Outlook on Middle Range Rental Property Prices

Reasons Middle Range Property Prices Going Up
1) Increase in commodity prices
2) Low financing cost
3) Relatively high margin financing (compare to other region in SEA)
4) Economy growth spur increase in purchasing power
5) Investor rush in to lock in low installment on rising interest rate environment
6) Increase on overall price from inflationary pressure
7) Extension of MRT link across greater KL
8) Increase of middle income earner to stay in middle range property

Reasons Property Prices To Go Down
1) Oversupply in property
2) Less speculator in the market (70% margin financing on 3rd property loan)
3) Reintroduction of RPGT

Suggestion:-
Focus on middle range rental property. On increasing property prices, its more difficult for young exec to own a property thus demand for property rental will increase. On the expansion plan of Greater KL MRT project, target properties which are within the "radar" of proposed LRT location. Rental price will appreciate along with property price and also installment thus on the environment of rising interest rates and commodity prices, rental price shall continue to appreciate. There is potentially flat time on property prices however i dont think there shall be any major correction in rental based property as rental income is downward sticky thus property price is always a function of the rental yield from property (or vice versa which conservatively is 5% of property price). If economy continue to do well, low income will move low range property to middle range property while if economy turn the another way, high income will move from high range property to middle range property thus ensuring demand on such rental market at any time. Any capital gain shall be attribution of a new township plan. For value buy, look at Kajang or Sungai Buloh.