Let’s understand that there are developers who continue to do just fine even under current market situation; slow. Just look to the quarterly reports being announced to understand better. Without any doubt, there are developers who are struggling too, especially if their products are having wrong pricing, wrong location and wrong features (sizes, specs etc). What about the majority of all developers? What are their thoughts? REHDA conducts a Property Industry Survey every year and the below would be some of the results from the survey. Briefly, not that bad.
This is the view of Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Soam Heng Choon when he was speaking to the media after the briefing on REHDA Property Industry Survey 2H2018 today. He said, “The market has been challenging for us but based on feedback from industry players, most of them are holding a neutral stance, and there is more optimism for the second half of 2019 than the first half.” In the survey, 27% of the respondents said that market will do better in 2H 2019. This is despite the fact that the take-up rates for new launches expected at 50 percent or below. The survey also revealed that developers who are neutral are 54% while another 6% are positive and 1% extremely positive. Article in edgeprop.my here.
Meanwhile developers who are pessimistic has also increased from 28% to 35% for 2H2019 versus 1H2019. With regards to the optimism, Soam said, “Developers feel that there are now more walk-ins and customers coming to their sales galleries, which they think give them a better chance to close a deal compared to six months ago, when hardly anyone came into their sales galleries.” Where unsold units are concerned, the percentage of developers with unsold units are at 62% and this is the lowest since 2H2015! Definition of unsold units would be properties which are still unsold 9 months after completion.
In terms of loan approvals, Soam said, “While we support Bank Negara’s policy of not giving loans to those who don’t qualify and to ensure that there is no systemic failure in the financial system, we hope banks can consider people who are creditworthy but lack documentation.” Where compliance costs are concerned, Soam said that developers are already taking cost-cutting measures such as freezing new recruitments, cutting benefits and perks, rescheduling project launches and reducing the scale of their launches. He added, “Compliance costs includes land conversion fees, development charges, infrastructure improvement fund and payment to utility companies, which is very high. If we can bring down any of these, property prices can come down.” Article in edgeprop.my here.
Remember, buying the right product will be alright for a long time to come. Waiting for prices to come down A LOT for the wrong product will still yield the wrong results and returns over time. Happy understanding.
written on 15 March 2019
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