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This may just be the worst down cycle for property development.

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Today is the 3rd day that I am staying at home due to the Movement Control Order (MCO). During these 3 days, I have made two quick trips to the supermarket because I did not want to be at the supermarket when the whole KL was panic buying before the MCO. I guess I have enough to last for the next 7 days. COVID-19 has really affected a lot of Malaysians and if I read all the FB posts and Whatsapp messages, the sentiment is negative. What does it bring for the property market? Bad? Pretty Bad? Very bad?

Here are the exact words from Real Estate and Housing Developers Association Malaysia (Rehda) president Datuk Soam Heng Choon. In this article in edgeprop.my (click to read full article) He said, “I have been through so many down cycles over the years and this is probably the worst. Malaysians are facing the fear of disease spreading, global economic slowdown and political uncertainties, all these are affecting people’s confidence.”

He did however share that the property sector will have a slight buffer compared with other industries, such as oil and gas, trading businesses and the tourism industry, as property developers have un-realised sales (or unbilled sales) which could cushion the near term impact of the disease. He proposed a few potential solutions to help the industry.

1. Continue with the Home Ownership Campaign (HOC)

2. Review the Real Property Gains Tax (RPGT)

3. Standardise the threshold price for foreigner buyers in all states

4. Review the loan-to-value (LTV) ratio cap for third home purchase.

Please do read the full article with more of his views here in edgeprop.my.

Please note that he said developers have some buffers for the short term yeah. If COVID-19’s effects are prolonged, then a lot more uncertainties will come into the picture. Let’s also understand that even if we start to see some positive signs on the number of COVID-19 infections, it does not mean everyone will be rushing to the salas galleries and quickly place deposits. The current COVID-19 situation would have already affected a lot of businesses and they may need some additional support from the government if we want these businesses to continue employing people.

Earlier, we have the stimulus announced. (read here) There are already people saying that perhaps a larger stimulus is going to be needed. This is by looking at some other countries including the U.S which may need US$2 TRILLION to save businesses and the economy. (earlier article here) For now, it’s best to stay at home and read more property news to prepare for the time when buying a property is again a favourite activity of some Malaysians. Happy staying at home and trying out new recipes. Please take care.

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Next suggested article: Covid-19 and its effects on prices

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