To a packed room of property developers and members of the media, the PropertyGuru 2016 Outlook Forum brought much-needed insight and illumination on what Malaysians should expect with regards to the property market in 2016.
Bringing together a distinguished panel of industry experts, the forum saw the sharing of candid views and insightful perspectives on the general health of the property sector in Malaysia, as well as touching on various key issues that have become the talking points for many.
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).
The event also saw PropertyGuru launching the first Property outlook report for Malaysia. The report provides a comprehensive review of the performance of the property market in 2015 and leads on to key trends and developments expected for the coming year.
Among the key areas discussed during the forum was the impact of (or none thereof) of Budget 2016 on the real estate sector, upcoming game-changers for the year ahead, Why 2016 will a Buyers’ & Renters’ Market, will prices rise or decrease, primary versus secondary market, the emergence of suburban living compared to city living, the continued Impact of Goods & Services Tax (GST) in 2016 and so on.
While there were differing views on various issues, the general consensus was that 2016 may find market conditions in the favour of buyers and renters while most property developers will face a challenging year ahead. Following were some of the key findings and insights discussed during the Forum and revealed in the PropertyGuru 2016 Outlook Report:
Buyers’ market in 2016
In 2016, the property market is expected to continue with its downtrend for the first half of the year, before recovering or stabilising within the second half. This could set the stage for a recovery in 2017 to 2018. Essentially, prices in general, are expected to come down as transaction volumes. One can expect a market correction of 3-4%. This is especially true for high-rise units, especially in the high-end market.
One can expect a market correction of 3 to 4%. This is especially true for high-rise units, especially in the high-end market. There, of course, will be certain properties in prime areas (i.e. near the MRT, etc.) that will buck the trend and continue to appreciate.
Having said that, do not expect prices to come down substantially. Aside from speculation, the many other factors driving high property prices – land scarcity, public sentiment, construction and compliance costs, strong demand and rising cost of living are still present and will continue to put pressure on prices.
With speculators having virtually been removed from the market, the year would be driven by more genuine demand. In essence, 2016 will be very much a buyers and renters market with plenty of bright spots and plenty of opportunities.
Buyers can expect plenty of incentives, rebates, freebies and goodies that make your new home deal more enticing. These could include full furnishing or partial furnishings, Guaranteed Rental Returns (GRR) schemes, indirect price rebates and discounts; free air-conditioning units and much more. These should not be overlooked as such bonuses can help buyers save on renovation and refurbishing costs and make home ownership more affordable especially in the initial years when considerable capital outlay can be expected.
Smaller units & greater density
With higher sqft prices, expect developers to continue building smaller units in the city centre and other urban centres to keep their built-up prices below or within RM300,000 to RM500,000 range. Unit sizes will range from 450 sqft to 850 sqft. By linking these with good road access and public transportation connectivity, developers will look to push the ‘small is the new buzz’ strategy to tap the market, especially to the 25 to 35 years old age group.
Location is important but not everything
One of the biggest questions for 2016 is where to purchase? The city centre or in the suburbs? The answer depends on one’s career path. If you’re young and have a bright career, then buy smaller that are closer to the commercial and business heart as it would better support your career. The experts shared that first and foremost a property is a home. It should be about supporting and elevating your desired lifestyle, not buying a house then adjusting your lifestyle to suit it.
Biggest gamechanger – MRT / BRT / LRT
The MRT is perhaps the biggest game-changer for 2016 with the first line earmarked for completion and operation by end 2016. The 51km Sungai Buloh-Kajang MRT line will connect the North and South of Greater KL and is expected to ferry 400,000 passengers daily.
When this happens, the impact of the MRT will be tremendous from alleviating traffic congestion, influencing future development trends and of course, impacting property prices and rental yields. Locations within 1km of an MRT station is expected to garner a modest premium on valuations and rentals.
Tight financing conditions
Despite calls by many parties to relook financing for 2016, expect lending policies to remain tight as Bank Negara Malaysia seeks to address the household debt-to-GDP ratio. The onus is on buyers to ensure they are credit worthy for housing loans. So a good move in 2016 is to improve one’s financial track record. Pay off or reduce credit card debt, check your credit standing via CTOS. Show multiple streams of income such and declare all assets when applying for loans. Banks are still lending but only to perceived “quality” house buyers.
Impact of GST
GST will continue to impact market sentiment for the first half of the year before the public accepts it as part of the cost of doing business and begin to start transacting. While house prices are GST exempt, construction materials and other resources required for the development of property are not and any increase in cost due to GST is likely to be passed to consumers. The same applies to increasing compliance costs.
“It has a been fruitful and rich discussion, with different stakeholders in the industry voicing their opinions and providing valuable insight on what to expect for 2016. The general consensus is that it will be a challenging year; certainly for the first half, with a reasonable chance for a pick-up in the second half, albeit a slow one,” shared PropertyGuru Malaysia country manager Sheldon Fernandez.
“Both the forum and report are part of a collective effort to bridge the information gap in the market as well as to allay concerns and fears about the future of real estate in 2016 in Malaysia. People are generally pessimistic but they must remember that Malaysia, from a regional perspective has plenty of potentials.
“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,” shared PropertyGuru Group chief executive officer and co-founder, Steve Melhuish.
“The response received from the media and industry to such initiatives has been positive. It shows that there is a need for constant engagement and discussion and for an avenue for stakeholders to air their views. We are happy to be playing this role in providing a channel for the betterment of the industry,” added Melhuish.