Klang Valley Property Bubble?

The property price across Malaysia especially Klang Valley has doubled since 2009. Yes, in my view, it is definitely a bubble. The question is when this bubble is going to burst?

What causes this bubble? Based on my observation, the phenomenon happens this way:

During the economy crisis, the banks in Malaysia were skeptical on corporates or enterprises borrowings. While the Bank Negara monetary policy has reduced the interest rate and SRR from nominal 4% to 1%, the focus has been switched to consumers borrowings. Hence, easy credit on property loans has taken place. The banks are aggressively looking for consumers loans, and the loan package has been never that attractive before, i.e. BLR - 2.3%, 3-year or shorter period of locking period, etc. 

  

In 2008, the property market has hit its rock bottom. Developers started to introduce 'developer interest-bearing scheme'. Under this scheme, all the interest during construction will be absorbed by the developers. Believe it or not, the interest has already factor in the selling price of the properties. Such practice does not benefits the home buyers, but has caused the price hike in properties.

With easy credit and developer interest bearing scheme, developers are selling hope to the buyers with the myth of properties price will only goes up, and buyers will make profit upon completion. Yes, the story has convinced many of us.

To ensure good take up rate, the property is launched by several phases, and the price is increased by 5-10% with the launches of new phases. For example, phase 1 is taken up by only 50%, to improve the sales of phase 1, phase 2 price is indicated to be 5-10% higher than phase 1 with same specifications, and instead of launching the phase 2 right away, there will be many round of so-called pre-lanch and soft launch. The same trick apply to all the subsequent phases as well. With this method, the developers are also testing the limit of price acceptance of the home buyers. I am not sure if you still be able to make profit in buying new property now, but surely the developers are enjoying fat profit margin out of us.

Come back to the major concern. Is the Klang Valley property market a bubble?

If the answer is YES, the market shall crash between 2014-2016 because most of the properties will be completed with CF ready then.

Annoying Neigbor

The quality of  neighborhood is one of the most important criteria to decide where we are going to live. Due to this reason, many of us is willing to pay some premium to stay at higher class residential areas that normally perceived to be safer and less annoyed.

6 years ago, I have bought my family a house in a upper middle class community. It was a new development at that time. The neighborhood are close to perfect, most of them are polite and considerate.

About a year ago, one of the house owner has moved out and come the new neighbor. This new comer has one very annoyed habit. He is a car lover, he will turn on his car engine twice a day during weekends, and each time will be at around 30 minutes. The worst part is it is an old car (Proton Lancer- Proton car but make up like a Mitsubishi Lancer Evolution), the exhaust smile is terrible.

It is very annoying that when comes to weekend, most of us will need to close up the sliding door and windows twice a day, each time 30 minutes to prevent the hazardous exhaust gas from coming in to our house.

I'm not a car lover. can anyone tell me what is the purpose of turning on the engine and let it idle twice a day? The car is not idle during weekday, the bugger is driving it to work daily.

Car is just a machine that suppose to bring us from point A to point B. Definitely it has defeat the purpose if much attention is needed to keep the car in good condition (Anyhow I don't think the car is in good condition).

Sales Consultant - The right approach

Today, I was enlightened by a speech from a very experience leader. He mentioned that all the sales executives shall have the objective to either improve the profitability or reduce the operating costs of the clients from the offering.

I still remember that when I was in Videojet business (industrial marking & coding), someone asked me about my career objective. The answer from me is as below:

"I would like to improve the productivity of the clients by offering the right solution that meets or exceeds industrial safety standards."

Be it industrial selling, corporates selling or retail business, sell only when there is a real requirements or needs. Do not push the items to the clients, especially in consumers business as it is sinful. And for buyers, you are sinful as well if you bought something that you do not need it.

When the item reached a person who does not need it, it will ended up as a rubbish. And, it takes a lot of resources to manufacture the rubbish and along the supply chain, it creates huge amount of carbon footprints.