The Malaysian Property Dilemma

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Re: The Malaysian Property Dilemma

Postby dariofoo » Thu Jul 26, 2012 12:37 am

Roy wrote:Aren't newspapers suppose to have fact-checkers? Fact checking may be optional for political news but certainly someone should be checking the figures for business news right?
:chef:


Hardly counts as business news. More like an opinion piece with his personal biz ad at the bottom. It links to a paying site. :problem:
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Re: The Malaysian Property Dilemma

Postby Property lover » Thu Jul 26, 2012 10:36 am

Roy wrote:Think I figured out where he got the "47.8% decrease" figure:

http://napic.jpph.gov.my/epsKeyStatisti ... indowsnpbj

The change in "Total Value of Transactions" dropped from RM53.32 billion in 1997 to only RM27.9 billion in 1998 which is a -47.7% drop actualy.

It just means that the total WORTH of all properties transacted dropped by 47.7%, not the PRICE of property

:gun:

Aren't newspapers suppose to have fact-checkers? Fact checking may be optional for political news but certainly someone should be checking the figures for business news right?

:chef:


Thanks for sharing..

I don't remember that bad also... I saw developer held back launches during that time and u could actually bargain for discount.... but not 50% drop... Perhaps some isolated cases, the most....
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Re: The Malaysian Property Dilemma

Postby Roy » Thu Jul 26, 2012 6:56 pm

Property lover wrote:
Roy wrote:Think I figured out where he got the "47.8% decrease" figure:

http://napic.jpph.gov.my/epsKeyStatisti ... indowsnpbj

The change in "Total Value of Transactions" dropped from RM53.32 billion in 1997 to only RM27.9 billion in 1998 which is a -47.7% drop actualy.

It just means that the total WORTH of all properties transacted dropped by 47.7%, not the PRICE of property

:gun:

Aren't newspapers suppose to have fact-checkers? Fact checking may be optional for political news but certainly someone should be checking the figures for business news right?

:chef:


Thanks for sharing..

I don't remember that bad also... I saw developer held back launches during that time and u could actually bargain for discount.... but not 50% drop... Perhaps some isolated cases, the most....


There will always be isolated estreme cases, but the way its written gives the impression that its something that happend across the board.

I'm very surprised that a mistake like that can be made by a Registered Valuer, surely for anyone who was in the industry during 1997-1998, such a high figure wouldnt sound right.
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Re: The Malaysian Property Dilemma

Postby ilhamster » Thu Jul 26, 2012 7:25 pm

Good Job!..does anyone involved in transactions from that year can validate the numbers further? :clap:
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Re: The Malaysian Property Dilemma

Postby centaline » Thu Jul 26, 2012 9:33 pm

The article did mention about demand and supply.

However, it would be more interesting to see a chart on correlation of property prices and money supply.
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Re: The Malaysian Property Dilemma

Postby Roy » Fri Jul 27, 2012 1:17 am

I was still "young" during 1997-1998, but my feel was prices in KV dropped 10%-20% due to some forced sales, but actually bounced back by 2000.

Extreme cases would be in Bkt Beruntung, but even there you're looking at 30%-40% drop. No recovery though.
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Re: The Malaysian Property Dilemma

Postby ismina73 » Fri Jul 27, 2012 7:55 am

Good chance we can buy underwater property fro
motivated seller..
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Re: The Malaysian Property Dilemma

Postby Roy » Fri Jul 27, 2012 8:44 pm

ismina73 wrote:Good chance we can buy underwater property fro
motivated seller..


In Malaysia a bit tough to buy underwater property (Loan outstanding > market price) compared to how it was in the US during subprime.

In US, many Underwater home owners were given option by bank to short-sell their houses, meaning the bank allowed them to sell the property and the bank only take whatever net proceeds were left over after closing cost and agreed to writeoff the rest of the outstanding owed.

Example:

House value before crash = $500k
Bought at 90% financing, loan = $450k
House value after crash = $400k

So say the bank agrees to a short-sale, and the price they are able to get is $350k after closing cost (agent+legal fee), the bank only takes $350k and writes-off the rest of the loan.

In Malaysia, there is no such procedure, so if your house is underwater, and you sell for < the outstanding loan amount, then you have to top up the balance to pay the bank and also pay the agency fees and other related cost. Therefore when in this situation and the seller no money, property will go to Auction.

From my understanding, even if go for auction and the price they get is below the outstanding loan, you will still owe the bank the balance. They can still file bankrupcy against you.
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Re: The Malaysian Property Dilemma

Postby ukulele » Fri Jul 27, 2012 9:13 pm

the motivation of a seller may not necessarily derive out of desparation.. we discussed this before, some are just willing to let go at lower profit even in a seller-condusive circumstances..

on the macro, negative gearing is one part of it only, between the value and credit extended i.e. 1st party lender and borrower.. sub-prime was a different set of problem altogether, the permutations involved when mortgages are bundled-in and being traded as instruments.. this has got some implication to the recovery process of the western world..
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Re: The Malaysian Property Dilemma

Postby Roy » Fri Jul 27, 2012 9:28 pm

ukulele wrote:the motivation of a seller may not necessarily derive out of desparation.. we discussed this before, some are just willing to let go at lower profit even in a seller-condusive circumstances..

on the macro, negative gearing is one part of it only, between the value and credit extended i.e. 1st party lender and borrower.. sub-prime was a different set of problem altogether, the permutations involved when mortgages are bundled-in and being traded as instruments.. this has got some implication to the recovery process of the western world..


During sub-prime, property prices didnt only drop because of people who couldnt afford to pay their sub-prime mortgage. Many "prime" borrowers who could still afford to pay their mortgage also stopped paying because their house was already "underwater". For many of these borrowers, it made more financial sense to stop paying their mortgage and short-sell their house than to continue paying their monthly installments.
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