It’s hard to shake off the perception that unsold homes means a property bubble is about to burst. It really depends on whether there are still units which are priced under the affordable category. Some friends continue to tell me that they will be rich when the market crashes because they did not buy a property currently and will buy one as soon as they see super-duper opportunity. As per Bank Negara Malaysia (BNM), the number of unsold homes continues to grow. Full report in TheMalaysianReserve here. In brief, 80 percent of the unsold housing units are priced above RM250,000. In earlier reports, BNM says that affordable properties based on median household income should be priced not more than RM282,000. Current number of unsold units increased to 146,196 units as at end of Q1 2018. It was 129,052 at end-September 2017. Central bank says, “Imbalances observed in the property market continue to persist.”
Before everyone now thinks of the property market as negative, this is what BNM says about the current market situation. “Nevertheless, sustained demand for affordable housing, particularly from first-time home buyers, and prudent underwriting practice in lending to the property market and related sectors are expected to mitigate risks of a broad-based price correction.” In fact, quality of borrowers are pretty high (even if compared to advanced countries), about three-quarters of new loans approved were to borrowers with debt service ratios (DSR) of less than 60%. Ratio of household debt-to-GDP moderated to 83.8% in 2Q18 versus 84.2% in 2017. Overall total impaired loans (net of individual impairment provisions) fell 10% to RM16 billion from RM17.8 billion in 2017, comprising 1% of total net loans compared to 1.1% last year. Full article for reference here.
A few conclusions yeah. On an overall basis, the property market is doing fine. There are no indicators on an impending property bubble bursting. Looking at the non-performing loan numbers, it shows that people are paying their loans on time yeah. No signs of a huge number of desperate owners based on these numbers. It meant that jobs continue to be available and people losing jobs should be able to find jobs quickly. This is why they could still pay their loans yeah. If anyone’s waiting for good deal, better start looking because the number of marketing campaigns by all developers are rising. I think this shows something yeah. 😛 Just look at property investment on a longer term rather than 2-3 years. Huge rebates are not healthy if the property price you paid for after rebate is still way higher than all the properties nearby yeah. Stay savvy even if there’s opportunity.
written on 28 Sept 2018
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