Thursday, April 23, 2015

Property Market Direction 2015 to 2018

Current Property Loan rejection rate: 60%-70%

WHAT WILL HAPPEN NEXT (referring mainly on CONDOS)?

Between year 2015- 2018 - There will be many units of CONDOS completed.  The real effect will be felt the most in 2016/7, that is when speculators holding power drop after one or two years of no rental or sale.  

This is mainly because many launches in 2011-2014 (easy money/loan during this period).  Prices went double within 2011 and 2014 for many condos.  So, those who just got their units completed, there will be very FEW buyers, one, because it is HARDER to get loan and two, the new launch is cheaper (but in smaller units).

Given a good scenario, a speculator has one to two years holding power.  Some only 6 months.  Let just say, a speculator gets his unit at say RM800k for a 1,000sf, and there is no tenants (due to high rental) and not many buyers, his monthly commitment for loan say, RM3,500 per month + RM300 maintenance + other costs (quit rent and assessments) - it will cost this speculator about RM50k per year.

Each year will cause him RM50k, how many years do  you think he can sustain?