No Property Bubble?

I remember I was reading the below article quite a while ago.

Property Bubble: Fact of fantasy? by Dr Ernest Cheong

Interestingly, he uses an Average Malaysian's take home income as the gauge on affordability. His points I feel are really relevant. Simple, but yet effective. But of course what he did not say is that loans can stretch up to 60 years of age i.e. sometimes allowing 2 generations to pay off for one single property or even eyeing the EPF's savings for part of the repayment. This is how hard for the average man on the street moving forward, with what's left for the savings from EPF.

The points of rebuttal are to counter the article by Dr Jeffrey Cheah (Sunway). If you notice, the more recent houses or apartments built are mainly higher priced units. The argument by Jeffrey Cheah is not going to help to stabilize the housing market in terms of pricing but of course helping the developers.

Another way of looking at is the household loans-deposits ratio. As of recent, the household debts have sort of stabilized while it is still a cause of concern, although some are saying that they are in check. Again, these comparisons are against some of the regional countries. Many a times, comparison against other regional countries are flawed assumptions. Many countries - Hong Kong, Singapore, China inclusive are trying hard to cool down their properties with different types of medicines. Any one affected, it could bring contagion effect to regional countries. The "tomyam effect" did not just limit itself to Thailand in 1997, despite the country being first to get hit. Similarly, with Europe recently.

If you notice housing and consumer loans as a gauge of how well the banks have been doing as well as moving forward, this is the reason why I have stayed away from banks (despite liking bank stocks as a business). I would not call it as a signs of stress but the banks have been continuing to stress test the system far too much as of recent. Yes, Malaysian banks today are much more diversified than before (as in geographical as well as products) but the stress on obtaining deposits due to high loan - deposits ratio, continued low NPLs for while now, high consumption loan (which is bad if too much) worries me. Perceived strong asset quality can suddenly turn to bad at an instant if not kept in check.

At all cost, property and financial sectors have to remain strong and stable as if they are not, the impact to other sectors are just too great.