By Bernama
Thursday, 20 October 2011 17:33
KUALA LUMPUR: Housing and Local Government Minister Datuk Chor Chee Heung has urged small housing developers to adopt the build-then-sell concept by 2015.
"From now until 2015, we are continuing to encourage them, unless they can come up with an iron-clad guarantee that the existing method can provide house buyers sufficient protection," he told reporters after launching Ecco's flagship store here on Thursday, Oct 20.
"I understand housing developer associations have started to talk with insurance companies to come up with a method where the purchaser is adequately compensated and protected if there are too many housing schemes," he added.
Prime Minister Datuk Seri Najib Razak had announced in the 2012 Budget that the government would encourage the construction of more houses using the build-then-sell concept.
For this purpose, Islamic banks have agreed to provide shariah-compliant financing and undertake construction risks, with installments only commencing after the house is completed.
This scheme will be implemented for houses costing RM600,000 and below.
Chor also urged the Prime Minister's Department to give more details on the 1Malaysia people's housing project, saying there is still a lot of confusion about it.
"It is a very noble way to help first-time house owners and medium-income earners to own houses, but I hope they will help us make the issue clearer," he added. — Bernama
http://www.theedgeproperty.com/news-a-views/8600-adopt-build-then-sell-concept-small-developers-urged.html
Friday 28 October 2011
Thursday 27 October 2011
Confessions of a property agent
This is a good piece on Real Estates Agent:
Tuesday, 25 October 2011 12:49
Tuesday, 25 October 2011 12:49
Desperate housewives, lonely single women, and bored retirees.hese aren't just characters on a TV drama series but also some of the people whom property agent Adrian Lee meet regularly.
The 34-year-old associate director of Huttons Real Estate has collected many "war stories" after getting into the business just three years ago. He confesses to being at the beck and call of one desperate housewife in his first few months on the job.
"I was new and I didn't know where to draw the line," says Mr Lee, who lives in a four-room HDB flat in Woodlands.
"She'd call me when her water pipes burst at home and I'd rush down to service her pipes. She also called me when her air-conditioning system broke down and I had to help her find someone to service it."
He says: "I did all that, thinking that she'd let me sell her apartment."
But it all was for naught. One afternoon, the housewife called and told him that she had already sold her apartment through another agent.
"Property agents face all kinds of situations, many of which are negative encounters. It's a learning process and those who succeed are those who persevere and maintain a positive mindset," notes Mr Lee, who declines to reveal his salary.Agents should be presentable and the men should always be in neatly pressed shirts, pants and leather shoes, he says.
And it definitely boosts your image if you drive a nice car, but it is still your professionalism and ethics that get you the business, says Mr Lee, who zips around town in a black Nissan X-Trail.
Most clients prefer pleasant-looking agents with whom they can have a conversation.
Some of Mr Lee's clients have become friends, with whom he goes out for drinks. He even goes on holidays with them.
These clients also introduce their family members to Mr Lee, which leads to more business.
Turning a business relationship to a personal one is a healthy development, says Mr Lee, but being too friendly can also lead to misunderstandings at times.
Once, he was at the receiving end of an indecent proposal from a male client. The client said he would make Mr Lee his exclusive agent if Mr Lee agreed to accompany him on a fully paid holiday in Phuket to "relax together".
Mr Lee, who is straight and a bachelor, rejected the offer.There are also single women who have responded to his ads and called him late at night to pour out their sorrows.
"I have also had customers telling me that they want to go for viewing just to kill time, while waiting to fetch their children or grandchildren from school," says Mr Lee.
"As an agent, I can't refuse to take them to the viewing. Every customer is a potential buyer."
When The New Paper on Sunday caught up with Mr Lee last week, the interview was interrupted by numerous calls from his clients. One of them called from Shanghai to get an update on her recent purchase.
The client, a Chinese national in her 40s who runs a garment business, had responded to Mr Lee's newspaper ad a few months earlier and had bought the apartment without even viewing it.
All Mr Lee did was fax the floorplan to her and helped her in the price negotiation.
He says he has more clients from China and Indonesia these days. A handful of them seek his advice for their properties outside Singapore.
Once in a while they offer to take Mr Lee on fully paid trips to China, Taiwan, Indonesia and Malaysia, to help them assess their foreign property purchases.
Mr Lee's clients fly him by Singapore Airlines and hire chauffeurs to take him around.
Mr Lee says: "I don't get paid for giving advice, but I take these trips as a holiday, where I get to learn more about foreign properties at the same time."Secrets of the trade
1 Always do your homework.
You need to know more than your clients. It is a competitive industry to be in.
Today, more people are investing in overseas properties. Often, clients will ask for an opinion on their foreign purchases.
Good advice will help gain their trust.
2 Sellers may not get the price that they want.
It is important that the agent informs sellers of all the prices that buyers have offered, even if those prices are far below the sellers' asking price.
Regular updates to sellers would give them peace of mind. It would also help to condition them to let go of their properties at a realistic price.
3 Property agents are not financial advisers or professional valuators.
They should not overvalue a property just to get a better response to the listing.
They also should not provide advice on areas where they have no expertise.
Wednesday 26 October 2011
Households seen to drive loan growth
In an article, last Saturday Star BizWeek, it was reported that loan growth will continue due to domestic demand of household consumption. Of all "credits", households financing accounts for 53% of those loans. And out of this, half are residential property loans. The report further suggests that financing for real estates will continue to grow in the year 2012, albeit, slower compared to years 2010 & 2011.
I attached the section on real estates. Readers may log on to the links shown below to read the entire article.
Saturday October 22, 2011
By YAP LENG KUEN
Affordable housingHousehold financing facilities now account for about 55% or RM531bil of the local banking system’s loans, with residential property loans comprising close to half or RM258bil of total household loans, says Wong.
Mortgage loans continue to drive lending in the retail segment. “While there was an initial slowdown in mortgage applications following the imposition of the 70% loan-to-value (LTV) cap last November for the third and subsequent home loans, the momentum has picked up again since March this year,’’ she adds.
Banks have been targeting the mid to mid-high-end segment of the market, although repayment ability is still key in assessing mortgage applications, she notes.
Robust growth was also seen in non-residential property loans, given that these properties are not subject to the 70% LTV cap while the imposition of real property gains tax from 5% to 10% for properties disposed within two years is not likely to deter genuine buyers.
According to MARC, mortgage loans grew by 8.3% in the first eight months of the year compared with total loan growth of 8.7% for the same period. As at end of August this year, mortgage loans accounted for 26.8% of total loans in the banking sector, which was in line with the average 26.9% it accounted for over the past five years (2006-2010).
Sng sees sustained demand for medium-cost housing, especially under the My First Home Scheme (MFHS) and 1Malaysia Peoples’ Housing (PRIMA) initiatives. This is coupled with the ongoing implementation of the mass transit railway (MRT) and demand from first-time homebuyers.
However, Sng expects demand for high-end properties, both condominiums and landed properties, at selected locations to soften.
Nevertheless, growth in Alliance Bank’s mortgage lending is expected to be in the high teens, boosted by expansion in its mobile housing sales teams and enhanced loan packages.
“The implementation of the PRIMA affordable housing projects will fill the void expected from the high-end property financing. Property loans for the middle/affordable segments should see a pick-up this year with Government initiatives such as PRIMA and MFHS, provided buying interest remains sustained and developers offer more creative and well-planned projects,’’ he says.
The recent budget announcement of an increase in ceiling price for MFHS from RM220,000 to RM400,000 with 100% loan financing for first-time buyers and stanp duty exemption will promote home ownership among middle-lower income groups.
http://biz.thestar.com.my/news/story.asp?file=/2011/10/22/business/9748716&sec=business
Tuesday 25 October 2011
New Act with rule for flat-dwellers
Saturday October 22, 2011
By YVONNE LIM
PETALING JAYA: The Housing and Local Government Ministry is working on a new Strata Management Act which would help “guide” those living in stratified property.
“Among other things, the new Act would put the guidelines on stratified property owners’ rights and responsibilities in place,” said its minister Datuk Seri Chor Chee Heung.
The new Act will replace the Building and Common Property Maintenance and Management Act, which was passed in 2007.
Chor said the new Act was necessary as selfishness made it difficult for those living in condos, apartments and flats.
He added that many Malaysians were not civic-conscious and were unwilling to pay for management and maintenance fees.
“I have seen unpainted apartment blocks which look terrible,” he said after launching the Real Estate and Housing Developers’ Association Malaysia’s (Rehda) third Malaysia Property Expo (Mapex).
On the affordable housing projects announced by the Government, such as the My First Home scheme, 1Malaysia People’s Housing (PR1MA) and the People’s Housing Program (PPR), Chor said more details would be announced soon.
Chor also said the ministry had successfully revived 83 out of 167 abandoned housing projects.
“The 83 projects involved more than 15,000 abandoned houses and efforts to rescue the remaining 87 are ongoing,” he said.
Under the Budget 2012, RM63mil was allocated to help revive 1,270 abandoned houses.
Chor invited private developers with a good track record to be “white knights” for these projects so that more revival could take place.
Mapex 2011 will run until Oct 23 at Mid Valley Exhibition Centre. Exhibition hours are from 10am to 9pm daily. Admission is free.
Property sales slip on economy worries, GE-13 talk
From Malaysian Chronicle & Malaysian Insider
KUALA LUMPUR - Property sales have fallen off their 2010 peak while investors and home buyers move to the sidelines as worries of a global economic slowdown, government cooling measures and uncertainty due to the upcoming general election start to bite.
The consensus among analysts and industry veterans appears to be that sales have slowed as the market enters a cooling phase and will continue to slow as buyers take a “wait-and-see” approach, although a hard crash landing of the property market is not expected unless the economy plunges first.
The slowdown is most severe in the luxury high-end segment which has seen prices drop by as much as 25 per cent due to oversupply and unattractive rental yields, prompting more developers to start paying attention to the more affordable mid-market segment which is expected to be less affected by a softening of demand.
Real estate agents SavillsRahim & Co’s James Goh, who is handling a tender of 61 luxury homes here, said however that he does not foresee prices in the high-end segment to go lower after falling by as much as 20-25 per cent since 2008.
“Interest in the tender has been quite strong with a mix of locals and foreigners even, though the luxury apartment segment has been quite slow at the moment,” he told The Malaysian Insider.
OSK Research said in a report last week that Sunway, one of the nation’s biggest developers, expects the property market to soften over the next six months while Paramount Property Development managing director Datuk Ricque Liew told The Malaysian Insider that there has been a “marked change” in terms of sales from last year to this year especially in the high-end segment.
Property analysts contacted by The Malaysian Insider meanwhile expect sales to slow from a high of 21 per cent growth last year to between zero and five per cent growth next year or even contract if the economy takes a turn for the worse.
‘We’re entering a cooling phase but no hard landing is expected,” said RAM Ratings chief economist Yeah Kim Leng. “The housing correction will not be that sharp unless here is a downturn with a lot of layoffs and business failures.”
The Malaysian economy is not expected to enter a recession however with most research houses predicting a growth of between 3-5 per cent for 2012.
Patrick Chay, founder of PropertyTalk & Lifestyle Malaysia, a social media platform for property investors with 448 members, said the mood among members has turned conservative with gloomy economic news and the looming general election, which must be held by the first half of 2013, weighing on decisions on whether to buy.
“There is uncertainty over the next general election as if there is a change of government, there could be new property investment regulations to deal with,” he noted.
Paramount’s Liew said developments in the high-end segment in areas like KLCC and Mont Kiara were the most affected by rulings such as the 70 per cent cap on loan-to-value mortgages for third properties and the inability to attract tenants for rental yield as some properties sit empty for as long as 15 months or more.
“The 70 per cent loan-to-value ratio for third houses has hit the high-end market as people who buy those units tend to have more than two properties already,” he said.
Liew added that a slowdown would potentially be good for the market as it would stabilise land prices.
“For those who do not build speculative properties, we’re not worried,” he said. “We build based on real selling prices not inflated prices.”
Property consultant and valuer Elvin Fernandez of the Khong & Jaafar group of companies said properties had historically been priced at 4-5 times household income but had shot up to as much as 10 times income, while rental yields for the benchmark double-storey terrace houses, especially at hot spots, had slumped below the three per cent threshold.
“The mood and sentiment has changed,” he said. “A lot of sales have slowed down and developers are not selling as briskly as before.”
He noted however that while property prices should return to their normal value of 4-5 times household income over the long term, they seldom drop drastically during a correction but instead stay flat.
The Valuation and Property Services Department (JPPH) of the Ministry of Finance, in its first half report for 2011, said that against the first half of last year, the volume and value of transactions recorded double-digit growth of 18.1 per cent and 29.7 per cent respectively but grew at a lower rate of 10.2 per cent and 12.6 per cent respectively when compared against the second half of last year.
Former JPPH deputy director-general Datuk Mani Usilappan said however that there is generally a lag in terms of data collected in the first-half report which is more reflective of transactions done toward the end of last year.
“I am not confident that there will be a correction,” he said. “What will probably happen is a slowing down of the take-up rate.”
Mani, who is now a real estate consultant, added that if the government wants to curb inflation, it should have raised the real property gains tax (RPGT) to at least 15-20 per cent instead of the 10 per cent as announced in the recent budget.
Saturday 22 October 2011
Property pointers No. 5
Saturday October 15, 2011
“Demand for landed units on the mainland and Penang island will continue but yield on the island is expected to be low, at 1% or 2%. The price movement for this year has been greater than last year. We continue to see land prices going up. For the lower to mid-end, prices are still moving. Demand is expected to remain firm for properties priced RM600,000-RM700,000 and below. For those between RM800 and RM1,000 per sq ft or about RM1mil, people will have adopted a wait-and-see attitude.
“Currently, prices on the mainland is a quarter or a fifth of those on the island. Penang people are beginning to find it too expensive on the island and are moving to the mainland.”
Affordability vs yields
Saturday October 15, 2011
By EUGENE MAHALINGAM
Balancing the need for affordable housing with property market speculation
SHANKAR, a 27-year old law degree holder, works as a paralegal with a law firm in Kuala Lumpur and earns below RM2,000 a month. He is currently studying part-time for his Certificate in Legal Practice (CLP).
Shankar and his fiancee, a kindergarten teacher, hope to be able to buy a home by the time they get married later next year. He admits that with both their salaries combined, affording a home in the Klang Valley is indeed a tall order.
Shankar is hopeful that once he is a qualified lawyer (after completing his CLP and once he has been called to the Bar) and earning a better salary, both his wife and him will be able to afford a nice place in the city.
“It is our dream to have our own house,” Shankar says. Both his fiancee and him currently live in their respective parents’ houses, some 50km apart.
Here’s the irony. Once he completes his CLP, but before he can be called to the Bar, Shankar has to do nine months of chambering (pupilage). During that nine months, his salary would actually drop (because he would be hired as a student instead of an employee)!
“It’s how the (legal) industry works, sadly. It does not help that property prices are also very high in the Klang Valley. Sometimes I wonder if we would even realise our dream of buying our own house,” laments Shankar.
Shankar’s plight is shared by many Malaysians with low salaries who, while struggling to make ends meet, are also hopeful of having a permanent roof over their heads – one that they can proudly declare their own.
The residential property market in 2012
It does not help that residential property prices are constantly on the uptrend.
“Property is unique, in the sense that they’re big ticket items that are virtually recession-proof. Today, it’s at one price, tomorrow it will definitely be higher,” says one industry observer.
According to data by the National Property Information Centre (Napic), the price of the “average house” in Malaysia reached RM206,513 in the first quarter (Q1) of 2011. The price increased steadily from the previous four quarters; RM189,604 (Q1 2010), RM194,286 (Q2 2010), RM199,085 (Q3 2010) and RM203,903 (Q4 2010).
“The highest prices were recorded in Kuala Lumpur at RM438,150, Sabah at RM325,676 and Selangor at RM307,586. Johor registered the price at RM147,441 while the lowest prices were noted in Perak at RM127,096, Kedah at RM126,940 and Perlis at RM115,072.
“In Q2 2011, the price of the “average house” in Malaysia increased marginally by 1.1% to RM208,725. Kuala Lumpur continued to record the highest of all house prices at RM442,864,” said JPPH.
Next year, property price increases are expected to continue in Malaysia, albeit at a lower rate, due to rising inflation and slower economic growth.
Citigroup in a recent report says global economic growth (at current exchange rates) is expected to slow from 4% last year to 3% this year to 2.9% next year. This was a downward revision from its forecast last month of a 3.1% growth for this year and 3.2% for next.
Property consultancy DTZ Nawawi Tie Leung Sdn Bhd executive director Brian Koh reckons that housing prices could increase 4% to 5% “across the board” next year.
“We expect a soft landing of property prices next year due to rising inflation. Furthermore, people are more cautious (about their spending),” he says.
“After strong increases in property in the last two years, especially within the Kuala Lumpur area, we expect price increase to be more gradual next year,” Koh adds.
Property consultancy, VPC Alliance (KL) Sdn Bhd managing director James Wong says he does not expect the outlook for the local housing sector next year to be as vibrant as it is this year.
“The economy is facing a slight slowdown and disposable income will be less. This explains developers’ push to launch as many projects as possible.
“Next year, we are expecting less recorded transactions and launches within the primary housing market.”
With fewer launches in the primary housing market, many buyers will look to the secondary market, Wong says.
Real Estate and Housing Developers’ Association Malaysia (Rehda) in a recent briefing says it is “cautiously optimistic” of the housing market outlook in the first half of next year despite a marked increase in building material and labour costs as well as a slowdown in economic activity.
Respondents to a Rehda survey reveal that developers are more optimistic about the second half of this year than the first half of next year. Most respondents said prices would likely rise by up to 20% in the second half of this year, with 47% of respondents planning to increase selling prices by at least 15%. The survey showed that launches in the period were equally split between strata-titled and landed properties.
At the briefing, Rehda president Datuk Seri Michael Yam reportedly said the industry was concerned about how the local economy would be affected by external forces including the pressure on the sovereign debt ratings of Malaysia’s developed market trading partners.
Research houses, meanwhile, have started to downgrade the property market.
HwangDBS Vickers Research in its recent research report says there are signs of property sales slowing down, due to less mortgage applications and approvals (due to banks becoming stricter with financing margins), developers delaying launches and buyers cancelling bookings.
“Mortgage approvals and applications eased from July to August 2011, after hitting record highs in June,” it said. However, for the first eight months of 2011, mortgage approvals and applications grew 25% and 10% respectively year-on-year, which was still ahead of the total banking sector average of 20% and 4% year-on-year respectively.
The research house also says it sees a risk to Malaysia’s economic growth amid the current global financial malaise.
“As property sales correlate strongly with GDP (gross domestic product) growth, demand will likely weaken going forward, which could dampen property prices. If there is a recession (in 2012) property sales could drop by 10% year-on-year on lower volume sales and average transacted prices.”
The need for more affordable housing
With rising inflation and spending power being curbed, the chances of people like Shankar are a little bleak. Fortunately for people like him, there is the My First Home Scheme (MFHS). Launched by the Prime Minister in March, the scheme allows 100% financing for first-time house buyers earning less than RM3,000 a month to purchase homes below RM220,000.
The limit was increased to RM400,000 by Budget 2012, with joint loans between spouses. This comes into effect next January.
“Increasing the amount will allow both of us to apply for our dream home,” says Shankar, who is happy with the Government’s recent budget announcement.
According to reports, seven areas within the Klang Valley have been identified under the scheme, namely Damansara, Cyberjaya, Putrajaya, Shah Alam, Puchong, Rawang and Klang.
“The MFHS is a good move, so is the move to increase the price of the homes to RM400,000 from the previous cap of RM220,000,” says VPC’s Wong.
According to Napic, more than 214,000 transactions took place in the property market in the first half year of this year. Of that number, the majority (66% or 142,600 transactions) was made up of properties priced below RM200,000. Just 10% (or 22,500 transactions) were properties priced at more than RM500,000.
“With the bulk of transactions below RM200,000, the MFHS is timely,” says one industry observer. The scheme has also received criticism – opponents have argued that RM400,000 is deemed too high to be considered as “affordable housing.”
“RM400,000 is too high for a first-time buyer. We need affordable housing at sustainable prices. The scheme doesn’t send out the correct message,” one industry observer says, while another analyst says he is supportive of the move to increase the limit to RM400,000.
“It would encourage more developers, especially renowned ones, to build properties for first-time buyers. They may be put off from buying homes worth RM220,000 and below, especially with higher raw material prices.”
Some developers have, however, expressed intention to develope mass housing projects. Mah Sing Group Bhd earlier this month announced plans to launch linked beginner homes, with prices estimated to begin from RM390,000 in Rawang by as early as the first half of next year.
Earlier this year, SP Setia Bhd also proposed to purchase 1,010.5 acres in Ulu Langat, Selangor to build starter homes priced from RM300,000.
Curbing speculative prices
Budget 2012 also proposed that a real property gains tax (RPGT) of 10% be applied to properties held and disposed of within two years. Meanwhile, the rate of 5% will be maintained for properties sold within the third, fourth and fifth years after purchase.
The current RPGT, imposed after Budget 2010, is 5% for all properties sold within the first five years of purchase. Following the budget announcement, industry observers opined that the 5% increase in the RPGT, for units sold within the first two years after purchase, would have little impact on speculative activities in the property market and escalating house prices.
“The minimal increase is unlikely to curb speculation,” says an analyst.
Wong concurs: “The 10% imposed is not much as it is only imposed on the gains and is a manageable quantum.”
Friday 21 October 2011
Property pointers No. 4
Saturday October 15, 2011
“In Johor, price increase is expected to be gradual. Areas with good connectivity will be popular. In the last several years, the emphasis on infrastructures like highways has helped to spur interest and prices. The western coastal highway from Skudai to Bukit Indah has made travelling a breeze and prices have moved 10% or more. Developers are expected to report good sales in the near future although September was a soft month, as a result of the US downgrade in August. Iskandar Malaysia will become more visible and is expected to generate interest from the Japanese, South Koreans and Singaporeans.”
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