In the just concluded PropertyGuru 2016 Outlook Forum, many industry experts were invited to share their views on the Malaysian property market. For me, one comment stood out in particular. PPC International’s CEO Siva Shanker predicted that 2016 will be a flat year before recovery starts trickling in by 2017 and 2018 because of elections. By 2019, the residential market could surge again in 2019 and hit a peak in 2020. This is as long as there are no unforeseen negative news. He advised that there is little need to panic because property market have cycles and typically goes through a few bad years before rebounding. Dato Seri Vincent Tiew concurred with the flat 2016 view from Siva Shanker but he said that considering 2019 and 2020 being the years when prices rise, now is a good time to buy homes.
With regards to rental market, Shanker said that it will be dropping a lot as many property speculators try to get a little bit of income to service their mortgages. Without these rentals, many may be struggling to serve their loans. PropertyGuru’s latest Property Outlook Report also predicted that the market would shift in favour of buyers and renters in 2016 due to the current supply glut. PropertyGuru Group chief executive officer and co-founder Steve Melhuish summed up the current situation concisely, “Property markets are cyclical, so things will be looking up again. People should take a long-term view towards the property market and stay positive that in challenging conditions, one is certain to find attractive opportunities.”
The panellists consisted of Dato Sri Dr Vincent Tiew (Andaman Property Management), Dr Daniele Gambero, (REI International), Milan Doshi (Wealth Mastery Academy), Siva Shanker, CEO (PPC International), Gary Chua (Smart Financing) and K.K. Chua (Armani Media).
Views from all the experts were summarised by PropertyGuru in an article:
- Downtrend expected to continue for first half of 2016 before recovering or stabilising.
- Recovery is predicted to be within 2017 to 2018.
- Downtrend in prices and transactions to continue, especially for high-end luxury high-rise units. Correction can be between 3 – 4 percent My earlier article here: Luxury condominiums oversupply in Kuala Lumpur
- Prices are always influenced by land scarcity, public sentiment, construction and compliance costs, strong demand and rising cost of living. My earlier article here: Will property prices ever come down? Realistically?
- Buyers can expect plenty of incentives, rebates, freebies and goodies. My earlier article: Without freebies, should you buy property?
- Smaller units would be the order of the day as developers focus on affordability; RM300,000 to RM500,000 range. Sizes range between 450 sqft to 850 sqft. My earlier article: Only smaller units can be affordable
- MRT / BRT / LRT would be game-changers. First line will begin operation by end 2016. This is definitely confidence booster. My earlier article here: MRT stations will change the area dynamics
- Buyers MUST ensure they are credit-worthy as loans would not be easy to come by. My earlier article here: Stay safe, buy within affordability and stop bubble building
- GST will continue to affect consumer sentiment until everyone understands this is here to stay and adjusts to it. My earlier article: GST, the cause of everything negative today
I think it’s good to know all these pessimistic views for the property market from now till at least mid of 2016. In terms of long term fundamentals, the Malaysian property market is actually still pretty positive. In terms of smaller units and where to buy however, my advice is to look at affordability first to ensure your loan is approved. Think duration and not distance and suddenly many more options open up instead of only the smaller units. Yes, wait-and-see is definitely not a better option than view-and-offer. Just make sure we do sufficient analysis. There are so many property portals in Malaysia today. Top 8 here. Yes, I am happy as these experts actually said many things which I have written earlier. Now, let’s hope what was said actually happen. Happy reading and learning.
written on 15 Dec 2015
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