I personally believe the supply is still way below the potential demand when it comes to property, especially within Greater KL. Thus the unsold property number which is being bandied about (article here) is incorrectly labelled as ‘oversupply’. Just look at Greater KL population for example. It’s growing by a few hundred thousand every year. Urbanisation remains strong and PWC said that KL is ranked number 11 in the world among cities exhibiting the strongest economic clout by PwC’s 2016 Cities of Opportunity Index. (Article here) Economic clout or growth can only happen with more population.
It seems however that the working population in KL, the M40 and the B40 are having difficulties in buying properties. Article in Edgeprop.my here. The reason is because the average house price is above both groups’ affordability range. Within the article The CGS-CIMB Research said that where property stocks are concerned, some have fallen from their peak valuations in 2014 and some down to their lowest levels in 2008. This meant that the share prices are now attractively priced. They continue to expect property companies in their coverage to show positive earnings growth. They also shared this important observation.
Housing loan growth is likely to be limited because of the existing low interest rate environment, limited buyer’s affordability and possible interest rate hike. Restrictive government policies are still in place.(They meant the current cooling measures and recent Budget 2019). Thus, they do not see buyers having the incentive to purchase property given the weak rental market and subdued property market. They expect the housing market to remain challenging in the near term. This will not change unless there is a meaningful surge in household income, decline in house prices or more positive measures are introduced. Please do read their full report here. Article in Edgeprop.my here.
Property prices have to come down or income has to rise. This is the usual view. Beyond these however, I think some of the potential buyers have to manage their expenses better already. Perhaps moving forward they could because smartphone sales have peaked according to some reports which may meant people will use their smartphones for a longer period of time since there’s no super-duper features coming up. This is the time when buyers could get their best property at a lower price. Developers are much more willing to tweak their margins too. However, if the buyer continue to miss this opportunity, then in the near future, we will continue to have the ‘house price too expensive’ situation. happy following.
written on 13 Jan 2019
Next suggested article: 7 reasons to buy in a slow market