Worldwide House Price Trend (2006–2010)

This is the worldwide house prices trend in the past 5 years which includes USA, Japan, Britain, China, Australia, Singapore and Hong Kong. Too bad, there is no data for Malaysia but you can kind of guess that  Malaysia should be somewhere  below China and follow the similar uptrend like China. Let’s check it out the graph below:

Source: www.econmist.com

The house price fell in USA was due to the subprime mortgage crisis in 2006. The house price drops by ~35% after this crisis and has never been recovered until today. By the way, this trend is also similar to Ireland which is not shown in this graph (I don’t want to make the graph too crowded) . As for Japan, the house price has never been recovered after the Japanese asset price bubble from 1986 to 1991. Surprisingly if you look at the house price trend in Britain, it was that badly affected by the subprime mortgage crisis if compare to USA. 

The house price for the rest of countries especially for Asia (except for Japan – i.e. China, Hong Kong, Singapore) and Australia, is moving uptrend. The slight downtrend in 2008 – 2009 was probably due to the stock market crash during that time.  After the stock market crash, investors start moving their target to real estate or property. That is probably the reason why you see the house price has been increasing dramatically after 2009 until today.
 

When is the next bubble burst?

You can kind of expected the house price in the western countries will probably stay flat in the coming years. But what really interesting here is the property market in Asia. Will it be keep going up or is it already at peak? Bloomberg reported Hong Kong is the world’s most expensive place to buy home. 65 million apartments in China are said to be empty creating “Ghost Cities”. Are these obvious enough to tell the property bubble is going to burst soon?


Well, I do not know but if you ask me about Malaysia, I think generally most of the investors in Malaysia have the strong holding power and this makes me think the property bubble bust is unlikely to happen in Malaysia. Could I be wrong? Another very interesting discussion is the property price in Penang and KL seems to have huge gap as compared to the other states or cities within Malaysia. Can the bubble burst only happen within certain states or cities (e.g. Penang and KL)?

So, what do you think? Do you think property bubble burst is forming in your country? What is the next trend?

Malaysia Property Market ROI by States in 2010

When you buy a property, the first thing that come to you mind will mostly likely to be “What is my potential return of investment (ROI)? However you know that no one can guarantee you the exact ROI. What you really can do is the study the past history or so called track record. What do you think of the property capital gain in Malaysia for all the states? Let’s see…

Malaysian State	Average Transaction Value (RM)	2010 House Price Increase (%)
Kuala Lumpur	488,522	25.3
Putrajaya	310,625	-27.2
Pulau Pinang	265,078	17.1
Sabah	222,698	17.4
Labuan	204,852	-11.6
Johor	166,802	12.3
Sarawak	142,927	7.9
Pahang	127,159	8.4
Melaka	127,081	4.4
Kedah	122,772	-5.2
Negeri Sembilan	116,808	-2.4
Perlis	106,562	7.6
Perak	94,764	3.3
Kelantan	82,337	39.5
Terengganu	74,056	7.7

Source: NAPIC, 10MP, RAM Economics

This table concludes few things as in general:

• The most expensive houses in Malaysia is at KL. Well, I thought is Penang but Penang is not even at the second price. So, can I say Penang property is still considered cheap as compared to KL and Putrajaya?

• The cheapest houses in Malaysia is at Terengganu and followed by Kelantan. Well, this is not a surprise to me. Want cheap house? Go to Terengganu!

• The highest ROI of property investment in Malaysia is at Kelantan! Wow, again my impression is either KL or Penang. Another Blogger (i.e. Kris) told me is Sabah which is kind of surprise to me too. It has the same capital gain (i.e. 17%) with Penang.

• The lowest ROI of property investment in Malaysia is at Putrajaya! Who say property sure make money? Look at Putrajaya, Labuan, Kedah and Perlis. They have –ve ROI. I’m surprise that Kedah is –5.2% or perhaps I should said I”m sad to hear the news. Hopefully this doesn’t apply to my property in Kedah.

Discussion

Having said so, this data is only for 2010 and if you look at it for long term (e.g. 10 years), the property price should appreciate around 3% to 4% (based on my personal observation), not as much as you think and due to the compound interest you should see the capital gain is around 30% for 10 years or since year 2000. 

The property price went up crazy in the past 2 years (i.e 2009 and 2010) was due to the severe stock market crash of 2008 and therefore investors switched their focus to the property market (safest investment vehicle). 

So what is next? One high possibility is the property market may be stable down for the coming years as now the investors are switching back to stock market. What do you think?

Do You Believe Feng Shui in Property Investment?

Do you believe in Feng Shui? If you do, I’m sure you do consider Feng Shui as part of your decision making process before you invest or buy a property. But if you don’t, will you still take Feng Shui into consideration?

Before we can answer these questions, let’s look at what type of Feng Shui believers out there in the market. So I interview my friends, relatives and strangers too. The conclusion is there are 4 different types or 4 different level of Feng Shui believers:


Type 1: Person who does NOT believe in Feng Shui at all.

This type of person does not give a damn about Feng Shui at all. These people are usually my non-Chinese friends such as Malay and Indian friends. Well, I have one Indian friend who believe in Feng Shui too but I think that is the minority.


Type 2: Person who believes in Feng Shui only at surface

This type of person believes in Feng Shui only at surface level. They know the basic rules of Feng Shui and some basic Feng Shui’s fundamentals such as house should not face directly to the road and etc.


Type 3: Person who believes in Feng Shui based on common sense

This type of person do their own research about Feng Shui and make common sense out of it. For items or Feng Shui practices that are out of their common sense, they choose to NOT believing in them. These are usually an educated people with strong analytic skills (e.g. an engineer). So, I”m actually belong to this type.


Type 4: Person who very believes in Feng Shui by knowing the rules

This type of person are the strong believers in Feng Shui and they know almost all the Feng Shui’s rules. However, they need someone who they think is reliable to tell them the rules of Feng Shui. So, they listen from friends or relatives about all these Feng Shui’s rules. For those rich one, they usually hire a Feng Shui master to tell them these “rules”.


Which Type of Feng Shui’s Believer You Want to Be?

No matter which type of Feng Shui believers are you, ultimately you should always invest or buy property at least like type 3 or type 4 of Feng Shui’s believer. The reason is very simple because type 3 and type 4 are the superset for the rest of the types. Look at the diagram below for better illustration.

The diagram basically tells you few things:

• If you’re type 3 and type 4 of Feng Shui’s believers, you can sell your house to type 2 and type 1.
• If you’re type 2, you can only sell to type 1.

Note: The reasons why you see there is overlap between type 3 and type 4 is because there’re rules that doesn’t make sense to Type 3 and also Type 3 of Feng Shui’s believers tend to always create or invent their own Feng Shui’s rules.

So now, which type of Feng Shui believers you want to be? Even though you don’t believe in Feng Shui or even Feng Shui is a fake thing, you should also start to change by analysing your property with your Feng Shui.

This is a demand and supply rule and has really nothing to with whether you believe in Feng Shui or not. Good luck in your property investment!