Many investors, the cash-rich ones are always on the look-out for good deals. First-time home buyers needs more enticement but perhaps May 2016 is a significant month, if the trend continues. Reported in TheSundaily, there is an increase for the first time in 16 months for “Applied Loan for Purchase of Property”. Data is from Bank Negara Malaysia. It’s up just 2% year-on-year or 5% month-on-month. Small number but potentially a significant change. MIDF Research provided more insights. When compared with 2015, it said that the cumulative five months of 2016 is still lower by 6% when compared to first 5 months of 2015.
In terms of transaction numbers which are falling, the least fall would be for those houses below RM500,000. For these affordable properties, the transaction value declined 11 percent on a year-on-year basis. For properties between RM500,000 – RM1 million, total transactions value is down 23 percent while for the properties worth RM1 million and above, it declined 20 percent. Do note though that total transaction in terms of units is still over 80,000 units. In other words, people are definitely still buying. Based on the latest Consumer Sentiment Index (CSI) by the Malaysian Institute of Economic Research (MIER), Q1’2016 Consumer Sentiment Index (CSI) has recovered to 72.9 from its all-time low of 63.8 in Q4’2015. This number is however still below the threshold level of confidence. MIDF concluded by saying, “We believe that the data suggest some return of interest among property buyers but buyers are likely to remain price sensitive.”
It’s good to note that buyers are still buying and that buyers are also price sensitive these days. Sanity has returned to the market. With this mindset, I think the Malaysian property market should be safer compared to the crazy growth in property prices during the 2009 – 2012 periods. I was having lunch with a colleague today. He has a small condo unit which he had renovated. He said it should be easy to rent out the unit but if he wants to sell, he would need to agree to a lower selling price from what he expected previously. I think most owners are having the same situation as him. Even rental rates are softer these days. Well, as they say, buy when low,sell when high. Hope we know which is which.
written on 12 July 2016
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