Bank Negara is studying the risks arising from DIBS with a view of potentially imposing curbs on it
PETALING JAYA: Bank Negara is studying the risks arising from the developer interest-bearing scheme (DIBS) with a view of potentially imposing curbs on it, sources said.
Although it is unclear if or when such curbs would be put in place, Hong Leong Investment Bank (HLIB) said that it may be “later this week”, adding that such a move would be a negative for future sales in the primary property market.
Other industry players think that the measures might be introduced in the second half of the year.
DIBS has become a popular easy financing package offered by property developers in joint-promotion activities with banks in recent years.
Under the scheme, buyers need not fork out much initial downpayment to buy properties, as the developer supposedly absorbs the initial interest. This is until the buyer takes possession of the property.
A high number of buyers enter this scheme with the intention of flipping the property when they gain possession of it, making a profit without having to come up with much capital in the process. Such a scenario fuels speculation.
“Typically, under the scheme, buyers only foot between 5% and 10% of the house price upon signing the sale and purchase (S&P) agreement and only begin payment when the project is completed,” a property consultant told StarBiz.
“There are caveats to this scheme, as buyers commit to a financial obligation upon the signing of the S&P and the interest cost has actually been already passed on to buyers via the higher selling prices.”
DIBS is mainly offered to the high-rise residential segment. Some property consultants have opined that the presence of DIBS in the market has caused prices to be set on an artificially higher trajectory.
Notably, the Singapore government banned DIBS in 2009.
“While the exact measures are yet to be revealed, we believe the curbs would impact this easy financing scheme,” HLIB said in a note yesterday.
According to analysts, most of the sales in the recent property bull cycle were tied to the attractive DIBS scheme at the expense of the secondary property market which has remained sluggish. And given the persistent rise in household debt, the Government is mulling over measures to limit it.
“In the recent past, Bank Negara has been compiling information on the scheme and studying its impact on the sector,” a source said.
Bank Negara had yet to respond to StarBiz’s queries as at press time.
“The difference between the non-DIBS and DIBS pricing can range from as low as 5% to as high as 30% if other incentives like early-bird discounts, stamp duty waivers and cash payments are taken into account,” said Elvin Fernandez, managing director of Khong & Jaafar group of companies.
He advocates regulators to compel developers to be transparent on the various incentives, as it may be difficult to do away with DIBS packages.
“Developers should inform buyers and bankers of the actual value of the discounts they are getting so that house buyers know the true value of the house they are buying,” he said.
UOB Kay Hian Research noted that new launches in selective high-rise projects in the suburbs of the Klang Valley were transacted at over RM1,000 per sq ft (psf) vis-a-vis RM450 psf two years ago.
“Household debt has risen to 80.5% of nominal gross domestic product as at end-December 2012, up from 60.4% as at end-2008.
“We also note that outstanding banking sector loans in the household sector has risen 3.6% year-to-date as at end-April to RM638.5bil from RM616.5bil as at December 2012. As the rise in consumer credit is partly linked to housing, curbs may be introduced to dampen speculation,” UOB Kay Hian said in a report yesterday.
On the financial impact of curbing DIBS on property companies, HLIB said that it would be “negative for future sales in the primary market but the extent of damage varies with the degree of exposure to the high-rise segment for each individual developer”.
UOB Kay Hian reckons that if DIBS or similar schemes were to be tightened, it could “significantly dampen new property launches as speculators will be filtered out”.
The company also does not rule out the possibility of a further upward revision in real properties gains tax (RPGT) to dampen speculation.
In Budget 2013, the Government had raised the RPGT for the second time since 2011, stipulating a 10% to 15% tax for the disposal of properties within two years of purchase, and 5% to 10% for the disposal of properties within three to five years. However, properties sold five years after purchase are exempted from the RPGT.
Source: StarProperty.my
Outlawing DIBS is one positive step in the right direction. Developers have many ways (DIBS is only one of them) in encouraging speculative buys. If the authority is serious about curbing speculation, BNM should work hand-in-hand with the housing ministry to come up with new laws. State land authority also has the power to stop speculation. Let’s sit back and see how serious, how good and how fast they address the problems…..:)….cheers!
Should hold back my purchase to wait and see?
If we have booked a property with a DIBS offer but havent sign the SnP, is this will be impacted if outlawing DIBS by bank negara. Any sharing.
yes.. highly will impacted…
but i believe if BNM enforce no DIBS, the developer will give you some discount to offset your loss due to DIBS abolish]\
There is always a loop hole on every cooling measures.. You’ll see how developers make things equally attractive if DIBS abolished. It is very unlikely property no longer a hot cake just because DIBS removed. Look at Singapore’s property price after DIBS was abolished from 2009. Even now, every new launch its a hot cakes! Eventually market price still shoots up after stabilize for a while. It’s like ppl complaint when property was sold at 300psf, now 500psf still people buying. The mentality of DIBS as non existence in future will be accepted and property speculation will continues in other methods.
Yes, time to band DIBS! Malaysia, are you ready? Are you dare? Singapore did it, i hope our world class bank governor can take the action.
this is good news … no DIBS
what took them so long to act …
also the RPGT should be increased to a much higher level
time to give those greedy speculators a punch in the face
@Bryant
@Ah Dog
your hardcore speculation days are numbered …. about to end … lol
If want to do, government should stop dibs, increase loan to value ratio, have additional sellers & buyers stamp duty. Finally if all fails, increase interest rate. Sure price drop coz ppl who have over speculated can’t tahan their loan instalment!
No DIBS .. this is great news
time to rejoice
we support No DIBS
genuine buyers are sick & tired of all the intense speculations and manipulations by greedy and unscrupulous suckers out there ..
BMN must be firm in carrying out its responsibilties … do not delay anymore in enforcing this positive move in the right direction and also hike up the RPGT to a much higher effective level …
Yes, developers have already lock-in their profit with all the previous DIBS projects. Now is time to help those blood-sucking flippers to release their on hand OC-soon units… if DIBS continuous, no one going to buy from subsale market, and the market will collapse with those flippers panic sales or bankrupt when need to serve loan after OC. If Banjk Negara is serious about curbing speculation, DIBS should be make compulsory for first-time buyers, while ban for 2nd house (and more) buyers. This is more efficient way to reflect the real market demand while helping first time house buyers. Please give a LIKE if you agree with me…
I suggest RGPT 100% for 10 years, only start from date of OC. I dont mind, because I am not speculators.
@justice
I am not a speculator.. I am sharing my view based on what I observed. You’ll see what I mean soon enough.
@ezalor
when u become prime minister or finance minister of Malaysia, u can impose it.
I think RPGT also going to be increased soon to take profit from flippers.. I help u (to get rid of the units for subsale), u help me.. hahaha..
skateboard, you got all your maths wrong!….:)
@condomana
can you show what is wrong in my calculation, and what is your “right” calculation?
Can’t say singapore property market is good. Agent friends say demand drop. Last time HDB agents don’t co broke. Now agents blast sms to other agents to swing their buyer over. Developers offering higher commission to agents who bring buyers to purchase. Even some Penang property (Tanjong Tokong) location is being actively sold in Singapore. Offer dibs, grr etc. High floors. I guess if really got enough demand in penang, developer no need to sell in Singapore.
@condomana
Don’t simple shoot. You have missing the “l” to safe guard yourselves if things go wrong…
@investor lang
HDB agents don’t co-broke last time? I do not know how long is last time but this co-broke thing actually helps to close deal faster and both sides wins! Yes, agents gets half or 1 side of the commission only, but long run, more deals are closed and it is faster.
Situation in singapore on property investment is really tough. Imagine first property must pay solid 20% dpymt, second property 50% dpymt. In addition there is stamp duty approx 3%+ ABSD (5%) for first property while second property is 13%. Unlike Malaysia, buyers get rebates for dpymt, sometimes dpymt goes as low as RM1K and nothing else till completion.
The main thing is the prices has shoot up so high in Penang that after conversion to SGD, singaporeans/those earning SGD feels that it is still affordable compare to property in Singapore itself. Imagine a shoe box unit cost SGD600K. With that money, you can get a 3 storey landed in Sg Ara. Or, you can get an awesome bungalow in Johor.
Thus property in JB mainly driven by demand from SGP due to its proximity. Penang is definitely due to many reasons, which I am sure everyone agrees – scarcity of LAND!
Nonetheless, the topic here is that even though there is no DIBS is SGP, yet every new launches, good units snapped up like nobody business. Same goes to Penang, long queue.. That is why I believe DIBS will not hinder speculation, it helps, maybe for a couple of years.. Buyers mindset will adapt and old trend will return to the market.
@Bryant
you asked the agents, what is the price range is most popular – properties under RM400K!
Foreigners only can buy >RM1 mil properties in penang and definitely not the key factors for the price hike! don’t keep telling Singaporean goreng up properties price here..There are Malaysian working in singapore, but definitely not that much to keep the heat!
ALL WRONG
Not because of DIBS or…
It is due to foolish buyers who buy unreasonable asking price quoted by agents/speculators .
If these type of idiots are still buying even if for example , a more than 20 years Sri York condo 1000sq ft but asking price of RM760K !! So, don’t blame any one, blame those people who buy from sub sale !!
. DIBS or no DIBS, everyone will speculate including those who are so anti- speculators here.
Wait until you taste that RM200K instant gain after 3 years of your property !!
Then , you know what I mean. People q and quarrel to grab whatever unit at Penang World City, for what?
@skateboard
I did not say Singaporean goreng up the prices in Penang. True, above 1mil. But prices of luxury property now in Penang are hitiing 1mil or already above 1mil. Setia V Residence in Gurney from 3Mil. The land scarcity is one reason. I only mean to say agent market Penang property to Singapore is due to the hefty price tag which many people cannot afford, as you said popular price is less then RM400K. Specially those in Tg.Bungah and Tg.Tokong, you know well how much these property cost. Who would probably can afford? I bet those working in Singapore could get their loan approved at RM 1mil easily.
Off topic, JB property prices are driven by Singapore buyers. Be it singaporean or not.
Many new launches in Iskandar allows foreigner to purchase condo less then RM500K. Medini at Meridin by Mah Sing is one example. The rules are simply being abused in this sense. Why is there such exemption? Simply because Gov wants to promote Iskandar. Long run, locals will suffer.
@Bryant
You are off topic too much. DIBS or not, will not affect high end properties because those are cash-rich buyers! DIBS only affecting flippers/speculators which may not have long term holding power. Those are gamblers borrow from bank (leverage – in financial term, google it if you don’t know) and betting the properties price increase in short term.
@skateboard
The off topic are meant to give you some explanation of how and why singaporeans and foreigners drive up property prices in JB because initially you mistaken my opinion that Singaporeans drive up Penang Property Prices!
If you read through my comments in this page, everything is directing to the point that abolish DIBS will not help in long run as property buyers/investors/speculators will not think about DIBS scheme as their decision factors anymore in the future, specially when this topic no longer a hot topic.
Make it simple, No buyers/investors in Singapore ever complaint about DIBS being abolished anymore. Why? Because people moved on and DIBS is not a factor in deciding anymore. It will be the same in Malaysia in general.
Without DIBS, will price drop? Would you still buy if developer offer 10% rebate?
May be price will drop faster if continuous with DIBS. Nobody want to buy the oversupply just-OC subsale properties and soon will see lelong.
Without DIBS, less investor will participate in new project and with lukewarm responds, developer will withhold/delay launching of new project. How to launch if only 45%-50% of the units will be sold? And no more people q-up or all this drama….
So, with less projects, first time buyer will have less choice…….They definitely will not have this luxury currently, every where is launching condos, landed, this & that…
So, they will again turn to subsale…..
So, there is where the sharks open the big jaws….RM200K instant gain from subsale.
Actually, telling story is easy, it depends on which side you stand.
You want price drop story, i can tell
You want price increase story, i also can tell
sri york value base on the location…not the building itself..same rule apply to the rest..always find out the value from bank or valuer to get the true picture of the property value…
@Tey
Can tell why price will drop?
Why would you want to let speculators/investors swallow you up?
Imagine they bought a landed at RM900K to RM1 million and would like to sell to you RM1.3million? a lot. You just go to Mudah or any property selling website, there are daily update of all these selling.
You know the difference what, you should buy new project and wait for 2- 3 years. Never mind the 2-3 years. Rental is dirt cheap in Penang.
You can tahan that smilling face of the speculator after you sign the dot, and he pocket your RM300K? No way. Come on, it is not RM300, it is RM300K. You get a loan,probably not so painful but imagine to save every single cent to RM300K.
If every one or most people has that kind of awareness, dignity and that kind of mentality that it is ok to rent for few years after marriage, the speculators will be at your mercy.
Imagine, stuck with RM900K bank loan? the interest alone will kill you
Many speculators are not afraid and arrogant because they have taste success before.
Most young couples will and must buy house in hurry the moment they register for marriage.
they are the prey and most pitiful victims. Imagine buying a condo at RM650K and you know your neighbour only spend RM350K from developer….My goodness
Straight to the point
1) Inflation is here to stay
2) Once, GST is implemented. Everything across the board will increase in price. That includes cement, sand, bricks, construction related materials. Do you think prices would come down?
3) Rental will eventually have to move up because affordability to buy a condo will become out of reach and hence many will resort to renting.
4) Do you think land itself is increasing on this island? No, that is right.
5) Removing DIBS is certainly a good move but with time, prices will certainly increase. History itself has proven this many times.
6) I don’t see our population decreasing over the next few years. In fact , the state plans to increase the population to 2 million by 2020. So, where are we going to get all the extra homes for those additional 400,000 people in the next 7 years?
Not to mention the increase in demand for food, transportation, basic needs and so on.
7) Do you view Penang as the leading state in the future? A place where everybody yearns to stay in, a successful place for businesses and culture, a food haven for all, etc. If you do, it is only natural to see increase demand for properties in Penang.
8) There will be boom and bust along the way. However, eventually at the end of the day, it will be higher than before. You know why? It is because it is an asset, you can print paper money but you can’t print properties.
@Tey
Don’t be sour grape..it’s all about timing, and the government may not have real intention to curb speculation all this while. Somehow property sector push the grow of the economy (at least figure on the financial sheet) and an important income to the government. If government ban DIBS to push for subsale market, RPGT going to increase too. Mark my words.
Time doesn’t stand still for anyone and it’s how you move on. There,s two sides to a coin, time will tell who’s on the right side of history. This tread is full of grieving people hoping for the property sector to collapse. I hope this is not a self admission that oneself has missed the gravy boat 5 years back. If that is so, you only have yourself to blame.
While speculators have a hand in pushing the price up, they don’t owe you a living.
Will malaysia interest rate be going up too?
http://business.time.com/2013/06/27/u-s-mortgage-rates-jump-to-2-year-high-of-4-46/
Why newly wed couple are the prey and pitiful victims when they buy house?
Hi Lim,
Newly weds in Penang used to be able to afford a nice house with good neighbourhood with their average family income. “Afford” means being able to pay the monthly mortgage payment comfortably, and still left with excess money for other expenses. When you feel comfortable as newly weds, you can then fully “enjoy” the things that newly weds do….:)
But today, they don’t have the luxury anymore. They can barely afford a nice house with good neighbourhood with their average income anymore. “Barely afford” means numbers-wise they probably can make it, but they’d have to cut down on lots of other things. In the event they can’t afford a nice house, they’d have to settle with probably a house near a rubbish dump site, or a noisy highway, or a neighbourhood where snatch theft is rampant etc. With such adverse condition, how would you expect newly weds to fully “enjoy” their “honeymoon”?….These are the pitiful victims of runaway house price!…:)
@Tey
nicely said…i’m one of the pitiful couple…in the end i totally ignore all the subsales which was asking lion share price and went for the on-going new project (that time still 1year to complete, its already OC now) from developer. While able to lock the price, i get 1year buffer to sort out my financial status to be ready once the installment kick-in. it’s work out very very well now.
i’m hoping that they won’t abolish it completely and instead limit it for first time buyer only as some of them really need it. i believe most of the people who are not so well of or from medium or medium/upper class family should understand that “feeling” when the lightning of having to pay tenth thousands for the downpayment strike you. That’s when you realize you still have to rely on your parent even though you already working for years..
HOOHOO Yeah!!!!!!, I love government ban DIBS and implement BTS (Build then sell) then those buyers will have to buy form sub sale market and good for sub sale market……
In conclusion, existing speculators and investors with many properties still winner but not future speculators and investor …………hehe ^_^
Your theory wont work la, is either u make new developer earn ur money 300k or sub sale earn u 300k, there is no way u can save 300k for waiting new project. So stil seller market now unless economy down is the only way.
beware of greedy & unscrupulous developers and scumback speculators …
the goverment should take more measures to curb speculations …
Singapore steps up property cooling measures
Singapore’s central bank has introduced rules to ensure that a property buyer’s monthly payments do not exceed 60% of his income, a move aimed at cooling the housing market and ensuring investors are not caught out by a rise in interest rates.
“The TDSR (total debt servicing ratio) will apply to loans for the purchase of all types of property, loans secured on property, and the refinancing of all such loans,”
The new requirement takes effect today,
Singapore has been trying to keep a lid on property prices due to low interest rates caused by quantitative easing adopted by Western central banks. The flush liquidity could, however, reverse in coming months.
Penang property prices are going down and fast… Over the last six months I have seen Central Park Condos asking price go from RM940-950k (January 2013) down to RM820-840k (June 2013), Greenlane terrace houses from 920-980k (January 2013) now asking 820-850k June 2013)… This is just the start. Chinas banking system is having problems and when it hits Malaysia it will be ugly. Over seas investors represent less than 1% of the market so they have no effect on prices here. It’s the uneducated/ignorant speculators how believe every lie that the agents tell them how property prices will double in the next 5 to 7 years blah blah blah… If they don’t buy now it will be 200k more next month blah blah blah… No property market in history in any country has deviated from the fundamentals for to long before it has all come crashing down. The Fundamentals are easy… the average property prices can not exceed 3-4 times the average yearly salary. That is where all property prices eventually revert to… Other wise it is called a bubble driven by a credit bubble. Just look at Ireland, Spain, Portugal, Greece, USA, Australia… Yes even Australia has dropped 10% in the last 3 years. I should know I’m from there… and sold off all my properties then. Just be patient and watch the fireworks over the next couple of years and buy for 30-50% less than now…
Care to let me know how many units are selling below rm850k for Central Park?I am interested to purchase.@Expat
You must be new to Penang. Seller’s market? I have a few agents calling me up every now and then offering various properties that have been left unsold for close to a year. My own shotlot, have been left unsold for 2 years now. I am just lucky that i have a good tenant, else i would smack myself too.@Crime
@Lim Would you sub sell your property at the same price you bought from developer a few yrs later or sell at market driven price?
When I googled , there’s one unit central park condo selling at RM880K , posted date 29 may 2013 . ( http://www.thinkproperty.com.my/realestate/listing-details/buy/1302036/?referer=search)
Without DIBS , many speculators would get weed out so the developers got no choice but to lower the price of new properties to attract genuine buyers , and the existing speculators also must lower the prices of their subsale properties accordingly, since who would want to buy from them if their prices are way higher than the prices set by the developers ?
But the developers are selling at future prices with DIBS , so they can afford to lower the price without DIBS and still make a profit , but can the speculators afford to lower the prices of their subsale properties without jeopardizing their would be profit when the properties they bought are already at future prices from developers ? Can you see the predicament that the speculators would be in with the curbs placed on DIBS by the bank negara?
When the singapore Gov. imposed curbs on DIBS back then, the singaporean speculators could not thrive there anymore so they turned their attention to Malaysian property market with DIBS , that’s why the surge in prices due to the surge in demand from them . But once no more DIBS here, then the prices of new properties sure will go down .
According to The Economist , “Housing markets are notoriously prone to boom and bust. To judge whether prices are at sustainable levels we use two yardsticks. One is the ratio of prices to disposable income per person, a measure of affordability. The other is the price-to-rent ratio, which is analogous to the price-to-earnings ratio used for equities, with rents going to landlords (or saved by homeowners) equivalent to corporate profits. If these gauges are higher than their historical averages, property is overvalued; if they are lower, it is undervalued” . http://www.economist.com/news/finance-and-economics/21578043-our-latest-round-up-house-prices-reveals-some-sharp-contrasts-boom-and-gloom
So by using the two yardsticks , the Penang properties obviously are overvalued since they are beyond the affordability of the majority of malaysians hence the prices are not sustainable .
i heard singapore just impose a cap on total debt servicing ratio. so i guess their property market will be impacted further. malaysians still happily buying. i wonder who will be left without a chair soon.
@pgkia
You are new to penang residential market…
For commerical shoplot of cause no want to buy from you because oversupply….
For residential especially landed, even market slow, seller will not lower the price too…
You don’t want to buy ah,who care….!!! people have money to keep lol
@pgkia
Sellers Market…. NO
It’s a buyers market last year there were only 12,000 properties listed on iproperty, now there are over 30,000… this will only continue to increase as the properties that are nearing completion come onto the market and the current stock can not be sold. How many people do you know that earn over RM150k per year? These are the only people who can afford RM800-900k properties. I can tell you that there are not that many in Penang.
@pgkia
Just go to iproperty… Type in Central Park, then sort the results from lowest to highest price and you will find 8 properties for RM850 and below. Then contact agent, negotiate and if you are a good negotiator you can buy for under RM800k. If you successfully buy the property please don’t forget to send me my commission for pointing you in the right direction…
US superstar Ben Benanacake has said it is time to end the QE bullsh*t and can expect rising interest rate soon …
if this rising interest rate is the next trend , this will be very good news especially for those cash-rich savers …. hooray
@Expat
Do you know how much they bought ? Still making a good profit.
Fren, if u like, you also can pose multiple ad to sell Central Park at 500K. I also can do the same to create to false impression if I’m aiming to buy one. If I really a owner, I also can create multiple ad with 1M to create the impression that the property price is getting higher. It is so easy to be manipulated. So u want to use this data for ur analysis?
@Expat
I checked on the Iproperty website , the price for central park condo posted on 24/06/2013 is RM820K ! Wow, the price is really accelerating downward that fast !
@Hemsley
The RM820K asking price that i mentioned above is posted by a licensed agent with a licensed real estate agency with 1081 listings on Iproperty ….. how can that be fake ad ??
@Wondering
Back in Oct 2010 even before obtaining OC , agents were trying to sell central park condo for RM800K ….. now almost 3 years later , the price is RM820K for high floor with seaview …. That shows the price for the condo is stagnant !
The issue with Central Park(or any Goh Chun Lye’s prop?) is that during the recent strong wind incidents, a couple of windows got blown off and flew away.
The residents who stay in the residential prop below saw it with their own eyes.
It is not worth even Rm700k when you have ur windows blown off by. One of the worst properties in the market..
Don get me wrong as I never think that Center Park project can fly. But I also don think I should believe property agent. U may try to dial the number. The 1st question will be: which ad u r referring to and what is the price stated there? If u tell 820K, most probably the agent will said: that unit sold out. I have another unit selling 850K. U want to hv a look?
I experienced an agent after viewed White Lily with 920K that time, I considered to buy but the agent said the owner is not answering the phone. He said this normally happen either the owner is not the real one, or want to sell later with higher price.
Come on, many agents also simply post ad because of the ad in iproperty or mudah. U go post a fake ad n there will be agent contact u.
@Hemsley
I had use to it. I just view as reference, will only contact those agent thru newspaper adv.
Put a gold plated window then the price can sell 1mil lo
@Expat
Expat,i just call them up just now, and its fake. Dnt believe me? Call up yourself. And the rm820k price is only posted by 1 user name “anthony”
@jackpg
Since when is Central Park GOh Chun Lye’s project? I always thought it were Chun Aun project.
All,
I see lots of view here on price crashing and price will keep increasing.
I like to understand the impact:
EXAMPLE: If an investor purchase a property (lets say at a moderately acceptable location like Relau) at a price of RM500K, only 2% dpymt and nothing else till completion 3yrs later..
Situation A – Price keep INCREASING
1) Upon O.C the investor will make profit from the market value + the 8% Rebate – Miscellaneous fee and etc.
(Assume there is a buyer)
Situation B – Price Stagnant
1) Upon O.C the investor may make profit or break even from the 8% Rebate – Miscellaneous and etc.
(Assume there is a buyer)
Situation C – Price Crash
1) Will the price of the condo drop below RM500K after 3yrs?
If yes, the investor probably will lose money and if cannot pay/sell, then the property will be auction. What is the auction starting price? slightly higher then 90% of the loan where the banks will break even the loss+interest?
2) Do price crash refer to a lower market value at the time of selling?
To illustrate, take this condo as an example, investor bought at RM500K, 3yrs later appreciate to RM550K (assume 10% increase), but due to price crash, instead of selling at 550K, investor must sell at 520 or 530K. Is this the case as well where price drops but still above initial buying price.
3) Some mentioned that maybe a 30% to 50% price drop will happen. Can I clarify if the drops refer to original purchased price or market price after 3yrs? So, is it right to say the investor+bank is losing money at least RM150 to RM250K? So finally the developer make all the profit?
Appreciate any constructive feedback on this topic. No right or wrong. Thank you.
@yeahright
Is it overprice 3 years back?
@islander_ori
IF you had bought a unit now for RM820K, then you talk. Do you know if
they are willing to sell at RM820K, how much have they gain ? Do you know
how much they bought 4 years back ?
The occupancy rate if really slowing down in many of the recently completed projects. This is putting pressure to the price appreciation as the supply is plenty. Less launches expected in island in the near future.
Hmm, that’s funny , ironic isn’t it to think that if you ppl want to point towards price increase then mudah.com and every property website on the net will become main reference , but if someone want to show price decrease then info on those websites suddenly turn out to be all fake here and there for you up to the point even agents and owners also can’t be trusted … why is that so ? Well then who can we trust ? If agents and owners like to post fake ads like you mentioned , then upward spiraling prices must also be considered as fake ads to create false impression ” selling like hot cakes” demands !Don’t be selective if you want to pass judgement , treat them all equally laa, if decrease fake then increase also fake laa .
A century old giant tree was uprooted during the storm, in fact 20 trees at the botanical garden all got uprooted which meant the wind that day was extraordinarily strong , so of course fragile glass windows of any highrise building could very easily get blown off when being bombarded directly by such wind ! It’s not like the building have become the leaning tower of PISA that would make it ok to blame the developer !
It is really up to ur own judgement. For me, I trust the pass transaction data and my property agent frens who I can trust, plus the banker value. Also, if only Center Park can’t fly, I also will not take it to represent the whole Pg island property market trend. Statistically, the sample size is insufficient n biased. Use what u hv learnt throughout the years n applied it, n I should advise u not to make any decision by sorely reading the information in the forum n other media, where anybody can post anything they like. Ad in newspaper (not by developers) is making more sense as it required money.
@Bryant
For first auction of a property , the reserve price is the current market value of the property, but if no takers then for subsequent auction the price will decrease 10 % each time . So by the 5th auction , the overall price decrease should be around 40 % less than market value . But after 5th auction if still no takers, then the price will remain the same with no decrease or increase no matter how many years the property is in auction . So if the market value is spiraling downward fast , then the property will eventually become underwater (bad loan that cannot be recovered) , but if the market value is showing an upward trend , then the price of the property will one day become attractive to potential bidders because over the years the property reserve price will be so much lower than market value .
Central park is not overprice or stagnant, you have to understand for a 2000 sqft condo not everyone can afford due to its bigger size. You might need a lot of $$ to renovate if to compare to 1000 sqft condo. People might wanna re-consider and the target market for this segment is less consider the location, it is not by the beach. If Central Park is being built at Gurney, and consider it is selling at 1m with 2000sqft i would definitely grab it but not at its current location.
@yeahright
Thanks.
If lots of these units are underwater, the banks will have problems too. Coz it’s millions or maybe billions of bad debts. So this is when those speculator haters-cash rich buyers will attack auctioned property. Will loans be more difficult to obtained at such situation?
Any other thoughts/experience over this topic? I mean many of you kept hoping prices crash and vice versa. You guys waiting for auctioned property where price reduced to 40%? Or price reduced slightly below market value in a sub sale?
Ultimately I get the impression that it’s not the investors or speculators or agents who are pulling strings and manipulating prices, It’s the banks who hold all the cards. They can say whatever fantastic magic number they can give for this or that project . The banks can also choose to NOT let property get to auction to avoid creating a panic , think about it. If you’re a banker why would you commit Hara Kiri by releasing all your bad loan property’s at once?
Think about All the toxic paper assets that were generated in the 2008 crisis, I think that the bankers have learned that the assets are only toxic if you admit they are and set in motion a domino effect of fear.In the meantime the game of musical chairs continues with ever more fantastic numbers being conjured out of a magician’s hat.
So no point debating who is setting prices because at the end of the day Everyone, buyers and sellers; grovels hat in hand at the feet of a banker who has the final say on the magic number that is “market price”.
Its true that penang secondary market price is reduce around 10% this year, my fren bank officer inform me bank having problem sold out auction property too.
My wish-list :
1. Removal of DIBS
2. RPGT at least 50% if sold within 5 years ( 2yrs no meaning .. real stupid
3. Increase interest rate to 10% p.a.
4. Cap on loan limit at 50% for 2nd property purchase onwards
sleeping BMN pls take note ….
@aah dog
If you run the government, country and local banks will go bankrupt due to sub prime crisis.
Anyway, you you are not qualify to talk about policy even comment because is BNM (BANK NEGARA MALAYSIA) not BMN (Bank NEGARA MALAYSIA). LOL!!!!!!!!!!!!!!!!!!!
@aah dog
How does these wishlist benefit you? Price crash so you could buy @ 50% cheaper?
Hemsley…. You are right you can post multiple ads to create a falls impression, But you are missing the point.
Weather or not the ads are fake in not the point… the point is that the asking price has gone down over 100k in the last six months.
Why didn’t the agent of phantom seller or buyer trying to bring the market price down, list the property at 820k six months ago? why list at 940k six months ago?
I look at the listed prices as a guide to determine the overall trend of property market. And the trend is down…
@Expat
It is up to u if u insist to analyze these trend from such a source. My way, get info from frens who are property agent, bankers, and frens with actual transaction price and when. Don’t forget to visit new neighbors who just move in ur area and ask their purchase price.
Remember. Rubbish in, rubbish out.
Looks like the market would be stagnant for some time(difficult to sell at desired high price, and difficult to buy at desired low price), otherwise you guys would be busy buying and selling, why bother talk so much here??….:D
I’m curious to know what made you think that the ads were all fake after you called them up ? What did they say to you that lead you to conclude that those ads were all fake ?
@yeahright
Actually you could just call up that Anthony guy. I also just notice that this same guy posted very low price on almost all new property. And sometimes the closest price on another agent and this guy is about rm60-rm80k.
Anyway, i came to conclusion when the agent told me that the said unit have been sold, but there is anither at a much more expensive price.
I could just called him up if i was really interested in buying the property, I don’t like to pretend to be interested just to test him . I asked you about it to understand how you came to your judgement. So there is still the possibility that the property did get sold out fast because of its much lower price than others , right ? Its not like the guy admitted to you directly that its fake !
May be its a firesale , that’s the only way to find buyer as fast as possible or else risk property being auctioned off by the bank . I don’t think agent would want to lower the price drastically like that if not due to some kind of urgency .
Btw, do expect more fire sales ahead with such stagnant and slow subsales nowadays , the situation is not going to get any better with the bank negara trying to curb DIBS .
The developers are not selling new properties at the price of the market value but at future prices especially when they include DIBS, and subsales prices are also higher than market value. So when the reserve price of an auctioned property has gone down to 40% less than market value, that means its 60% to 100% percent lower than the selling price of new properties or subsales . Those who get used to buy auctioned properties would not want to buy subsales or new properties anymore .
@yeahright
Its a bit difficult to understand clearly what you explained. Mind giving me an example with figures? Tq.
Villa Emas condo recently advertised for auction at the reserve price of RM330K, Its first auction so the reserve price is set at market value . If we compare subsale selling price for villa emas condo nowadays which is around RM430K , that means the subsale price is actually RM100K higher than market value , so at first auction its already around 23% (100K) lower than subsale price .
My condo I’m staying in now was put up for auction about 4 or 5 times going by the notices that were in the overflowing mail box, Before I snapped it up. Had to attend the auction in KL so that may have been why there were no other bidders :). The Assignor paid 399K for it in 2003 and I got it at 234K. Is there an emoticon for Gloating?HeeHee
RM100K is not 1 ringgit … its a LOT of money to be saved .
@yeahright
Where is Villa Emas condo?
One more penang auction sale, park view tower, subsale price 375400k, auction price reserve price 2.
Subsale 370k, auction 275k.S
In summary, you must ask for lower price for sub sale price by 20% – 25%.
You can use few methods to determine the value of the properties such as go through valuer by paying some fee.
OR
The rental yield (%) basis. For instance, If the mothly instalment (90% loan + 30 years tenure) > mothly rental, it is mean that the property value is over.
I can 100% confirmed with you all the the sub sale or secondary market is not as good as you think. It is more favourable to buyer. The buyers have more bargain power than sellers (unless the sellers have a strong holding power).
where is your source?
@JJ
A 20% discount on 700k property is RM 140,000.00. If you ask me, I will
tell you to wait for another 2 years to see if I really need the money.
@yeahright
So, subsale = RM430K, Auctioned at RM330K.
Auction = Market Value.
Subsale Value determined by Valuation (I assume professionals).
So, How and why is these valuation different so much with market value?
Its not like the seller mark up the price as they wish, the price bound by valuation.
Why can’t valuation figure = market value?
I mean, if valuation of a property always higher then market value, something is not right. This valuators which works for the bank must evaluate the value properly to ensure the loan from the 2nd hand buyer can be approved. If subsale prices goes up rocket high due to valuation, then cooling measures will not be so much effective anymore because as the figures shows, valuation for a subsale increase the price by RM100K!
LOL… You listen to property agents? Yeah… of course they would only tell you the truth. It is in their best interest to tell you that property prices will continue to go up to infinity and beyond., otherwise you won’t buy and they won’t make any money…
Would you still buy if the agent told you property prices are going down?
Bankers are no different they make money from providing loans.
Two of my friends are bank managers and I can tell you they tell me a different story… More and more people are getting rejected for their loan applications and more and more properties are being repossessed by the banks.
And your friends… So they are ignorant like you and buy over priced properties and some how you come to the conclusion that property prices are rising???
Property prices will always rise but only if they meet two basic fundamental conditions…
1. Rise with inflation
2. Wages have to keep up or exceed inflation in order for the people to afford the property.
Property in Penang have doubled and even tripled in some area in the last 5 years… Why???
Because speculators had access to cheap debt…
What is cheap debt? Low interest rates (BLR -2.2%) When was the last time that banks offered interest below the BLR?
You see when there is a sharp increase in asset prices in a short period of time and diverge from the fundamentals it creates a bubble. The end result is never pretty.
Take it from some one who has invested in property over the last 20 years in a number of countries, including UK, USA and Australia… I have seen this story before… And its always the same people who are blind to reality and believing that property prices always go up no matter what that end up getting burnt the most. I can tell you from experience that Property not just in Penang to in KL too are a classic bubble waiting to POP…
If you look at the penanginstitution.org figures the population of Penang rose by 1700 people between 2010 and 2011… That is the latest data.
For the life of be I can’t find any official data for 2012… Most likely because the population has dropped.
Now I don’t have any actual evidence of this, but I am sure some of you would agree that Penang has been having a brain drain. Educated people moving to KL or overseas never to want to come back…
So haw can property prices rise when the population is falling? And even if it is slightly rising it is most likely due to the Banglas… Some how I don’t think they have the ability to buy a RM500k plus property on their RM400 per month wages…
@Expat
That is based on your assumptions.
I think there will be a slow down in the property market but it will not crash for the mere reason that Penang is running out of land.
Penang is like a mini Singapore. Its growth will mimic Singapore but it will never be like Singapore.
So its safe to say based on historical data, at the end of the day assets will increase in value due to inflation.
@Expat
Think you missed out a point from Helmsley, he got his info from friends with actual transaction price too… Not just agents and bankers. Now that is a strong facts and figures! Not from any websites with posts from just anyone..
So you mentioned about UK, US and Australia. What about Singapore and Hong Kong? What do you know about these places?
Subsale or selling price = asking price ( set by owners and agents)
Market value or valuation = actual price ( set by valuers)
The banks lend you money based on either the selling price or the valuation price whichever is THE LOWER .
So when valuation price is only at RM330K but selling price at RM430K , if you are elligible only 85% of the loan , then you get only RM 280500 from the bank ( 85% x RM330K ) , so you need to top up RM149400 cash on your own to get to the sum of RM430K . That’s why subsale market in Penang is very slow because many buyers just don’t have that much cash in hand leading to abortion of sale .
Actual transacted price can happen above , at or below market value . So transacted price does not indicate market value .
@yeahright
How do you know that RM430k for villa Emas condo is set by owners or valuation price?
Again, there is no right or wrong. I am only highlighting to Expat about the point from Helmsley which he/she skipped in the replies above regarding price may crash in penang…
@Econs 101
Penang is not running out of land… There is still half an island on the west side that can be developed. Once that is developed than you can say that Penang is running out of land.
The myth that land is scarce and running out is the oldest trick in the book that agents and developers use to try to sell at higher and higher prices… The sad thing is that people fall for the lies.
SO WHY DIDN’T PROPERTY PRICES DOUBLE OR TRIPLE FIVE YEARS EARLIER AND FIVE YEARS BEFORE THAT???? DID PEOPLE ONLY JUST WAKE UP TO THE FACT THAT LAND IS RUNNING OUT????
If you really want to talk about Singapore property I suggest you do some research… Singapore property prices are only back to the same level as the peak of 1996 before the Asian Financial Crisis… And if you look at the property prices before 1996 you will see that they tripled in price from 1991… before they crashed by almost 50%… That’s what happens when people have access to cheap debt and speculate…
So in 1996 the population was 3.8M, in 2013 the population is 5.2M yet property prices are the same…. no real growth….
Sucks to be ignorant and uneducated doesn’t it???
@Expat
True if u only be fren with those category of property agents. My property agent frens, mostly I know them before they become property agents. Our chat time is not only talk about property. Probably u hv different social network. About the banker, what we need is just their recent bank value for certain project. If u can’t get this simple information from ur 2 bank manager frens, probably it is too much to quote them as ur frens.
If u think the info get from iproperty is more accurate that the info I get form the sources above, u really can go ahead with ur way. I won’t stop u.
Not sure whether it is the same size, my fren just sold his unit at 460K.
@Hemsley
I’d like to know if Rm460K is valuation figure or sub sale figure which your fren mark up the price?
U want developers to built property on hills n the reserve forest/ national park isn’t it? The only place suitable for development at the island west is Balik Pulau. True, there r still many land at B. Pulau, actually many cheap landed there. But, until gov build more access road/ tunnel to improve the accessibility of B. Pulau, it is actually not in the picture. Most of my frens bought there years ago, now looking to opportunity to move back to island east.
@Bryant
Subsale figure.
@Expat
Have you bought any property in S’pore ? Do you know how much they are
selling a HDB flat in Pasir Ris now ? 670k in Sing dollar.
Government starts with the end in mind, that is to reduce the household debt to GDP ratio.
If stopping DIBS does not work, they will implement/impose something else.
On propwall website , each of its auctioned property ads has an info about the average sale price for the property to allow us to compare the reserve price with the current market price . Bear in mind that market price is not the same as market value . Market price is an average sale price transacted on the market for such a condo (most often than not owners will mark up the prices higher than market value ) , but market value is the real value of the property set by bank valuer.
Clink on the link below , scroll down the page to the the lower left hand corner.
http://www.propwall.my/classifieds/1206872/villa-emas-bayan-indah-condominium-for-sale-by-lelongtips-fb
On propwall website , at the lower left hand corner of its page for each of its auctioned property ads there is an info about the average sale price for the property to allow us to compare the reserve price with the current market price . Bear in mind that market price is not the same as market value . Market price is an average sale price transacted on the market for such a condo (most often than not owners will mark up the prices higher than market value ) , but market value is the real value of the property set by bank valuer.
@yeahright
Interesting:
Subsale or selling price = asking price (set by owners and agents)
Market value or valuation = actual price ( set by valuers)
Market value is the real value of the property set by bank valuer.
Market price is an average sale price transacted.
In this context, the initial topic of many people saying the price gonna crash is because of subsale/asking/selling price is too high from the valuation? So everyone hope that the price will drop one day and they will be able to buy properties at auctioned/actual price..
I see the patern is similar as the situation in Singapore. Prices of a HDB unit fixed at the valuation price, but there is a Cash Over Valuation (COV) which the owner/seller has the rights to demand from buyer as this is something like a open market policy. Real example from my friends which bought a unit at SGD600K, with COV of SGD60K.
In subsale terms, total is SGD660K.
From the discussion above, clearly shows that Penang is having the same “trend” of this open market. Going back to the topic on DIBS, I am pretty sure it helps a little bit, but still with this open market freedom, it is still a long way to go before prices could crash.
All,
Any disagreement or views over the DIBS thingy?
The average sale price is the average asking price, not transact price. U may average up the asking price in the posts to get the number. And it can be manipulated.
The auction price is very much lower. However, if u attended any auction b4, u may find out most of the time, u will not able to buy with the auction price, except flats.
@Hemsley
Why not able to buy with auction price?
oh wow!.. very long discussion here. And afterall, BNM is not going to outlaw DIBS for the moment….:D…There must have been a lot of lobbying up there by the big developers, giving them more time to push more financial liabilities to “soh-hai” buyers….:)…But don’t say you were not warned later when it really happens.
BNM has officially acknowledged the household debt problem in malaysia.
Hi Bryant,
BNM won’t do anything to “crash” property price, that’s akin to sabotaging the economy of it’s own country, and that’s a traitorous act….:). But it thinks going from 70%(2009) to 83% (now) for GDP to household debt ratio is alarming (~3% widening rate per year). So they are trying to slow things down to avoid assets getting risky.
Effective immediately, properties financing up to 35 years only.
“prohibition on the offering of pre-approved personal financing products.” What are the products ?
In a move to curb spiraling household debt, Bank Negara Malaysia announced today a set of measures including pulling the brakes on pre-approved loans by housing developers, a feature which has allowed many Malaysians to buy properties they could not really afford on their wages.
pre-approved loans by housing developers?
pre-approved loans by housing developers, a feature which has allowed many Malaysians to buy properties they could not really afford on their wages. This statement sounds like the prohibition of DIBS .
@yeahright
I think it refers to personal loan & credit cards.
Take the Villa Emas as example, market asking 430K and above, but the auction price of 330K will attracted many potential buyers. So, the sold out price will never be 330K or any price which is still relatively cheap. I hv a fren previously members of a group that focusing on auction property. To avoid competition, their 1st bid will probably lift the price by 20-30K. So, if may of this groups are still out there, I think public hardly can get this unit probably below 380K. This is just an example for the explanation.
@Hemsley
Experienced bidders never bid on the first auction , they would wait for the 3rd or 4th auction for less 20% – 30 %, that way even if many ppl bid the price would still be cheaper or at market value .
I’ve never heard of housing developers offering personal loans and credit cards to their buyers , was there such a practice before ? Could give me an example which developers did that ?
What about those that recently approved? I know a few guy whose property havent completed that have a few loans up to 40 years. If it also factor those recently approved, sure they gone case, haha.
@Hemsley
In new property there are speculator hike up the price purely for profit.
From what you explained, sounds like even in auction market, these so called more cost conscious “speculator” exist too. I call them “speculator” as well because they had to bid the price higher to get the best property for perhaps investment, hold on a few years till market bounce back and their properties are up for grab 50% to 100% higher. (Excluding those who bought it for own stay of course…)
The only difference I see from these two types of speculator is the difference in the cost of the property.
@yeahright
Not sure if this is correct, what about certain developer like tambun indah provides installment options for the dpymt in 12 or 18month period. Not really personal loan but still some kind of easy pymnt scheme.
@pgkia
I think it applies to new applications and those had been approved
will not be affected.
Bayan Baru, not far from Queensbay.