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Democratising Property Investments
What I wish to share today 1. Property sector outlook
2. How theedgeproperty.com can help you
make better property investment decisions
Property Sector Outlook
• The property market, in terms of transactions, has been sluggish for well over a year.
• Cooling measures was put in place effective from Jan 2014.
• Positively, prices have not fallen but have
continued to rise. Malaysian Home Price Index - average prices increased 7% in 2014, a deceleration from 9.6% in 2013, 12.2% in 2012, 10% in 2011 and 8.2% in 2010
Property Sector Outlook
• Ingredients for a structural property downturn were already well in place before the Budget 2014 measures.
• Home prices have run ahead of wage growth, especially in urban
areas, where growth has been strongest, while the middle class is seeing their disposable income curbed by higher inflation, rising costs and now the GST.
• Malaysians are already very highly geared, especially on property.
Our household debt to GDP ratio of over 87% is the second highest in Asia. Going forward, this means less ability to borrow or spend.
• The big question is: if the property outlook is negative, how bad
will it be? Was there a bubble and as a result, will there be a crash? Will prices also fall, after the huge decline in transactions?
Malaysia House Price Index
0
2
4
6
8
10
12
14
100
120
140
160
180
200
220
Mar
-200
0
Dec
-200
0
Sep-
2001
Jun-
2002
Mar
-200
3
Dec
-200
3
Sep-
2004
Jun-
2005
Mar
-200
6
Dec
-200
6
Sep-
2007
Jun-
2008
Mar
-200
9
Dec
-200
9
Sep-
2010
Jun-
2011
Mar
-201
2
Dec
-201
2
Sep-
2013
Jun-
2014
% Index
Malaysia House Price Index (Mar 2000 - Dec 2014)
Malaysia House Price Index (LHS) YoY Growth (RHS)
*Source: Bloomberg ; Dec-2014 figures are preliminary
Last 5 years • Home Price > Income
• Average home prices increased
57% between end-2009 and end-2014
• Home prices doubled in prime areas within the Klang Valley, Penang and Iskandar Johor.
• Outpaced total income growth
of 31% in the same period.
Price shot up sharply last 5 years
Home Price vs Income Growth
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
2000 to 2009 2010 to 2014 2000 to 2014
Home price vs income growth
Home price growth Income growth
Between 2000 and 2009 • Home Price < Income • Average home prices rose by just
39%, below “real inflation” and wage growth rates.
• In that same time, the average Malaysian’s income actually doubled.
Since 2000 Average home prices up by 113% to RM295,345. • Income per capita up by 160% to
RM35,002.
Price gains over the past 5 years not “bubbly”, but more of a “catch-up” process. And over the longer term, prices have still slightly lagged income growth, but are close to an “equilibrium” level.
Housing Supply
-10
-5
0
5
10
15
20
25
30
Jun-
2001
Dec
-200
2
Jun-
2004
Dec
-200
5
Jun-
2007
Dec
-200
8
Jun-
2010
Dec
-201
1
Jun-
2013
Dec
-201
4
%
Total Incoming Housing Supply YoY Growth (June '01 - Dec '14)
*Source: CEIC **Dec 2014 figures are preliminary
• Housing supply grew by just over 6% per year from 2002 to 2007
• Supply was absorbed by purchasers
buying on cheap credit
• Banks redirected more loans towards households from corporates following the Asian financial crisis.
What caused the earlier lag in prices? (2000 - 2009) Supply
Growth in Incoming Housing Supply
0
100
200
300
400
500
600
700
Jun-
2000
Mar
-200
1D
ec-2
001
Sep-
2002
Jun-
2003
Mar
-200
4D
ec-2
004
Sep-
2005
Jun-
2006
Mar
-200
7D
ec-2
007
Sep-
2008
Jun-
2009
Mar
-201
0D
ec-2
010
Sep-
2011
Jun-
2012
Mar
-201
3D
ec-2
013
Sep-
2014
Units '000
Total Incoming Housing Supply (June '00 - Dec '14)
Total Kuala Lumpur Selangor Others
*Source: CEIC **Dec 2014 figures are preliminary
• Post US sub-prime crisis in 2008-09, developers cut back on launches.
• Housing supply growth rates
halved for several years.
• Supply cuts, combined with the earlier lagging price growth, low interest rates, ample credit and higher wages caused prices to rise sharply.
Going forward, however, incoming supply is growing strongly again after the recent boom, and this will put pressure on prices again.
Affordability and Financing
6.06.57.07.58.08.59.09.5
10.010.511.0
Mar
-200
0Se
p-20
00M
ar-2
001
Sep-
2001
Mar
-200
2Se
p-20
02M
ar-2
003
Sep-
2003
Mar
-200
4Se
p-20
04M
ar-2
005
Sep-
2005
Mar
-200
6Se
p-20
06M
ar-2
007
Sep-
2007
Mar
-200
8Se
p-20
08M
ar-2
009
Sep-
2009
Mar
-201
0Se
p-20
10M
ar-2
011
Sep-
2011
Mar
-201
2Se
p-20
12M
ar-2
013
Sep-
2013
Mar
-201
4Se
p-20
14
Malaysia Home Affordability (Mar '00 - Dec '14) (House Price/GNI per capita)
*Source: NAPIC, BNM **Dec-2014 figures are preliminary
• Number of years it takes to buy an average home – is now at about 8.4 years.
• Near the highest levels since mid-
2005
• The ratio since 2000 been between 10.6 years in 2001 and 6.3 years in 2008.
• Urban-rural divide is very wide. Average house price in the country was RM295,345 BUT the average for Kuala Lumpur was RM676,620 and Selangor was RM441,383.
To buy a home in Kuala Lumpur, one has to earn 2.3 times more than the national average, and you will probably end up with a home half the size.
Household Debt
5
7
9
11
13
15
17
60
70
80
90
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
% %
Household Debt to GDP ('02 - '14) Household Debt to GDP (LHS) Annual growth household debt (RHS)
*Source: BNM
• Household debt-to-GDP ratio in Malaysia standing at 87%, at the end of 2014.
• Ratio accelerated sharply over the last six years, from 60% at the end of 2008.
Residential Loan Disbursed and Approved
• Build-up of debt followed robust
loan growth for residential mortgages, which has been growing at double-digit figures until very recently. Esp DIBS !
• Banks major driver of property market - financing provided the liquidity to absorb excess supply in the earlier part of this decade, and then helped raise prices.
-20
-10
0
10
20
30
40
50
60
Jan-
2007
Jul-2
007
Jan-
2008
Jul-2
008
Jan-
2009
Jul-2
009
Jan-
2010
Jul-2
010
Jan-
2011
Jul-2
011
Jan-
2012
Jul-2
012
Jan-
2013
Jul-2
013
Jan-
2014
Jul-2
014
Jan-
2015
%
Residential loan disbursed YoY % Growth (Jan '07 - Jan '15)
*Source: BNM
Residential Loan Applied
-40-20
020406080
100120
Jan-
2007
Jul-2
007
Jan-
2008
Jul-2
008
Jan-
2009
Jul-2
009
Jan-
2010
Jul-2
010
Jan-
2011
Jul-2
011
Jan-
2012
Jul-2
012
Jan-
2013
Jul-2
013
Jan-
2014
Jul-2
014
Jan-
2015
%
Residential loan applied YoY % Growth (Jan '07 - Jan '15)
*Source: BNM
• Banks and consumers now more cautious.
• Ability to lend and borrow is getting more challenging.
• Liquidity to fuel the housing market will also be more constrained.
• Mortgage applications and approvals growth both declining sharply.
• Coupled with increasing supply and the other factors, foresee that the property market will be dampened in the near term.
-40-20
020406080
100120
Jan-
2007
Jul-2
007
Jan-
2008
Jul-2
008
Jan-
2009
Jul-2
009
Jan-
2010
Jul-2
010
Jan-
2011
Jul-2
011
Jan-
2012
Jul-2
012
Jan-
2013
Jul-2
013
Jan-
2014
Jul-2
014
Jan-
2015
%
Residential loan approved YoY % Growth (Jan '07 - Jan '15)
*Source: BNM
A major wildcard to the above negative prognosis? A possible faster reversal for a more positive property outlook – is interest rates. Instead of rising domestic interest rates, it is now more likely that interest rates will fall before the end of 2015. Why? • Falling interest rates worldwide with an ongoing currency war is the
prevalent global strategy. • Countries are devaluing their currencies to boost economic growth
through exports.
• Gives room for Malaysia to also reduce domestic interest rates to boost exports without too negative an effect on the Ringgit.
• A lower mortgage rate, higher export earnings, more employment and
higher wages will all be very positive for the property sector.
• To further promote economic growth, curbs on domestic borrowings and foreign purchasers will have to be relaxed.
Are there pockets of opportunities even as the outlook for the industry and the economy as a whole are negative? • When the tide rises, everyone gets lifted. But the smart investors are
the ones that are capable of finding the opportunities even as the tide recedes.
How theedgeproperty.com can help you
Tools at theedgeproperty.com
Bird’s eye view of property prices – What is HOT
View by • State • Property type • Price per psf • Absolute price • Volume
Ability to zoom in & out
Captured on 21 April 2015
Tools at theedgeproperty.com
Location search to view price information for a selected area or streets
Search by • Project
name/building • Street
Captured on 21 April 2015
Analyst’s research, property news
Proprietary & partners’ news
Featured properties from developers
Theedgeproperty.com
Finding out the right price for the property
Search for project
• Indicative average price • Indicative asking rental
rate/yield
Ability to fine tune search by time period & unit size
Tools at theedgeproperty.com
Transacted sales information & asking rental of selected property
Learn all about the amenities in the surrounding area
Learn all about the properties in the surrounding area
Customise selection by • Distance • Transacted price (min, ave,
max) • Asking rental (min, ave,
max) • Asking rental yield
Location of nearby properties in relation to selected property
Interactive ‘Edge Fair Value’ algorithm to obtain sales/rental prices
Search for any property to obtain indicative sales/rental value
Based on historical transaction data and adjusted listing data
Create your own list of properties or locations to track
Watchlist will notify you via email when a property which meets your criteria is transacted/listed
Create your own Watchlist based on: • Project name/type • Select radius • Unit size • Absolute price • PSF price
Multiple ways to view listings
Listings are linked to fair valuation and analytics • Allow consumers to
further research and view info for projects
What’s next and why?
What’s Next
• The Edge Property will expand to Thailand, Indonesia & Hong Kong by Q4’15
• The Edge Markets v2.0 will be launched • The Edge Markets will expand to Thailand, Indonesia & Hong Kong by Q3’15 • The Edge Unit Trusts will be launched in Q3’15 Why?
• We believe democratizing investments is a worthwhile objective. • Our goal is to level the playing field and to help investors make better
decisions with tools and information
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”. Maimonides
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