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Property sector improves on positive consumer sentiment

December 20th, 2019 Leave a comment

The overall performance of the property sector in Malaysia is deemed to have improved slightly in terms of transactions following the government’s initiatives to enable more Malaysians to buy their first house.

Malaysian Institute of Estate Agents (MIEA) chief executive officer Soma Sundram Krishnasamy said based on a technical study, the sector, which has been declining since 2012, has been on a rebound since the end of 2018.

“The signs are showing a stabilising market for the property sector where the first half (1H) of 2019 was better than 1H2018.

“With the Home Ownership Campaign (HOC) initiated by the government, we are of the view that the sector is on a recovery mode but at a slower pace,” he told Bernama.

Soma Sundram said the residential property segment has been looking good up to the first half of this year but the full-year performance will only be known in April 2020 when the National Property Information Centre (NAPIC) report is out.

Elaborating on the HOC, he said any discounts and incentives given were merely to help reduce the cost for buyers but the challenge lies in the location where the houses are built.

Most of the houses are not in strategic places, imposing additional problems to the targeted Bottom 40 (B40) income group, he said.

He said due to the unsuitable locations, most people have shied away from buying, resulting in the property overhang in the country.

According to statistics provided by Nawawi Tie Leung Property Consultants Sdn Bhd, as of the second quarter of 2019 (2Q2019), the number of overhang units in Malaysia was estimated at 52,666, including 32,810 residential units, 18,186 serviced apartment units, and 1,670 small office home office (SOHO) units.

“We strongly advise that whatever product (houses) that developers and the government want to build for the B40, there must be a market and feasibility study including on the size, public amenities and services, environment and such.

“Do it properly and do a balancing act. Don’t simply jump on the bandwagon and follow the trend of building houses for this group just for the sake of it,” said Soma Sundram.

He also said as the government is planning to withdraw the subsidy on petrol prices, it will cause more problems for the people as travel would be further and costlier, while living standards continue to increase and salaries stay stagnant.

While the industrial and factory segments are resilient and are currently sustaining, the office segment has been quite flat, he noted.

“The supply (of offices) now is not that much depending on the area. KLCC rental is expensive and so a lot of them (companies) are coming out to relocate to where rentals are lower.

“There is movement coming out from there. However, some of the ‘big’ guys — multinationals and international companies — are coming into KLCC, new buildings…taking up large spaces,” he said.

NAPIC reported that in 1H2019, the property sector recorded a 6.9% improvement in volume of transactions to 160,172 units from 149,862 units in 1H2018.

The value of transactions increased by 0.8% to RM68,301 from RM67,735 in the same period.

Soma Sundram also noted that co-working spaces are also gaining traction, especially in main cities, by the younger generation who work from home or do not rent office space.

“Co-working spaces have a growing demand as they are seen as a trend, and they seem to like this kind of place where they can sit down and have discussions and do their work comfortably,” he said.

Commenting on the drivers that would improve the property sector, he said consumers’ confidence is a key factor.

“Some people in Malaysia do have money but they are adopting a wait-and-see approach — with the general election, the government’s new policies etc. taking place.

“Now the confidence level is slowly building up again. People will come back and put money in, but they are just waiting for the right moment,” said Soma Sundram.

He noted although there has been about a 10% to 20% decline in house prices in certain locations especially in the outskirts of cities throughout the country, prices in main townships have remained unchanged.

In addition, the quality and percentage of B40 transactions have also improved since the government has been giving incentives.

“This happens because of the criteria that Bank Negara Malaysia (BNM) has put in, for example, those who want to buy a house, they must meet one-third of their net income and not one-third of their gross income.

“Malaysians now have accepted the fact that if they want to get a housing loan, they must meet the criteria, and that has helped improve the quality of applicants,” he said.

Meanwhile, PropertyGuru International (M) Sdn Bhd (PropertyGuru Malaysia) country manager Sheldon Fernandez remained neutral for the sector this year, tracking the property market index from house owners’ asking prices put up on its website and consumers’ sentiment from its surveys.

He said a year-on-year decrease of 0.9% was recorded in terms of asking price this year, which is expected to carry on in the year 2020.

However, he said it is difficult to specifically determine how the sector would perform in 2020 as it would depend on how the impact of initiatives such as the Rent-To-Own (RTO) financing scheme and a lower RM600,000 foreign property ownership threshold under the 2020 Budget would kick in.

“Market players still prefer to adopt a wait-and-see approach in H1 2020 before taking the right move in the rest of the year.

“But sentiment has remained positive as we saw potential buyers still intending to purchase properties, although actions to buy still remain slow as they still want to wait and see the market’s performance first.

“Nonetheless, with the rebound for the sector slowly taking place, we think the situation would be better in 2H2020. Hence, we maintain a neutral outlook for next year,” he said.

Source: Bernama

 

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  1. tahusamatahu
    December 20th, 2019 at 15:16 | #1

    Looks like it is at least “stabilizing” though not “recovering” more so, in the Penang Island side. More young professionals especially in the E&E sector are showing more keen interest and sales are inching up in a way.

  2. Internation
    December 24th, 2019 at 07:48 | #2

    Admittedly, E&E sector in Penang is booming. But even with the starting pay of RM4,000 + for young engineers there, it is still quite tough for them to buy a 400K apartment.
    Frankly, our (normal) Malaysian pay-scale is way too low comparatively !

  3. andy
    December 24th, 2019 at 09:56 | #3

    If you complaint about our pay scale is way too low, wait till you see hong kong taiwan and singapore folks. See their housing price vs pay scale.

    There is not a “MUST” for a fresh young engineers to buy house immediately. I’m sure there is no where in this world whereby a young fresh grad can buy house immediately and easily.

    Rent while still not afford (Penang house rental is dirt cheap), work hard and increase your income, then buy.

  4. chintuaki
    December 25th, 2019 at 15:19 | #4

    That’s why, the new gov said Ubah, ubah, ubah, ubah hamilan???? Nothing has ubah! Forex still so low (in fact much lower than before). The gov try to reduce subsidy, but don’t know how to increase real wage. Aiyo, if don’t know how to do the finance job, let others do it lah. I really don’t know WTF is he doing, just trying to scew up everything.

  5. tahusamatahu
    December 26th, 2019 at 07:43 | #5

    In Hong Kong, an ordinary policeman get paid HKD40,000 per month even though their property prices are about 8 to 9 folds compare to ours ! In Singapore, a hawker helper get paid SD100 per half day but their property prices (with exchange rate build-in) are about 3 to 5 times of ours depends on locations.
    Are we being short-changed without our knowing ?

  6. Sammy
    December 26th, 2019 at 11:31 | #6

    @tahusamatahu
    Cost of living in Hong Kong has been unabatedly risen in recent years. A normal bowl of Wanton mee at the roadside store costed about HKD30 in 2016 has now been HKD40 over !
    When we poor Malaysians (like me) are visiting Hong Kong can only get used to fast food like McDonalds as it is sometimes even cheaper than in Singapore.

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