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Property sector recovery starts in Q4 2020?

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I was speaking to a Chinese national working as a regional manager based in Shanghai, China just a few days ago. He was sharing about the situation in China after the COVID-19 situation. He said that he has been back to work in his office for 2 months. Nevertheless, he is still wearing a face mask to work everyday even currently. He said that Shanghai was not as affected as Wuhan.

Then, he shared that with the easing of the lockdown, Chinese tourists have flocked to many tourist sites. One of it is Huangshan mountain park in Anhui province. I did a quick search and I am not sure what to say of the image below. It seems that everyone has totally forgotten about COVID-19? Where is the normalisation period we are all anticipating? The image below happened on 4th April 2020.

Image source: https://edition.cnn.com/2020/04/06/asia/china-coronavirus-tourist-warning-intl-hnk/index.html

So should we feel a little more encouraged that perhaps the normalisation may just take a little faster than what we thought? Perhaps we also listen to some views from panelists in a webinar organised by the Malaysian Institute of Estate Agents recently?

Article in edgeprop.my Hartamas Real Estate Group founder and group managing director Eric Lim said that property developers remain strong because many development projects done had been financed through equity financing rather than bank borrowings. As for the COVID-19 pandemic bringing with it corporate debt crisis, he said, “So, on that basis, exposure to gearing is much more manageable. I would think this time around, we will be better prepared”

Lim also shared that he expected the property sector to recover in Q4 2020 and will normalise by 2021. He said, “Some even expect the property sector to surge by 2021, a jump from where they are now. So, the banks’ six-month moratorium is a relief both to the individuals and corporations. This will cushion the (Covid-19) impact at least for the next six to nine months and probably until the end of the year.” He also think the economic stimulus packages would also help especially to the small and medium enterprises (SMEs). Please do read the full article here: Article in edgeprop.my

Actually, if I am speaking to the first-time home buyers, I think there is still a window of opportunity for them to buy a choice property currently. Interest rate is at one of the lowest point since 2010 I think? Image below shows that the interest rate was at 2% in 2010. Currently, it is hovering at 2.5%. Banks meanwhile has money since the Statutory Reserve Requirement (SRR) was just reduced recently and that alone released about RM30 billion into the market. (click to read)

The only word of caution is this. Read more, understand more and really do sufficient due diligence before buying. Once a wrong decision is made, it will set the person back many years where financial standing is concerned. If the purchase was because someone said so, then please continue saving up the money instead yeah. Only invest when we understand what we are actually investing. Happy hoping that the property market recovery will start sooner than later.

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Next suggested article: Malaysian property market in one word? Resilient.

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