revenue collection and according to his calculation it would only amount to loss of revenue of about 6.7% and this is manageable because money saved would be injected back into the local economy. He gave many more recommendations, do read the full article here:
Article in nst.com.my here.

By the way, he is right about the money flowing back into the economy. This is because if the tax exemptions were given to the super rich, it would not make such a huge difference to economic activities. However, if given to the right group, the savings would actually be spent on necessary and this will help drive the economic multiplier. Of course, if too much money chasing too few goods, then inflation will rise but I think this is the least of our worries if we look at the unemployment as well as the potential GDP numbers fo 2020 which is most likely will be in the red; negative.

Perhaps the only thing is that we really do need to start being more selective because it’s important to help the ones needed. This is because the loss of revenue would also meant that the government may have less to spend for the groups which needed more assistance. Let’s see how the government would respond to Datuk Chang yeah. I should think it will not take too long because the media would definitely ask our Finance Minister in his next press conference.  Happy anticipating.

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Increase Your Chance Of Getting A Bank Loan  For Your Dream Home

The below article is by PropertyGuru.com.my

You’ve earmarked a property that you really like.

The question is, can you afford it and are you able to get a loan from the bank? These questions are especially crucial when it comes to purchasing the biggest investment and expense in your life.

A home does cost a fortune…so before you jump in, allow PropertyGuru, to guide you through some basics of loan financing and what are some of the strategies to land yourself a bank loan.

Checking Your Affordability Score

A reality check is always required when we aim for our dream home.

And it’s a click away, through the mortgage calculator, which is available at
PropertyGuru
.

The mortgage repayment calculator is able to project the interest rate, loan terms, starting principal payment, monthly payments and total interest payments.

By this, you would be able to know if the property is within reach, or it’s really just a dream for now!

Credit History Says It All

It is important to ensure a clean credit record, as it showcase your creditworthiness to the financial institutions when you apply for credit cards, personal loans, hire purchase loans, mortgage loans, and other loans.

In the event of having a bad credit record, you might end up getting a lower loan amount than the one you applied for or pay higher interest rate than normal. Having a bad credit report may cause you difficulty when you try to get financing for your home, car or any financial product. Therefore, it is vital to keep a clean credit report.

I would like to Purchase a Home, But I Have Limited Credit History

There are some amongst us who live frugally, and all the better if there are no car loan, credit cards or even study loans. There are also entrepreneur who believe cash vs. credit, is king.

However, if one has limited credit history (e.g.: less than a year) (and without the employee providend fund (EPF) contribution or possess a thin bureau (minimal credit repayment history in the Central Credit Reference Information System (CCRIS), it’s a tough situation for banks who rely on credit history to ensure if they are making a right judgement call to grant a loan.

The existence of a credit bureau aids financial institutions in making informed and responsible lending decisions in a timely manner. Information obtained from the credit bureau also helps financial institutions to mitigate the possibility of other issues such as fraud cases.

Improving Credit Score – The Path to Getting a Bank Loan

Having a steady job with stable income would help to improve your credit score, as it signifies that you have a lower chance of missing your monthly repayment. The bank sees you as a low-risk borrower and this helps with your credit score.

If you happen to own a business or variable streams of income, having tangible assets such as real estate, investments and savings will help to improve our credit score as well.

Banks see this as solid signs that we are financially stable, which will then be beneficial to improve our credit rating.

Fixed Vs Flexi Interest Rate

There are two types – fixed rate and flexi rate.

For a fixed rate mortgage, the interest or profit rate is fixed throughout the tenure. Hence, our monthly installments are also fixed throughout the tenure. This gives us stability and peace of mind.

Flexi mortgages have rates vary according to changes made to Bank Negara’s Overnight Policy Rate. When the rate decreases, we enjoy some savings, but we pay more when rates are increased. But, movements are usually marginal.

To find out which strategy is better for you, speak to multiple bankers or financial consultants who can advise you based on your financial situation. We’re all different so the best is to get professional advice, and not just from one single source. You would be able to compare figures, allowing you to negotiate if you need to.

Team Up With the People You Trust

If you’re caught in a situation where you really like what you see, but you can’t afford it. The trick is to partner up.

This would boost our chance of securing a mortgage, and even getting a lower interest rate.

If your income is too low for our desired home, team up with a partner who has an excellent credit history and a higher income than us.

On the other hand, if we have sufficient income but older than 40 years of age, partner a younger person to improve our chance of getting a loan, and even increasing the loan term – this will in turn lower down the amount of monthly repayment.

But remember that this is a big commitment, so only partner up with somebody that you trust.

This is Not My First Property Purchase

For the savvy property buyers who invest in property for wealth accumulation, having multiple loans would be a norm.

To navigate your way through a second, third or fourth property loan financing, it’s always good to check if you have passed with flying colours for the affordability test, also known as the Debt Service Ratio (DSR).

The DSR is derived from two main components, which are commitment, and income, which shows the amount of a person’s income is spent to service debt.

There can be major differences in the DSR calculation between banks, which can be up to 20% difference. This is because every bank has their respective calculation methods for income and commitment recognition.

Once the DSR has been determined, every bank will have their respective guidelines for max allowable DSR threshold. It is typically determined by income level, but may also be affected by net worth, qualifications and age.

Under the current BNM guidelines, the maximum property financing is capped at 90% of the property value. However, if you are a first time homebuyer, you might get 100% financing via the Skim Rumah PertamaKu.

What If I’m Not Around Anymore to Pay the Loan?

Buying a home is a huge commitment and will take the average homeowner up to 35 years to fully repay.

Hence, it should be protected even when you are no longer around.

Mortgage Reducing Term Assurance (MRTA) is a life insurance plan with the decreasing sum assured over time, and it is used just to cover your home loan owed to the bank.

This plan is usually offered by the bank you are getting the mortgage from, as it is used as protection for the bank in case of misfortunes that stop you from servicing the loan.

About PropertyGuru

PropertyGuru is happy to bring you tips, trends and market insight about the local property market. Having served Malaysia, Singapore, Indonesia and Thailand for over 5 years, PropertyGuru is a leading property website in South East Asia, rendering insightful content to over 16 million people across the region.

We tailor make information campaigns to collect data, go to the streets to hear you out, interpret the research, hone in on what’s pertinent, and present you the answers in clear and easy-to digest format so that you are empowered to make confident property decisions each and every time.

We know giving you access is important to you. Hence, we are constantly investing and improving our website and our collaboration with media, and offering bylines such as the above to increase awareness about property amongst the nation.

To find out more about PropertyGuru, please visit:
www.propertyguru.com.my
 or on facebook:
https://www.facebook.com/propertyguru.my

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30% increase in property price? The central bank better be doing something, DRASTIC.

If the average property price in Malaysia goes up by 30% in one year, two things would happen. The ones without a property to their name would complain very loudly and ask why is the government allowing the property price to go up so fast, so high. The ones with a property whose property price went up by 30% would be quiet and smiling happily if they could sell their property at 30% higher.

Fortunately for the ones without a property and unfortunately for those with a property, the 30% increase in property price did not happen in Malaysia. It happened in New Zealand which has managed to keep Covid-19 in check thus far.

Article in nst.com.my
  New Zealand policy makers are battling one of the hottest property markets in the world, with prices surging 30 per cent in the year through June.

The Reserve Bank (RBNZ) plans to reduce the amount of low-deposit lending banks can make from October 1, and will also consider introducing debt-to-income limits and/or interest-rate floors later this year.

In more detail, the RBNZ proposes to restrict the amount of lending banks can make to house purchasers who have less than a 20 per cent deposit to 10 per cent of all new loans, down from 20 per cent at present. For even more details please refer here:
Article in nst.com.my

The measures if property prices do go higher too fast?

Please note, if property prices are rising by a few percent every year, the central bank, in the case of Malaysia it’s Bank Negara Malaysia (BNM) will not be taking drastic measures. However, if property prices move up too fast, it will definitely try to cool down the market.

For example, getting the banks to use net income versus gross income in their loan approval calculations. This has reduced the number of people who could afford to buy and also limited the amount they could actually qualify for.

Another potential measure may be to increase the interest rates because this would definitely make it more expensive to buy a property due to higher mortgage repayments.

There are a lot of other measures which could be taken including even working with the state governments to ensure the developers do not launch ever higher priced properties. However, at the moment, there is not much intervention necessary. The property market is adjusting itself with the demand and supply forces.

Just need to remember that property prices will change if Covid-19 is under control. The reason may be due to the pent-up demand and the slowing down of the construction stages and thus supply into the market because of lockdowns. Happy following.

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Yes, property price is dropping

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Increasing liquidity and maintaining rates

After Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 3.25 percent and reduced the Statutory Reserve Requirement from 4.00 to 3.5 percent, the market sort of turned positive. Well, according to Credit Suisse, BNM is ‘treading a thin line.’ It’s economist Michael Wan said said that if the market interest rate structure is too low, it could result in further capital flows. Due to the anticipation of a slower growth for 2016, BNM actually does not have many options. Reduce rates, it may force capital outflow. Increase rates, that may mean the end of growth with all those with debts currently becoming worse off.

My personal thoughts from these assessments would be that BNM is still doing the right thing currently and all these potential outflows just have to be calculated in. Besides, I personally think this is better than increasing rates. Seriously, with the current market sentiment, even if the rates are increased do we believe Ringgit will appreciate to a level we are comfortable with? I personally rate anything below US$1 to RM4 as comfortable for now. Accommodative stance is needed today. Actually, if we look at the market today, there are already many companies which are more wiling to take in lower margins.

From white coffee to clothes and even new property launches. It’s a good time for consumers. In case no one noticed, the typical pack of white coffee of 15 packs x 36-40gms would be around RM14.50 (all major brands). Today, these major brands are selling at RM12.50 and many times, special offers at below RM11. The not-so-major brands? Well, many are already below RM10. I know because in my office drawer, I have over 22 brands of 3 in 1 coffee for sharing with my colleagues. Yes, I think I have more options than many small supermarkets.

To those who buy polo t-shirts often, the prices are normally RM69,90 or higher. Depending on brand and quality, it can be higher. These days, even the major brands would have special discounts of buy one free one for RM79.90 or even lower. For the non-major brands, it’s even lower. I recently bought two new polo t-shirts for just RM59. For some in-house brands, with their ‘clearance’ sales, a new polo t-shirt can be as cheap as RM24, after 50% discount. RM24 to be worn for 2 years, it’s worth every cent.

For new property launches, there’s no need to start about the special rebates, the renovation packages, the last few units under-market value prices and more. Those in the market for primary properties would know better than me.   The good news for these potential buyers is that with the cut in SRR, the banks would immediately have more funds to lend out. Recently, many banks were offering special Fixed Deposit rates too. All these measures share one common theme; availability of funds for those who needs to borrow and qualified for one.

Of course, for goods which are imports, the prices needed to be adjusted upwards because the ringgit has indeed depreciated so much that we are the worst performing currency last year, even against the Rupiah or the Baht. Hold on, the ride may still get rougher but if we are in the ride, it meant that after the lows, then the ups will come. The worst thing is that we are not in the ride yet and have no idea when we should board the ride. Happy deciding and remember, read more and follow your own analysis as it may be better than majority of the analysts out there.

written on 24 Jan 2016

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Increase of Vehicle Entry Permit and Iskandar property demand goes down?

Sorry. Please allow me to smile if not laugh. I seriously do not think this should ever be the reason why Singaporeans would stop buying a property in Iskandar. There are many other reasons, more valid ones but Vehicle Entry Permit? This was the same reasoning given to me when I decided to buy in Damansara Damai instead of the usual few prominent places like Bangsar, Mont Kiara, Cheras etc. Ok, perhaps the real reason I bought Damansara Damai was because I could not afford all these places mentioned. However, when they told me that I would have to pay RM1.60 toll per day to reach my home everyday. I told them that even if I pay RM3.20 everyday for one year, it would come up to just RM1,168. Considering I can stay there for 10 years, this would be an additional RM11,680 spread over 10 years. They wanted me to pay extra RM500,000 or more today to save RM11,680 over 10 years?

Coming back to the Vehicle Entry Permit (VEP). Assuming this is RM50 per day and assuming the Singaporean buyer comes into Malaysia every weekend in the whole year. This is an extra RM5,200. (RM50 x 2 days x 52 weekends).  If I am a Singaporean buyer who is buying a condo and I decided not to buy because of this RM5,200 perhaps it is best that we do not attract these buyers. Sorry but RM5,200 in Singapore dollar is only S$2,000 and this is spread over one whole year. The truth is, the savings that these buyers would get from having seafood meals with their family here in Malaysia, drive into Melaka for a much better food variety, drive into Ipoh for the best dim sum and dry curry mer and a cup of fresh white coffee would easily exceed the paltry VEP that is being proposed and is being debated currently.

Please do not jumble up two different matters. Whether or not Iskandar is worth investing and if yes, what to buy is a totally different topic from whether VEP would stop Singaporeans from buying Iskandar. The above does not even take into account the huge difference between a HDB flat with not even a car park versus a full facility condo which the Singaporean family can take full advantage of every weekend. It also does not take into account the usual capital appreciation of the said property. Assuming a RM500,000 property and the appreciation is only 1% per year, that is already RM5,000. Until today, I have not yet owned a property in Iskandar. However, it still does not stop me from smiling with the suggestion that with VEP, the demand for Iskandar properties may drop.

written on 31st July 2014

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Increase selling price due to GST? It depends on margin.

I think I have never written about LBS Bina Group (LBS) before this. However, after reading an article recently, I think I want to highlight what its managing director Datuk Seri Lim Hock San said. He said that the new Goods and Services Tax (GST) would definitely affect property developers BUT if LBS’s current profit margin is comfortable, the selling price would be maintained. Of course he does think that some developer may increase their prices by 4% or 5% to cover the GST but for LBS, there are none planned for now unless its profit margin suddenly dips. My earlier article here:
Property prices up due to GST? Developers should just absorb it.

I think he is being very frank about how the market actually works. No developer would increase their prices just because of GST. There must be some underlying factors. LBS said they would have launches worth up to RM6 Billion within the next 3 years. For a Malaysian developer, this is definitely no longer a small number. Their projects are concentrated in Selangor (60%), 25% (Johor) and 15% (Pahang). Current landbank size is 2,715 acres with a GDV of RM22.5 Billion and this will keep them busy for the next 10 years. LBS also has a joint-venture with a Chinese government-linked company for development of a 264 acres land with a racing circuit (Zhuhai International Circuit). For now, approval is still pending.

Of course, no developer would react based on just its margin. It would also take into account the market situation. For certain hot locations, it would continue to be easy. For newer locations, better be prepared with a lower margin first before increasing them slowly later. It may be foolish to launch first few blocks of a 10 year development at prices so high that these first few blocks all FAILED to sell. Sometimes, these do happen. Just few days ago a friend told me of her friend being offered a condo for RM500psf. It seemed okay except that this particular project was advertised at RM800psf previously. Funny? Not really, just the wrong strategy in the beginning, perhaps due to wrong timing. Happy buying.

written on 12 Apr 2015

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Increase in stamp duty delayed. Support for property market?

The stamp duty for property transactions above RM1 million was not welcomed by the market. Of course, the target was not the B40 or the M40 households but this will subdue the number of potential transactions from the more experienced investors and when the numbers suddenly drop, the first-time home buyers would definitely lose confidence and may delay their purchases further. It’s their first time, they would not be able to act logically, not yet. The stamp duty was supposed to start from 1st January 2019. I think many must have made known their views to our Finance Minister Lim Guan Eng.
This was reported in Edgeprop.my of his latest views.

The increase of one per cent in stamp duty for over RM1 million properties are now effective July 1, 2019. In a statement today, the Finance Ministry said this is to encourage the sustainability of activities in the real estate sector. Finance Minister Lim Guan Eng said the Pakatan Harapan government was very concerned and fair in determining a sufficient time frame for the transfer process to be undertaken in the interim before the new stamp duty becomes effective. He added, “As announced in the 2019 Budget, the government had agreed to grant a 100 per cent stamp duty exemption to first time house buyers for properties priced between RM300,000 to RM1 million.” As for houses priced below RM300,000, the stamp duty will be exempted for sale and purchase executed between Jan 1, 2019 to Dec 31, 2020. he also said the exemption of the stamp duty is aimed at continuing to encourage first time house purchases by Malaysians, improving the purchase of unsold units from developers, as well as boosting the property market.
Full report in Edgeprop.my here.

Whether this will boost the market or not will be known soon. When everyone sees everyone else is buying, the buying will continue. If everyone sees everyone waiting by the sidelines, then the waiting starts. I personally do not think many Malaysians are going to be out of job soon which meant that their ability to buy remains intact. My advice? Buy if we have enough downpayment and don’t if we need lots of help from everyone just to buy that unit which we will still have to sweat as soon as interest rates start creeping up. Happy believing.

written on 29 Dec 2018

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The home we want is usually never affordable

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Increasing cost of living a certainty

During one of those political debates many months back way before 509, I told a super confident friend that whether the government changes or not, ringgit’s movement is not going to be dictated only by what happens locally. It’s a currency which is traded internationally and unfortunately it’s no longer just trade driven but sentiment and expectations driven most of the time.
Earlier article here.
 He argued that this was all due to that one person and it’s connected to 1MDB. If only solving one thing can solve everything…

Article in TheSunDaily.my here.
  Domestic Trade, Consumerism and Cooperatives Minister Datuk Seri Saifuddin Nasution Ismail shared that the depreciation of ringgit against other major currencies has contributed to rise of the cost of living in Malaysia. He said, “The movement of currency is beyond our control, but what we can assure here is that we will contain this problem and assist the rakyat.” The government will focus on six areas to reduce the cost of living.They are food, housing, utilities, transport, education, and healthcare. He specifically mentioned that extra focus would be given to the B40 (low-income segment). This will start with the launch of the food bank where supermarkets, restaurants and hotels throughout the country will donate excess food to the bank, who in turn would distribute the edible items to the underprivileged B40 group. He also said that the ministry will draft an enactment to govern the formation of a Food Bank in the country, using models applied in France, US, Australia, UK and South Africa as references.
Article in TheSunDaily.my here.

Courtesy reminder to everyone who puts the currency as the one to blame for everything yeah. Ringgit has depreciated by 2.9% for 2018.
Here’s that latest article.
 Assuming B40 uses half of all their salaries to buy only imported goods, this may be something like RM3,000 x 3% = RM90 per month. The Bantuan Sara Hidup is enough to cover this ‘deficit.’  What’s more important is however to raise the qualifications and employability of these B40 households. Higher FDIs meant more employment and this will result in more higher paying jobs. Then,
teach financial awareness so that they could manage their money better too
.

Remember, they must have a roof over their heads which they own.
Earlier article: Else, they will always be in poverty. Examples abound even in advanced countries.
 That RM90 savings we talked about above is NO MATCH for the rental which a poor household have to pay every month. This is why they remain poor.

Yes, I remain committed to my thought that Ringgit is undervalued. We have trade SURPLUSES okay versus THAT country with super huge trade deficits and yet blaming everyone else except trying to change itself… Happy following.

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written on 27 Dec 2018

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Increasing prices for foreigners will ‘push’ developers to build more affordable homes?

Do we know how many percent of the property transactions in Malaysia were due to foreigners? (non-Malaysians). Is it true that foreigners are buying too many properties in Malaysia and thus pushing up its prices? By the way, foreigners are buying into Melbourne’s properties in huge numbers.
Earlier article here:
Foreign purchase of Melbourne’s properties

According to Real Estate and Housing Developers Association Malaysia (Rehda) president FD Iskandar Mohamed Mansor, only 1 percent of the total property transactions in 2017 involved sales to foreigners. He said that the figure was based on information from National Property Information Centre (Napic). Valuation and Property Services Department (JPPH) director-general Nordin Daharom had been reported as estimating some 300,000 property transactions for 2017. This is the full article for
reference in FreeMalaysiaToday: Only 1% of 2017 sales went to foreigners
  Since foreigners are not really buying that many properties currently, plus the floor price of RM1 million, are there any actions we can take to ‘discourage’ them further? (Assuming they are the ones pushing up prices)

The government may increase the minimum property prices for foreign buyers. The Housing and Local Government Ministry secretary general Datuk Mohammad Mentek said, “The move to review the floor price would give local potential buyers a wider opportunity to own a property in Malaysia. Also, due to our foreign currency exchange rate, the threshold is actually quite low if we consider the current economic condition. To make a comparison, RM1 million is currently at around US$250,000.”
This is the full article in EdgeProp.my
  The reason to do is to ‘encourage’ the developers to focus on affordable homes instead. He said that the government wants them to focus on building houses for Malaysians. However, there was no timeline mentioned for the introduction of this new increase. Currently foreigners could only buy resiential properties above RM1 million except for those in Penang Island, Perlis, Melaka, Kedah and Sarawak.

Personally, the government must intervene in the market because availability of affordable homes will not just happen. Developers have an obligation to their owners, their shareholders to earn sufficient profits so that dividends could be given. Imagine building 1,000 units of affordable homes and trying to sell them versus building just 300 units of not-so-affordable homes and trying to sell them. The effort needed for both are very different. This is why the government must step in. For example, some subsidies, some tax incentives and perhaps even joint-ventures. However, increasing the floor price for foreigners? That will not do much in reality because RM1 million homes are really not something majority of Malaysians could afford. In fact, if we look at even the T20 group, seriously, most of these group would still not be able to afford that RM1 million home. Please focus on the necessary yeah. Happy buying.

written on 11 July 2018

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Increasing sales for Eco World. To hit RM6 billion for 2019. How?

I think this article explains what I have been explaining to all my friends.

The market sentiment is bad, everyone knows.

However, when the right product at the right location and the right price comes alone, the demand will still be around.

It’s like the whole smartphone market is not growing much but imagine iPhone drops its price by 30 percent…? 😛

Article in edgeprop.my here.
 Eco World Development Group Bhd expects its “Home Ownership Programme with Eco World (HOPE) campaign will help it hit RM6 billion in sales this year.

(EcoWorld) President and chief executive officer (CEO) Datuk Chang Khim Wah said, “We raked in RM2 billion worth of sales — 1,800 residential units via the #OnlyEcoWorld campaign — and we still see people coming to our sales gallery to know more about our residential units.”

There are two options under this campaign for the buyers.

The “HELP2OWN” (H2O) would allow buyers to purchase residential units via a mortgage plan while for the second option,
The “STAY2OWN” (S2O), EcoWorld would allow buyers, particularly first-time house buyers, to rent its product and eventually own the house after one or two years.

The second option would be facilitated via a collaboration with Malayan Banking Bhd, under the Maybank HouzKEY scheme.

“Buyers might have an issue in placing a down payment for a house and may require an extra two or three years before they can buy a house, hence the S2O option would be useful to them.

Maybank Islamic will hold the ownership and base on the monthly rental fee, they can actually own the house,” Chang added.

As for the supply overhang, Chang said that Eco World did not face such challenges.

Eco World’s total land bank stood at 3,288.64ha with a total gross development value of RM87.5 billion.
Article in edgeprop.my here.

Campaigns are great to get people to go the sales gallery.

Perhaps one important factor which Eco World has done well is to equip its sales staffs with the right skills and trainings to handle the potential customers.

Yes, I have personally been served by such a staff before and I have also been served by sales staffs who knows nothing else about the property market except to repeat what is in the brochure.

More importantly, if the demand is truly non-existent in the market due to some circumstances, then regardless of the campaign(s), nothing gets sold.

The sooner we understand this, the better the sentiment should become. Happy following.

written on 24 Jan 2019

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Increasing stock, Increasing vacant units and HDB prices dropped 6 months consecutively

I travelled to Singapore recently for a business trip. As usual, Singapore maintains its neat, clean and everything smooth image as soon as I touched down. I could see new flats being built and even a condominium being built right across the street from my office. I think the market must be doing well. I met a friend in the evening and we spoke about the property market in Singapore. He told me that he was actively looking for a HDB flat because the price has softened. He said the major reason was because many of these owners were upgrading due to the softening prices for the condos. There were many completed units which is still vacant. He asked me about my opinion. I told him, while I may not have a property in Singapore but I asked him, how many % of his colleagues own a home. He said, for the married ones, all. For the single, majority not yet and many are staying with their parents. I told him, ‘you have your answer’. He smiled and said, that’s my thought too.

In terms of actual numbers, in an article in PropertyGuru, it was pointed out by a Savills report that the vacant private homes in Singapore is rising continuously. It rose 10.3% from 19,284 units in Q1 2014 to 21,268 units in Q2 2014. Vacancy rate meanwhile rose to 7.1% from 6.6% in Q1. The reason? Increasing stock is one reason. In fact, as at Q2 2014, there were 297,998 available private homes across the island, 1.6% higher than the 293,283 units in the quarter before. One positive point is that leasing demand remain strong in Q2, with rental deals reaching a record of 15,503 transactions or a 12.2% increase a quarter before. Some of the completed units include The Lakefront Residences on Lakeside Drive (629 units), Foresque Residences on Petir Road (496 units), Waterfront Gold on Bedok Reservoir Road (361 units) and The Greenwich on Seletar Road (319 units), Silversea on Marine Parade Road (383 units), Sophia Residences on Sophia Road (272 units) and Cyan on Keng Chin Road (278 units).  Savills expected the vacancy rate to increase even further with more impending supply.

According to another report by Singapore Real Estate Exchange (SRX), prices of previously-owned Housing and Development Board (HDB) flats slipped 0.9 per cent on-month in July. Total decline since beginning of the year is 4% and it was also the sixth consecutive month of price decline.

The amazing thing about Singapore is that all these information are available transparently down to the exact number of units. Thus, for any investors or buyers of their first home, it is so important to have this information. I think my friend would be able to get a good deal. He said he has viewed a few but has yet to offer. He was confident time is still on his side. With the prices of private homes softening, upgraders would have to let go off their HDB units and he would have his chance. Too bad, I earn RM, or else I would love to view and perhaps get one unit end of 2014 or even Q1 of 2015. Then again, I think I think with my familiarity with KL / Selangor perhaps my opportunities are wider. I hope my friend would invite me for his house warming then.

written on 28 Aug 2014

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Covid-19 update. Rising Infectivity Rate and Vaccinations for 5-12 coming soon.

What is Infectivity Rate?

Infectivity Rate means how fast the Covid-19 infection is growing. A number below 1 means it’s slowing down and the recovery is faster than new cases. A number above 1 means it’s spreading very fast and the number will rise every day. While the current number is still below 1 BUT it has been rising everyday and this is something we need to be worried about. I do feel that people are more relaxed but get our facts right, Covid-19 Delta variant is still around…

Article in nst.com.my
  Malaysia’s Covid-19 infectivity rate (Rt) continued an upward trend with a Rt of 0.94 as of Wednesday. The Rt was 0.91 on Tuesday, 0.89 on Monday and 0.88 on Sunday.

Health director-general Tan Sri Dr Noor Hisham Abdullah said Negri Sembilan Rt remained at 1.02, highest among all states, followed by Kuala Lumpur (1.0) and Melaka (0.98).

Rt in Putrajaya stood at (0.96), Selangor (0.95), Sabah and Kedah (0.92), Johor (0.89), Penang, Pahang and Perlis (0.87), Terengganu and Kelantan (0.86), Perak (0.85) and Sarawak (0.84). Please do read the full article with more details here:
Article in nst.com.my

When will the 5-12 year olds be vaccinated?

I am still worried for my daughter and son, both are below 12 years old as both of them are unvaccinated. Furthermore, they will go back to school and nursery soon and my son will start primary school next year. There is a good news. It has been announced that children aged 5-12 will be vaccinated. There is no timelines yet but if we look at the 12-17 which is now at 80% or higher, it meant that the 5-12 vaccinations should be starting very soon.

Article in freemalaysiatoday.com
   Health minister Khairy Jamaluddin today affirmed that Putrajaya will go ahead with its procurement of the Pfizer-BioNTech Covid-19 vaccine for children aged five to 12.

This comes after the US Food and Drug Administration (FDA) endorsed the vaccine for children two days ago.

He said, “With the FDA panel recommending Pfizer jabs for five to 12-year-olds, Malaysia will go forward with our procurement of Pfizer for kids. We will also look at other options like Sinovac.”

Recently, a medical panel of US government advisers endorsed the Pfizer Covid-19 vaccine for those aged five to 11, paving the way for younger children to get their shots. The FDA, which convened the meeting, is expected to give its formal green light soon. Please do read the full article here:
Article in freemalaysiatoday.com

Wear Masks please

In the means time, stay alert and always be careful. Many countries which showed good progress have started to see a higher number of infections recently. Fortunately, we are required to wear masks here. That’s at least another extra layer of protection.

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When inflation hits highest in 20 years!

Everytime our favourite noodle increases in price, we usually would accept it (or some of us may decide to switch to another shop) and continue going back because we know the price was raised because of inflation. By the way, increasing price does not necessarily because of inflation all the time. Inflation happens because the demand is more than the available supply and thus prices increase to balance the demand and supply.

Theoretically, when prices go up high enough, the demand will reduce and if supply is more than the demand, then the prices are supposed to drop as well. It does not usually happen though. Prices, once they are up there will usually stay there and wait a while before moving up further. Ask ourselves. If we bought a property, would we sell it lower even when people kept saying that there’s an overhang property market today?

Just in case you like to know, the inflation surged to highest in the US over the last 40 years as well. As reported in the media.
Read it hereUS inflation surges to near-40 year high, testing Biden

Article in nst.com.my
   Michelle Marquardt of the Australian Bureau of Statistics said this about Australia’s inflation rate. “The CPI recorded its largest quarterly and annual rises since the introduction of the goods and services tax.”

Australia’s annual inflation rate hit 5.1 per cent in the March quarter, the highest recorded since 2001 as per official data.  The rising cost of living has been a key issue in the election campaign and the conservative Liberal government Wednesday handing a one-off Aus$250 payment to millions of Australians.

Unaffordable housing has become a hotly debated subject in Australia, with mean house prices hitting Aus$920,000 — and Aus$1.2 million in the most populous state of New South Wales — according to the statistics bureau. Please do read the full article here:
Article in nst.com.my

Yes, even Malaysia may have a rate increase to stem inflation

Here’s that earlier article:
Interest rates will rise in H2 2022. Let’s be ready and be happy too
. When inflation is high, central banks will increase the interest rates with the hope that more people will put the money in bank instead of using it. Plus the fact that when interest rate goes higher, people have less incentive to buy a property or a car because the repayment will be higher when the interest rate is higher. When demand for goods and services go lower, then the supplier will be willing to reduce the price and this is how inflation can be stopped from going higher even if interest rate alone may not push down prices.

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What happens if inflation in Malaysia hits 6.2%?

According to Investopedia.com –
 “Inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising.”

Briefly, this means that if our earnings stay the same and the cost of goods and services continue to rise, we would afford fewer and fewer things with every passing year. It also meant we would just need to work ever harder to get the same amount of money just to afford the same thing we could afford a year ago.

By the way, inflation is not all bad yeah. At least it signifies that the demand for goods and services are existing or maybe even increasing too fast for the supply of goods and services to keep up. To increase supply, more people would need to be hired. When more people are hired, they would have salary to spend. As you can see, inflation does turn the economy around. We just need to ensure it’s not so high that it crippled the economy instead.

Let’s look at all the things which could happen if inflation hits 6.2% per year.

Latte Price? (
I drink one per day and still save money, read here)

Imagine your favourite latte in a nearby cafe rising in price by 6.2% every year. That’s RM15 rising to RM15.93 per cup next year. (most probably rounded up to RM16) A year later, it would become RM16.92 (most probably rounded to RM17) Not a lot it seems but if you drink one per day, that’s an extra RM365 every year and then extra RM730 two years later.

Wow…  How much is RM365? That’s a return flight from KL – Langkawi. So, do we drink that latte or go for a short vacation instead? When it’s RM730 per year, that’s the flight as well as 2 nights accommodation in a 3-Star Hotel…  6.2% increase in latte price is a lot.

Property Price?

Now imagine property price rising by 6.2%. Oh dear… RM500,000 property would become RM531,000! An increase of RM31,000 per year is crazy! Monthly, that’s an increase of RM2,583.

Now imagine another year later and it’s going to become RM563,922! Yes, that’s close to RM64,000 within just 2 years. This is why people with property will smile if inflation is supporting them and people without a property would now frown because it’s tough to keep pace with over RM30,000 price increase every year.

How many people has salary increment of RM31,000 per year or RM2,583 per month? Hardly anyone I know. That’s why buying a property is usually via a mortgage versus buying by paying cash.

Oh yeah, where did this 6.2% come about? It’s from the largest economy in the world which would be surpassed by China in a few years’ time. Let’s also understand why inflation may happen and what are the steps which governments could take in order to tame the inflation.

Article in theedgemarkets.com
  US President Joe Biden said his administration was looking for ways to reduce energy costs amid a broader increase in inflation.  Consumer inflation data on Wednesday showed prices were rising at a 6.2% year-over-year rate, their highest level in three decades.

Phil Flynn, Price Futures Group senior analyst said, “There’s, no doubt, more pressure on the administration after the inflation reading numbers today. There’s a growing concern the Fed may have to go back to acting more aggressively on a rate increase, so that’s given the dollar a rally.” Do read the full article here:
Article in theedgemarkets.com

Inflation and Interest Rate’s Relationship?

When inflation is low… usually it meant that the economy is also not doing too well. The central bank, in this case either the Federal Reserve in the US or Bank Negara Malaysia (BNM) would ensure the interest rate is accommodative. This is when they will try and keep the rates as low as possible. When the interest rate is low, more people would prefer to invest their money versus keeping it in the bank.

However, when inflation starts to go higher or in this case, too high for comfort, then the central bank will tweak the rates upwards. This is what the Federal Reserve is now contemplating. This is also why there’s a sudden interest with US Dollars. Well, if the pressure is just too much, then our BNM may also have to take a similar step next year. In the mean time, our inflation is not at 6.2% but yes, it’s moving up and it was 2.9% in October 2021.

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Get ready to LOSE a lot of our money because of inflation

Inflation effect is real

Recently, it has been revealed that many developed countries are suffering from double digit inflation and that’s one major reason why they kept increasing their interest rates in order to tame inflation. One example is the U.S. The interest rates have been raised to the most current 3.8% from an average of 0.9% in 2020. It’s 4x higher versus that starting point. With all these expectations, the US$ continued to chalk new highs versus all major currencies except those which is pegged or linked to it.

Why must interest rate be raised to tame inflation?

When rates are raised, there’s a higher chance that people would prefer to keep their money in the bank, stop speculative buying which would then tame the inflation as the demand for goods and services slow down and the prices will not keep getting higher; inflation.

The reason why central banks kept raising rates is because the above was not yet working and people continue to spend their money excessively. I hope they the U.S would stop soon because many home owners with loans / mortgages would be struggling to pay their repayments if the rates kept rising. In fact, people may think buying a home is just too expensive unless the home owner reduces their selling price instead.

Is raising interest rate working?

Well, if it works very well, then it is supposed to slow down the price increase or even cause the price to drop. The reason is because there are less demand for goods and services and even properties. So, the very least is that inflation will slow down tremendously and prices are supposed to stop rising too. However, this may be a double whammy for property owners yeah. Why is that so?

Interest rates up meant that the monthly mortgage is up. Homeowners must pay more.  However, they may not be able to sell their home at a higher price because many people do not want to buy because the interest rate is inching higher. They are worried that if they buy now, what if the rates kept rising?

Low interest rates is also not good too

When rates are low, everyone thought it is cheaper to buy. Ahem… when everyone thinks the same, then everyone would buy more. That’s the start of a speculative bubble and in fact this will always be one potential bubble. Another reason it is not good is for depositors of fixed deposits. The rates they earn will be so low that it may not be enough for them in the future since inflation may still be higher than the returns from the fixed deposit.

This is why investment is really a must

Without investing our hard earned money, there is no way our hard earned money could work harder to earn us more money. Keeping it as fixed deposit is still better than putting the money under the bed yeah. Meanwhile property is the only investment which will rise with inflation. Cost of materials go up, cost of land goes up, cost of labour goes up and this would meant that the prices today could not be maintained for tomorrow. This is why property is said to be a hedge against inflation.

Happy understanding.

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