When will the recent major change in energy prices affect the prices of real estate?

Will it inflate the prices or will it crash the real estate market?

How long will it take to, say, lower or push the prices upwards?

i think u will see impact within months.

i think prices will rise but at the same time property market will slow as energy costs are going to slow the entire economy.

Well, the peak-oil phenomenon affects everybody. Even the Amish! No exceptions! Just how hard will it affect M'sia's real estate prices one way or the other. Prices should sky-rocket, I think. Especially in the prime areas of KL.

I'm not too sure about that. Property prices in Singapore are already falling and expected to fall by 15%. So, how can Malaysia hold up, especially with its added political uncertainties? No sensible investor would like uncertainties. Furthermore, the share markets in this region are also retreating quite badly.

edward, i don't see prices rocketing. world economy is too bad.

winners all, singapore saw a property boom. malaysia didn't. there's a big difference. on one hand tough economic environment will slow things down BUT malaysia's population is growing fast, so it needs more and more property. if the price of building those properties has suddenly gone up then prices of new properties will have to up. developers may take smaller profit margins due to economic environment but we do have 2 competing factors - rising building costs and slowing economy. for the short term it will be building costs that will dominate as that is something that will be more immediate - the slowing economy will take a while to have an effect.

The way I see it, a worldwide recession is on the horizon if it's not already here. However, it may also turn out to be a blessing in disguise as only during such times will the oil price come down to their sensible level.

During this interim period of stagflation (throughout the recessionary period), consumers will be very reluctant to spend unnecessarily. As such, developers will be tested on their holding power of unsold units. If this period is further prolonged, I foresee that property demands, being big ticket items as well as their illiquid nature, will fall, leading to a drop in prices due to excessive supply.

And that was how several of those small developers had gone bust during the last blow-out. Only the fittest will survive during such trying times.

Needless to say, the situation will be even worse for those sub-sale properties, because many Malaysians just don't go for second-hand properties. In addition, those upgraders looking to buy new properties will have a tendency to rid of their existing ones prior to their next purchase. So, this will inevitably affect the decision on their new property purchases.

Adding more to the wound, there are also many "flippers" in the market. These people had never wanted the properties for their own use, but would just resell them for a quick profit towards the completion of the property since there is no longer the property gains tax. If they are going to be stuck with it and saddled with their bank loan (which interest rates are also going to pick up soon), it will be a double whammy should they decide to bite the bullet and sell at a loss instead.

I didn't mean price rising because of good economy. I meant prices go haywire due to peak oil. Was just trying to figure out what's the effect of oil prices on real estate.

I think the housing price(Landed)will up as most of the building materials price has gone up from 50% to 300% and the price(materials) still going up because of the energy cost up.
About the second market, I think will be more demanded as the new development will be lesser, than the buyers and the investor will be back to the second market.

I've spoken with an owner of a construction company and he's expecting the development market to be really bad for a few years because of the oil prices.

Below is an extract from the Singapore Business Times today:

Published June 19, 2008

M'sian builders struggling to cope with higher costs

They'll try to pass on extra costs to buyers, but market already showing softening

By PAULINE NG
IN KUALA LUMPUR

WOULD-BE home buyers are keeping a close eye on new launches after Malaysian developers warned that construction costs will surge as much as a third because of hefty hikes in fuel and power charges.

Although foreign buyers from traditional markets are more cautious now, new ones have emerged from Bangladesh, Pakistan and Russia.
- Regroup Associates MD Allan Soo

But how much more can be squeezed out of buyers - given the segment was noticeably softer in the first quarter of the year - remains to be seen.

Regroup Associates managing director Allan Soo reckons developers will try to pass on the additional costs, but he is unsure whether buyers will bite. 'They'll try. But with today's climate and sentiment, it may be difficult to sell,' he says.

Regroup's Klang Valley Housing Property Monitor, which keeps track of the secondary market, showed a slight decline - even in prime areas. Compared with 2007, when foreigners lapped up many offerings, Mr Soo said this segment 'all but evaporated in the first quarter' of 2008.

Location is the key to whether developers can ask higher prices, says Real Estate and Housing Developers' Association (REHDA) chairman Ng Seing Liong. According to him: 'Just because the cost of materials goes up does not mean the price of homes will also go up.'

After a flat first half, Mr Soo expects the outlook in the third quarter to remain uncertain, citing fuel price increases and political worries.

Prime Minister Abdullah Badawi could face a vote of 'no confidence' next Monday after threats by the small Sabah Progressive Party that its two Members of Parliament will back such a motion against the embattled premier, whose ruling National Front coalition did badly in the March general election.

Local demand has waned, said Mr Soo; it is price-sensitive now. Most developers will likely have to accept lower profits, and smaller ones without strong reserves may not survive the shake-up he sees coming.

Stronger developers are undaunted. In June, Sunrise completed a transaction that analysts place at close to RM180 million (S$76 million) for Wisma Angkasa Raya, on 0.63 hectare of freehold land.

This works out to some RM2,600-2,700 per square foot, given that it has to sell back some of the new space to the original owner at a discount.

The Malaysian developer paid a third more than the previous benchmark set by YTL group for real estate in the vicinity of the Petronas Twin Towers. But Sunrise's view from Wisma Angkasa Raya is quite unmatched: directly opposite the iconic towers.

In the popular Mont Kiara area, Bukit Kiara Properties plans to launch the third of four residential blocks of its high-end Verve Suites, which come completely furnished.

In March 2006, the first block was launched at an average RM570 psf, rising to RM650 in February last year when the second block was launched.

Management indicated that the third block would be priced 'substantially higher'. Industry executives say it is likely to be in the RM800- plus psf range, but expect it to sell well even then.

Although foreign buyers from traditional markets are more cautious now, new ones have emerged from Bangladesh, Pakistan and Russia, says Mr Soo. Koreans, many of whom have settled in Malaysia under the Malaysia My Second Home programme, remain positive about the country.

Another group still keen on Malaysian assets are institutional buyers, with 35 funds showing interest in a building that Regroup is now pitching.

As for these year, it does not matter yet. The main focus is mostly in home values to increase as it will definitely push the global housing market up.