Property prices staying put till 2016

I read one different opinion from the research houses of banks today. It also provides a different point of view from some property outlook seminars lately. Instead of the terms such as cautiously optimistic, Siva said that prices will not recover until 2016. He stated clearly that the prices would be tough for 2014. Instead of recovering within this year, albeit towards second half and beyond, Malaysian property market will only start rising again in 2016. One of the main causes was due to the speculation in the primary market, so much that there were more properties bought than there are real demand. In other words, it was not bought by people who needs them but more on people who wants to flip. 

In fact, he said that the days of 20-40% appreciation within just a few years are now over. There is however a silver lining. The secondary market would begin to show its shine. He gave an example, ‘A new launch in Bangsar could set you back RM1,500 per sq ft, compared to RM800-RM1,000 per sq ft for an existing property. The discount goes up to 50% in some prime areas,’

An analyst with TA Research also said something which has been happening, property players have noticed a marked slowdown in sales since the various curbs were put in place. I think this is already happening and we are starting to see a lot of launches are said to be super cheap, RM500psf etc.   My friend showed me a project in Old Klang road, a new condo for just slightly above RM500psf. I think the buying interest is still there but uncertainty meant that a lot of people may put off their purchase until it is clearer on where the market is heading.

One thing’s for sure. If new property launches continue to be cheaper, it will start to also affect the current market. This is indeed a good news for real buyers who need a roof over their head. Alternatively, if you believe what Siva is saying, the perhaps you may want to consider secondary properties as your primary choice instead. Oh yeah, remember REHDA announced that property prices will increase in 2014 due to costs? They represent the property developers. Siva said secondary property should be the main focus this year. He represents the real estate agents. Both arguments have its merits but the final decision should belong to your investment objective. Happy buying or waiting or thinking.

written on 14 Jan 2014

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4 thoughts on “Property prices staying put till 2016

  1. Hi Chialih,

    In my opinion, it is very expensive for the new launch of property, it is ridiculous lately, i have noticed a property mini far was held in KSL mall, it was told by my friend who visited, he was approached by the sale man in sharing a new highrise property located at Nusajaya near to Tesco and giant, although, the location seems to be good, but the price is too expensive and overvalue with RM1000 per sq ft. Besides, nowsday, most of the new launching especially in highrise property is quite high density with 13- 14 units per floor and more than 25 floors per building. it is very challenging for long term facility maintenance and service.

    I wonder who could really afford. my guess would be those malaysian who earn S$ dollar OR Singaporean. good luck to new buyer ^_^

    • Hi Ang, your guess may just be correct. In fact, if you look at majority of Malaysians working in Singapore, they either have a home in JB or are renting in Singapore, for those earning below S$5,000, I do not think they can afford to buy in Singapore. However, as soon as you convert back their purchasing power, condos / apartments in JB really seem attractive. I think this is still beginning as Johoreans working in Singapore has yet to buy JB in a big way as compared to Singaporean investors.

  2. Hi Chialih,

    Yeah, i agree with your point, for those Malaysian who work in Singapore and intended to stay in JB, the spending power surely be stronger because of stronge currency RM1 X 2.6. nevertheless, those would have to travel across checkpoints everyday, it is very headache in crossing the border with traffic congestion and crowded, people rush to the immigrantion checkpoint by bus in the rushing/madness manner especially in super peak hour before Festival with long weekend holiday (Hari Raya, chinense new year, Christmas X and so on), the time spend and the effort are really tiring but it depends on every individual. i would say that this solution is only applicable to those are still bachelor or without family along and intended to earn $S dollar. my 2cents

    If you include those who work in local JB earning Ringgit, it is very unaffordable and overvalue. as the ratio for salary income between property price is getting wide, it is hard to achieve. anyway, developer may has done the survey from market, the type of property in that area is mainly cater for those specific category as mentioned above, buyer who who work in Singapore as Malaysian,Sinagporean and Foreigner.

    • If you ask me, I would not want to work in Singapore and travel daily. If I work in Singapore, I will stay in Singapore. However, I will use the money I earn to pay for another property in JB which in the mean time I can stay during the weekends. It is a foregone conclusion about property price increase because your neighbour is Singapore.

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