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Property market oversupply? Improve by mid-2018 and recover in 3 years.

Statistically, Malaysia is still growing its GDP. This is an assessment by the International Monetary Fund and basically most of everyone including our very own Bank Negara Malaysia (BNM). This is a pre-requisite for everything else to follow. Investments, stock markets and even the property market.  When the economy stalls, the unemployment starts to climb and as usual, no one in the right frame of mind will think of buying something HUGE like a property. Why would the unemployment climbs if the economy stalls? Just look at the number of new graduates coming out. Without creation of jobs or programmes for them, of course they will be included into the unemployment statistics. Without jobs, banks would not lend money to them. Without money, how to buy property, right? 🙂
Anyway, according to an article in TheStar quoting the National Information Property Centre (NAPIC) data, the residential oversupply is expected to recover within the next 3 years. This was shared by Real Estate & Housing Developers Penang chairman Datuk Toh Chin Leong, “If the consumption per year continues at 12,000 to 13,000, it should take three to four years for the market to absorb the remaining 47,000 units.” Raine & Horne Malaysia director Michael Geh agrees and adds that “We welcome a pricing correction scenario in the high-end segment, as prices in the high-end category has peaked.” He added, “Given the competition from the sub-sales market, the pricing of properties in the primary market will eventually be adjusted to a moderate level.” CA Lim & Co principal Lim Chien Aun says it is not unreasonable to expect the property market to recover in three to four years’ time. He shared, “Many people have forgotten that there was a property crisis in Penang in the second half of 1980s, which saw property prices dipped by about 50%.” Do read the full article here: ‘Residential Supply Expected to recover in three years
It’s great to listen to an overview. When the whole market is recovering, generally any property is going to do well. Just remember to note that it’s important to look into each of the property that we will be buying. There are those which are more suitable for own stay and affordable. There are those in prime areas which are loved more by expats. Of course there are also those favoured by students / working professionals where ‘room’ is more important than ‘whole unit.’ There are of course those units which may be converted into homestay. For these, it’s best not to buy in some mature developments where most of those staying are already families. Get ready for lots of objections. By the way, the word recovery does not mean anything significant. perhaps we can think of it as better sentiment, perhaps prices start growing, perhaps number of oversupply drops, well, it could be anything. Of course, in brief, it meant that the market will be positive by then. Happy keeping up.
written on 2 May 2017
Next suggested article: Once you rent high, you may never buy

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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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0 Responses

  1. Hi Chiali,
    Do you think rm562 per sqf still expensive for new property high-rise (size of the apt is 860sq) located in strategic location in Penang? About less than 5 minutes to Qeensbay mall Penang.
    Please advise, thanks

  2. my best buy was at 2008… am thinking another one in 2018, hopefully the dust really settle by then. Anyhow my buy on 2008 continue to achieve good appreciation even at now.

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