I think everyone is aware that the property market is entering a slowdown period. The total numbers were lower for Q1 2015 versus Q4 2014. Well, situation may be even slower than anticipated or the sentiment is even more negative than I thought? Well, according to Real Estate and Housing Developers’ Association Malaysia (REHDA), for the strata units launched in Penang, Selangor, Kuala Lumpur, half of the units were priced below RM500,000. Despite this huge number of units below RM500,000 the total unsold units still increased from 64 percent to 78 percent. Yes, this includes the unreleased bumiputera units too. However, REHDA’s president Datuk Seri Fateh Iskandar said that the situation is still manageable. In brief, I think he is saying that developers are not desperate currently.
This current gloomy outlook for the first half 2015is likely to continue and the biggest challenge is said to be the end-financing rejection rate going up from an average of 29 percent in 2014 to 35 percent in 2015. Fateh said that this is very alarming because it showed that most first-time home buyers were not able to buy one due to the lower margin of financing and stricter lending rules. A famous property guru told me in a function a few weeks ago that for some areas, banks were only willing to lend up to 80 percent. Due to the gloomy outlook, sales performance has been lukewarm for the past 18 months.
I personally believe that the current slowdown is mostly because of the wait-and-see attitude. The wait-and-see attitude meanwhile is due to the current negative sentiment prevailing in the market. I also think that there are still rooms for some of the developers to adjust their prices further. For those who have launched, it may be wise to provide more special offers and quickly sell instead of waiting. With the ringgit remaining volatile and the on and off negative statements by some international rating agencies plus the never ending political dramas, the developers may have to wait very long if their project is not attractive enough. Buyers in need of their first home is definitely a huge pool but perhaps the potential risk of buying a unit is not something they want to try today. Happy anticipating and choosing that it that you want, objectively.
written on 11 Sept 2015
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