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Properties in 2015? Tough times.

The Real Estate and Housing Developers Association (REHDA) has a few negative news for the market for 2015. It said that 2015 is going to be a tough time ahead for their members because of the rising costs of doing business, tight monetary policy and also the new GST. I think the rising costs of doing business encompasses everything including the compliance costs, the material costs, the labour costs etc. As we noted, there are still shortages of construction workers in the industry. The compliance costs most of the time would be the ones caused by the state governments. True enough, REHDA’s president Datuk Seri Iskandar Mansor said that depending on states, the premium charges are contributing tremendously to the overall cost of doing business. Thus, this now varies between three to eighteen percent. I seriously wonder which state is he talking about. 😛 GST is nothing more than a negative sentiment caused by uncertainty. As soon as everyone understands that the uncertainty they are thinking about is actually a certainty, this would no longer figure in their decision of whether to buy or not to buy. The question is when, right? Let’s assume this would take six months.
REHDA did suggest something beneficial for the first time property buyers. He said that GST should be exempted from properties which are priced below RM500,000, specifically for first-time buyers. This would help them to get a roof over their head. In fact I think this may be faster than all the PRIMA or even other states’ affordable housing plans. I know of a few states which has spoken about this affordable housing for the longest of times and yet until today, it is still just words that it would be ready in the near future. For these first-time home buyers, I think this request is valid and should be approved. Whether or not it can help a lot is another matter because if I am first-time home buyer, I should also consider the secondary properties too and not just the primary ones. After all, there are still attractive properties amidst the current market. Prices for the secondary market has not climbed a lot when compared to the primary ones.
Personally, I think demand is still strong, just that for now it is subdued. While pricing is one issue, I think the main issue is a combination of pricing as well as negative sentiment more than anything else. Just a few year ago, everyone was buying and queuing for new properties and then the prices just shot up through the roof. Suddenly, the cooling measures came because the prices were crazy and now, many of the buyers are hoping that the measures would push down prices. Seriously, I do not think the cooling measures would push down prices. Perhaps it has helped moderated the price increase. Perhaps it has help to pressure some developers to price their properties lower so that they can sell faster. However, price decrease is not going to be a by-product of the cooling measures. Prices would only come down a bit more if the sellers can hold on longer and the buyers continue to rent before they buy. Prices would move downwards more if there is a world financial crisis. Well, if there is another crisis, many of the current buyers who are waiting would continue waiting. During normal times, you dare not buy, do you think you would dare to buy during bad times? Haha.
written on 1 Jan 2015
Next suggested article: Come on, give first time home buyers a break says REHDA Penang.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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