What do you think of the 2015 property market? For those who wanted to forget the property market of 2015, it may be best to forget 2016 instead. According to Dato Seri Gavin Tee, “2015 was bad, and 2016 will be worse.’ He said this is due to the likelihood of a weaker economic growth, tougher to obtain financing and even the loss of pricing power would meant 2016 would become the worst year for Malaysian property. He further elaborated that many potential buyers are reconsidering the safety of their investments in Malaysia due to the worries from ‘political and racial issues. He said that from his travels across the region and speaking to ministers, developers, investors and the media, this is the feedback that most Malaysians would not want to hear.
According to The Malaysian Reserve’s (TMR) report in October 2015, the property prices in the secondary market fell as much as 15% this year alone due to softer demand and the absence of speculators on the market. Tee said property prices would dip even further in 2016 in comparison to the last few years. In fact, nothing positive would be happening in the first-half of 2016. In fact it would be the lowest for the next eight years even though it is highly unlikely to be lower than the 2009-2010 levels. The lower prices does not however mean more would be buying. Basically, demand is going down. He said that the loan rejection has been as high as 50 percent for KL-based properties and up to 80 percent for Iskandar ones.
He recommended that the Malaysian government start to ease the cooling measures and help more buyers to buy a property. Read here: Singapore may ease the cooling measures in H2 2016. In fact without the help from financing policies, it would deter the local investors and this may transfer the wealth to foreign hands instead. By 2018, due to the rising material and land costs, developers will increase prices because the impact from exchange rate fluctuations would be gone by next year. He ended by saying that the best opportunity may be to buy in 2016. “If we miss it, we will miss it forever.”
Before everyone rushed to buy, especially to those who believe Datuk Gavin Tee’s assessment, do note that properties in many so-called hotspots remain to be on the high side or I would say ‘fully valued.’ The property prices may be falling but this is normally for the less popular areas and the reason for this drop is not because demand is dropping but more because the overall market sentiment. When the market is hot, all areas would rise even if some areas are faster. On the other hand, in a slow market, these less popular or secondary areas would be the first to be affected. Lower overall demand meant that for these areas, there may not even be much demand. Buy undervalued, at all times. When we do that, we can buy anytime and not just during the best, worst or whatever year. Happy investing.
written on 23 Dec 2015
Next suggested article: Property market: Nothing much in 2016 as per Maybank Research