Penang residential prices to rise 8%
RESIDENTIAL property prices in Penang are likely to rise by 7% to 8% by the first half of 2013 due to the steady demand and a stronger gross domestic product (GDP) projection for 2013.
According to the latest Finance Ministry report, the GDP forecast for 2013 is between 4.5% and 5.5%, riding on the growth in the agriculture, construction, mining, manufacturing, and services sectors.
Raine & Horne Malaysia director Michael Geh says new properties launched with a bundled-up financial package would be most popular.
“This is why this segment will perform better than those properties in the sub-sales market, where the buyer and seller have to do more paper work,” he says.
Currently, the price for terraced property in prime locations such as Tanjung Bungah and Tanjung Tokong is around RM1.2mil to RM1.5mil.
The selling price of development land in prime locations ranges between RM450 and RM1,000 per sq ft.
“The stringent guidelines for housing loan, now based on the evaluation of net income rather than on gross income and the difficulty in obtaining the desired valuation report will mean that the sales of condominiums in the secondary market will face more challenges,” he says.
The new guidelines from the Penang government for foreign purchasers to buy only high-rise and landed properties priced from RM1mil and RM2mil respectively will impact adversely on foreign property transactions in Penang, according to Geh.
“More foreigners will prefer to rent than to buy, thus one can expect rental yield in the state to increase gradually,” he adds.
According to the latest National Property Information Centre’s (Napic) property market report, total transactions for residential properties in Penang hit around 18,316 for the first nine months of 2012, with a transacted value of RM5.2bil.
The whole of 2011 saw the state registering some 30,674 residential property transactions valued at RM7.7bil.
Geh says the total volume of property transacted for 2012 was unlikely to catch up with 2011′s.
“That the total value of property transactions has risen although the volume transacted has decreased is not surprising, as this is normally the trend,” he adds.
PPC International Sdn Bhd director Mark Saw says the lower volume of transactions may be because housing loans are harder to obtain nowadays.
“Another reason could be that the preferred choice of properties might not be available,” he says.
Malaysian Institute of Estate Agents deputy president Siva Shanker says Malaysia is unique as property prices have not dropped following the decline in transactions.
“In fact property prices will hold and then shoot up when times are good again,” he says.
Penang Master Builders & Building Materials Dealers Associationpresident Lim Kai Seng says construction cost will likely be maintained in the first quarter of 2013.
“Although sand prices have gone up, the smaller volume of construction jobs available is offseting the impact of rising sand prices.
”Due to the competition for jobs, construction cost will be maintained,” he says.
The price of sand per load of 30 tonnes is around RM1,200, compared to about RM800 in early 2012.
Since the price of cement went up in August, the cost of construction has increased by about 3%, Lim says.
Source: The Star
Piang! Those who already own properties… HO SAY! Those who still not bought…. SI LIAO!
So surprise liao.. Every year price up! We can never own property after few yrs… Scary liao!
hee hee hee, I never see so many boosting “news”/prediction during the booming year of 2008/2009. I think that 2208/2009 booming time investor club will quietly bulk buy properties. These days the club is shouting everywhere for new bloods to join the scheme..
Raine & Horne Malaysia director…..if they don’t boosting. Where they can get their livings…
About Us
Incorporated in 1982, Raine & Horne International Zaki + Partners Sdn. Bhd. is a firm of Chartered Surveyors and Registered Valuers with professional practice emphasis in property valuation, investment and project management, property management, real estate agency and property consultancy.
Better be SUPER nice to Papa and Mama so at least they can give their house to you…. but hurry… your other brothers and sisters will have the same idea!!! Papa and Mama very happy now…..kids very KWAI…. Very THIA EWA!
@Penang Homes
Hahaha, agreed but if I don’t think we should go THIA EWA because of house, they are the one that make sure we grow up properly (for those who have good parents). But the problem now is the price has over over developed. Now most people prefer to stay with parents.
Does it mean if we buy now, our house price will increase 7-8% by July? They should quote a few properties that will increase 7-8% so that we all can judge them later.
Where are all the property “EXPERTS” ? “Bubble or Bubble gum” in 2013 ?
So it must be in 2014 ?
When all those property experts keep on saying good things about the property market, be caution. If it is really that good, they will keep the less people know the better.
Sorry Bryan… your theory only works for the stock market….. the property game is different…. the more poeple know, the higher the hype, the faster it shoots up….. Khee Kuan Kuan!! Ka Liao Lang Tharn Looi!!! Happy Chinese New Year! Chua Nee Lai Liao!!
hua hi hua hi…..
So, how many units you invest today? Sure make money one….. haha!
Not one but more…. Kong Hee Huat Chye
Largest drop in KL shares since Sept 2011 …
The country’s benchmark index stood at 1,635.63 points at the close of trading
today, down by 40.81 points from this morning ….
property burst next … coming soon …
“property burst next … coming soon …” so, so clever ?
@Aah Dog
Come on lar, every time when near to election the share price will drop as usual. Nothing special.
Unless there is war, else property price will not drop… please accept the fact
Heeheee, share prices will drop after election but not property coz u know why land is scarce, just like gold. During the economic down turn, prices will drop like hella but gold prices it will increase tremendously. How can u compare 1997 and 2013??
Share price dropped 2% already acted like the world will end tomorrow. Your risk profile is really low la. Even you cut loss after dropping more than 20% is still consider medium risk by investment standard.
Same goes to our population, we are growing from estimated 20millions 1997 to 30 millions 2013. Im just curious how can u compare with earlier years when our population rate is growing at a rate of 3-5% every year and do you think that the current supply is sufficient to meet the current demand?
@Lolx
If not compare with historical price, then only count on your prediction or some housing agency’s boosting prediction? Penang housing already oversupply 20% (Invest Penang’s official data), and you count the number of new launched projects/units last 2 – 3 months, definitely faster than the population growth…
Must consider outstation investors and those from ‘kway hai’ SG, HK and China not forgetting Nippon
@Penang Homes
Yes, soon Malaysian force to rent house from foreign investor
Come on lah, foreigners only can buy >RM1million properties.. the average family only need ~1000sqf apartment which is way over supplied.
Oversupply still can increase 8%, can’t imagine the price if under supply.
Penang land is scarce and the people has strong holding power. We might have oversupply on apartment/condo but it is getting hard to get landed free hold, especially 2 storeys. So if the price go down, I think condo/apartment will be the first to hit. But I sure hope the price will maintain, if not go up. The 8% is highly possible for freehold landed in penang.
If you invest long term, like timeline>20yrs, then you don’t really care about the price drop. In the long term, historically, real estate always go up. I try to invest with my kids in the pictures. I could not imagine how they could afford any property twenty years from now, when they first start to work. Historically in Malaysia, the starting salary of fresh grad is lagging far behind. It does not increase as fast as the property price. And sad to say, probably on par with FD rate.
For the ten years between 1998 to 2008, property price is alomost stagnant, and the price is escalated almost 100% for the last 3 -4 years. I think it is “overheat” (probably thanks to investor clubs), but some believe it will rise like crazy and continue for many more years.. hee hee hee, You know what, if you buy property with cash that is investment, if you buy by bank loan, the total amount (holding cost) you paid after 20 years is almost double you buying price with 20 years loan…
http://www.mm2h.gov.my/incentive1.php
Not sure your proposal have already official announced or still under discussion.
Apply on Penang…..state government already approve.
Foreigners only can purchase properties > RM1 million in Penang, already approved. Surprise you don’t know. So do you have a plan B to exit, or want to switch target to Iskandariah region in Johor?
@kotun
Agreed with you. I forsee the bank will started to offer “2 generations” loan after few years from now. Meaning to say, you kids also have to bear the installment.
The money you paid in future is not at the same value as now. So, sound like the total money you paid will be double the current house price, but in actual, it may not if you consider inflation.
So big impact by foreigner? I tot foreigner purchase is only <5% of total transaction?
Now you know it from heehee
It is WTH that said so…don’t twist and turn.. hee hee hee..
That is why it is not worth to “invest” with borrowing from bank.. You paid the loan interest for the first 10 years, those money (loan interest) actually value higher than the money when sell after 10 years (due to inflation!).. finally you got it.. hee hee hee..
Not agree. If not by loan, mean pay cash? The cash now is having bigger value than the amount to paid in 10 years time.
Not me is Penang Homes, hee hee hee. Aiya, where is the 5%investment, mostly also at city areas lol. Where peoples mostly find the job or doing biz, city lol. Nothing wrong to say you need to rent from foreigner soon.
Nobody thinking of flipping? Strange. Even stranger is when someone mentioned property in Penang stagnant for 10 years from 1998 to 2008. Maybe din read enough.
@Bryan
Try this..
assume you have RM20k cash, you have 2 choices:
Option 1: loan to buy a RM200K properties, hold for 10 years and sell
Option 2: Save the money in 3% fixed deposit as per you are paying the bank loan in option 1.
Use this mortgage loan calculator: http://www.mlcalc.com/#mortgage-200000-10-10-4.25-0-0-0-1-2013-year
Monthly installment = RM1843.88, Total payment after 10 years =RM221K. Sell house with RM400K. Earning = (RM400K -221K) = RM179K (you may also want to minus some other holding costs)
Option 2: use this compounded interest calculator: http://www.achievesuccess.com.au/money/compounding_effect_calculator.htm
Initial deposit 20K, monthly top up RM1843.88, FD interest rate of 3%… and BINGO.. 10 years later, the saving is RM284K NETT !!! RM105K more than “property investment”..
Now you see, you all are not doing any good by rushing for properties investment by borrowing, it only serve the developers and bankers..
@heehee
y didnt minus the money u invested..
@heehee,
your calculation keng ar…
pls tell us which investor is so stupid for not renting out the unit? buy for investment yet vacant it for the next 10yrs? speechless
@heehee
Selling price RM400 is very subjective it can be 200k or 1M after 10 yrs while FD +/- are more stagnant. You can’t measure this 2 things together.
@heehee
You don’t buy then rental must be taken into consideration. House rental is
not fixed.
Secondly, for some they need a fixed residence for their parents and kids.
With your concept everyone will be moving every now and then,like “nomads”.
Thirdly, where are your kids going to sleep when they are grown up and
have their own families ? They have no house to rent because nobody
bought a single house for the last 10 years !!!.
Now please calculate a person bought a unit in Symphony Park for 128k in
2003 and sold it off now for 360k !!!.
@heehee
The way you are calculating is incorrect. RM179k is your ROI. By paying RM1.8k every year, you already pay off your house at the end of 10 years (0 debt). Selling it off at RM 400k means you now have the full RM 400k at the end of the 10 years (ignoring income from rental or other costs).
For your option 2, you only have RM 284k at the end of the 10 years. This is assuming you didn’t have to pay rental for that 10 years.
So, unless BLR/FD rates increase to a point where ROI from FD is better than property investment, then your theory is actually incorrect.
Wow! I guess there are already many ppl help you to point out where the problem is.
1 more things to add. Assuming your calculation is correct, not considering the rental from the house, inflation and all other factors.
For option 2, you only got 284K after 10 years, which is still not enough to buy a 400K house. Option 1 already own a house, regardless for own stay or rent out.
option 2 calculation incorrect. the money you earned is RM284K – RM221K, which is RM63K only….:)
Assuming the inflation rate is 5% per year, using the same compound calculator with annual return of -2%, the actual value after 10years is 217K
Assuming if the house has not been rented out, After 10 years the property has been paid off, if sold the seller will keep the 400K, from the 400K, 221K is from own saving in the form of paying bank loan while the 179K is the profit from the investment. Comparing with FD which has 284K after 10 years. So property investment will make extra 116K compared to FD even without rental return.
Great Discussion. I could be wrong, but if I understand correctly from what I read in MD’s, KClau and all, always try,
1. To loan as much as you can. Fork out down payment only. You can buy more property this way, assume rent out.
2. To loan as long (tenure) as you can. Easier to get positive cash flow as lower payment, assume rent out.
Say your loan is 400k, and you have 400k cash in FD. The interest on loan is 4.2% and FD interest is 3.5%. This way, it makes sense to dump the money on the loan. OD feature on the loan will be good here, so that you can take the extra money out anytime.
Say your loan is 400k, and you have 400k cash in EPF. The interest on loan is 4.2% and EPF interest is 5.5%. This way, it makes sense to keep the money in EPF.
My 2 cents.
I own 3 properties, and I hope the bubble to burst. why? Because i’m not afraid of it. And, if bubble really come, I can enter the market again.. hehe
@James
You can enter the market now. It still has rooms to grow.
@James
Hello James, good thinking at least you have a plan on what to do when market is depreciated. If we are into property for long term, than bubble burst should not worry us. You still gain (statistically) in the long run. My guess, just my guess, bubble to burst is quite unlikely, especially in Penang. We might have a mini boom in 2013..
@William
Hello William, what type of property are suggesting, eg condo, DSLH…?
yes.. now looking into Penang World City Block C & D..
NO risk NO return.. Keep waiting and earn nothing..
Hello James,
My friend said that to me, asking me to get into public mutual end of 2007. I got in and few month after that, down turn. Price drop more than 30%. While downturn might not effect property in Malaysia so much, just be careful.
yes.. my first property bought in year 2006 and price gone down like 10% in year 2007 and 2008. Ppl advise me to sell at that time, but I stick to my decision to hold it.
Price gone up again in year 2009 and now in year 2013 the return of investment is about 160%.
The more you understand the trend of the property market, the lower the risk..
@kotun Your friend is fund agent? Don’t listen to salesman when investing..
@PBBinvest
Should listen to more people and read more. Then only you can make a good judgement.
If you buy a mutual fund since 2006 and hold the fund until now, the return is also already >100%, and it is better liquidity than buying properties. http://www.publicmutual.com.my/application/fund/performancenw.aspx
If you buy some blue chip shares 10 years ago (2003 – KLSE index ~600), easily you have earned 200% return (KLSE index now >1600). In long run, blue chip stocks wins!
One thing to mention here is:
For my property investment
-I only use RM20K for downpayment, the rest of RM270K is bank’s money.
-I got return about 160% after selling the property at RM520K. (580K-270K/20K)
=> meaning i’m using 20K -> return 310K
For mutual fund, i’m not familiar and not sure.
-But, I think if you invest RM20K, you wont earn so much.
Hello PBBinvest,
My friend is one who invested in mutual fund. Thanks for your suggestion. I’ve learned my lesson the hard way…sob sob..
That is called flipping, or speculating (a.k.a. gambling) not investing. If the house price just move down 8% and you already lose 100% of your 20k cash payment. You can do that with playing contra in stock, or foreign currency trading (forex), return can be even higher.
Hello James,
Totally agree with you. With property, you can leverage, whereas with mutual fund, you can’t do any leveraging.
Property:
1. Invest 20k downpayment on 200k property by from developer. After completion (2 or 3 years), say price goes up by 20% to 240k. If you sell, your return is 200%. You make 40k, with simplification.
Mutual Fund:
1. Invest 20k on mutual fund. After 3 years fund goes up say by 30% (ROI around 10% per annum). You only make 6k.
Not saying mutual fund is bad, but for this example of leveraging, property win. Mutual funds win in term of liquidity, low entry and exit cost, and easy to find actual market value. I do have some cash in mutual fund and the return is quite okay at around 12% annum (after minus the x% entry cost). Better than any amanah saham.
@kotun
Your method is same as “borrowing to gamble”… Property price not guarantee always rise… if price go down 20% you will need to pay the bank loan installment for many years..
KLSE and kortun, really appreciate your comment.
I’m still learning and I would say i’m still fresh. I’m 31 this year, and I hope I can retire at age 40s.
Anyway, I believe as long as you are familiar with the Tools that you used to generate wealth for you is a GOOD tool. So, mutual fund, share or property.. all also a good tool…
Are you forgetting the Taxes payable and the lawyer fee >30k if you sold your house less than 5 years ? don’t always count as there is always a green day of tomorrow.
Yes, RPGT 10% (hold <5 years)+ 2% agent fee + 1.7% legal fee +~2% stamp duty (pay by buyer, but need to factor-in, if not buyer will prefer new project that absorb the fee). You net loss 15.7% upfront. Your 10% deposit basically gone and at negative loss once signed S&P. You better pray hard hard the price going to raise at least 20% just to break even.
Hello Indo,
Noted. That is why property investment is for long term. And I also agree that we should diversify. Put some in property, some on stock, some on mutual fund and etc.
@heehee, where are you? Need your help to calculate the return on investment. 😀
Come on guys. Let’s keep this discussion healthy. There are people got super rich through stock/mutual fund (eg Warren Buffet), and there are people got super rich through property investment (eg Donald Trump, Renessial Leong). It is just different investment vehicle, with different risk profile.
Something that I’m not sure. Is the RPGT 10% on the profit or on the purchase price?
@kotun
Real property “gain” tax.
@kotun
Then please quote a Donald Trump investment example/strategy.. He don’t just pay 10% deposit and sit there hope the property price will go sky rocket..
@KLSE
Hello KLSE,
I don’t go to that extend, but I know he is rich through property investment. One local example that you can do the research yourself is Renessial Leong, and Milan Doshi. Based on calculated risk and educated guess, you pick the best property, and hope for the price to rise. I don’t expect sky rocket, but more stable and long term return. For landed especially, the land supply is limited, you can’t simply increase the land area like IPOs or new funds. The supply is getting less wheres the demand (population keep increasing) is getting more. View this long term. There might be a slow down in property, but in long term, property always gain (forget about skyrocket).
There is nothing wrong for hoping the price to appreciate, if you have done your homework well, like pick a good property or pick good mutual fund. Don’t you expect the mutual fund to appreciate by more than 5% (entry fee) to cover your initial loss? In case you invest in more than one fund, can you rent out one of your fund, or can you make any loan (OD) collateral against your fund? Can you make loan at around 4.2% interest to buy mutual fund? If you can make loan around 4.2% to buy mutual funds, can you make the interest paid on the loan, as deductable amount on your income tax claim? The answer to the above question is YES with property investment.
Again, I’m not a hardcore property investor. I diversity and have some significant cash in mutual fund. I also invest in sawit land for yield play. I don’t fall in love with the investment vehicle.
Hello PG Guy,
Thanks. Exactly. That’s what I thought. So the 15.7% initial loss is overblown.
@KLSE
“Yes, RPGT 10% (hold <5 years)+ 2% agent fee + 1.7% legal fee +~2% stamp duty (pay by buyer, but need to factor-in, if not buyer will prefer new project that absorb the fee). You net loss 15.7% upfront. Your 10% deposit basically gone and at negative loss once signed S&P. You better pray hard hard the price going to raise at least 20% just to break even."
RPGT 10%: Invest long term. Sell after 5 years if you have to. It's 10% on your profit, not purchase price.
Agent fee 2%: You could opt to post in mudah.my, iproperty.com yourself. Save on agent fee. Or buy new, no agent fee.
Legal fee stamp duty: If you buy subsale, then you have to pay. But if you buy DIBS, then all free here.
Good point! I guess somebody there very expert in share market trying to advise the property investors here how to invest, and trying to apply the share trading knowledge in property investment. This is a big topic and don’t think this is the right place to start it.
Just to add 1 more. I guess many ppl don’t know that RPGT can be waived once in a life time for each person.
I have enough money for downpayment 10% . I am sure my salary can get the 90 % of the landed house. But i still have the fear feeling for invest in landed house, expecially now the price is rm900k+