Not an easy time for the Malaysia property market

It’s not something new. Come on, how many of our friends would tell us all the good news about the current Malaysian economy or even property market? I have none currently, except those involved in the industry itself. It’s tough and an acquaintance from India (top management of a global MNC) said that all the UBER drivers who drove him in recent weeks were once full-time employees but are now UBER drivers. Is the Malaysian economy really so bad or what? The answer is no but let’s not debate about it. So, assuming the economy is bad, what should happen to the property market?

Well, according to AllianceDBS Research in an article in thestar.com.my, two things are challenging for the property market. They include weak affordability and low supply of affordably priced properties. In brief, people could NOT afford and there are NOT many supply of affordably priced properties. Besides that, public housing supply is also increasing and it will increase the competition within the affordable segment. It believes that the current macro-prudential measures have reined in excessive speculation in the property sector.

It also said something worth noting. As at end July 2016, there was 10 percent growth in outstanding loans for residential properties. In other words, credit access remains open even if there are higher rejection rates. With the government being focused on first-time homebuyers, the upcoming Budget 2017 would definitely be continuing to focus on increasing the supply of affordable public housing (priced less than RM400,000) to boost homeownership. Developers would have to do more in terms of product offering. For example, ‘value-buy’ properties with some lifestyle amenities that will differentiate themselves from the lower priced public housing.

Since the public housing is increasing in huge numbers, this is good news to the first-time home buyers, provided that they are willing to get one in the first place. What happens when the supply is increased suddenly? Of course, property prices may stay stagnant for some time, especially for developments which are seen as only slightly different from the public housing being offered. Is this a bad thing? Well, do we really want prices to keep going up much faster than our incomes? I personally would love a stable property market so that my investments are safe for the long term. What about you?

written on 27 Sept 2016

Next suggested article:   Developers pessimistic but luxury home prices still up

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