Property experts predicted that the Malaysian real estate market is expected to undergo correction in 2018 despite stronger economic and industry fundamentals.
These insights were shared during the PropertyGuru Outlook Forum 2018 held at UOA Komune in Bangsar South held recently. The event also saw PropertyGuru Malaysia Country Manager, Sheldon Fernandez launching the PropertyGuru Outlook Report 2018.
Fernandez said during his presentation, though overall consumer sentiment has improved and asking prices have come down, key themes like price unaffordability, overhang of high-rise homes, rising living costs, tight financing and other factors will have a dampening effect on the overall momentum next year.
The PropertyGuru Outlook Report 2018 provides comprehensive findings of the property market performance in 2017, including price movements, supply of properties over the past 12 months, as well as emerging trends in the year ahead.
Citing Fernandez, higher Gross Domestic Product (GDP) does not necessarily mean higher wages and disposable incomes for the B40 and M40 segments.
He also explained to more than 30 media personnel’s and representatives from leading developers in the country that properties remain out of the reach for many Malaysians due to the gap between asking prices in both the primary and secondary markets.
He added that in 2018, properties are expected to remain unaffordable at 4.4 times the median income in Malaysia and the number would be even higher in key urban locations such as Kuala Lumpur and Penang.
What developers opine?
Developers who attended the forum shared their sentiments for the coming year. While most agreed that 2018 is touted to remain stagnant, some said during this time, it is crucial to roll out projects that are lacking in the market.
UOA Development Bhd, director of marketing, Teh Heng Chong said developers are careful with what they are launching to ensure there will not be another overhang, as experienced before.
“There is more emphasis in conducting market research and more responsibility is considered. Based on this, buyers purchasing inexpensive homes will be seeing properties that come in the form of high-rises because land cost is going up on a yearly basis.
It will come a time when affordable housing in Klang Valley will only be focused on high-rise developments,” he explained.
On the other hand, UEM Sunrise Bhd senior manager of sales and marketing, Michael Lee said the company is looking to come up with more affordable homes by scouting for more landbank near MRT stations at the current moment.
“Currently we have RUMAWIP in Mont Kiara and Rumah Selangorku in Serene Heights, Bangi,” he shared.
Hap Seng Land general manager of sales and marketing, Chee Kok Keong also said fundamentally the market is based on the consumer purchasing power. Despite all the positive reports of the increase of GDP, the important aspect to consider is the consumer disposable income.
He said it is evident that private consumption has reduced, and this has placed a significant impact on their spending power. However, a good property that sits in a good location will still be much sought after.
Hap Seng will be looking at providing affordable housing to address this market potential given the various landbanks they have.
Meanwhile, Bon Estates Sdn Bhd marketing director, Angeline Liau said despite the volatile market, the company is not really affected by the macroeconomic situation because they built something they have profiled, citing their luxury project Bon Estates in Bangsar South.
Liau stressed that it is important to profile the demand and build what is lacking in an area. This is only achievable when an informed data system which works and answers to the certain gap that is missing in the market.
The company’s upcoming project, situated in Mont’Kiara will be launching high-rises priced below the RM1 million-mark next year.
Property Outlook Forum 2018
Current issues faced in the market were discussed during a long-hour roundtable discussion between MyProperty Data director Abd Hamid Abu Bakar, Khazanah Research Institute director of research Suraya Ismail,CTOS Data Systems director Wong Pau Min, and Jones Lang Wootton executive director Prem Kumar. The session was moderated by Fernandez.
Key topics discussed during the session was on the freeze by Second Finance Minister Johari Abdul Ghani after a Bank Negara Malaysia (BNM) report warning that unsold residential properties were at a decade-high level.
Prem who spoke from the perspective of a professional valuation consultant said the freeze was going to have an impact on land.
“When a freeze like this was imposed on a certain segment of the market, land valuations would become tricky,” he said.
Prem added that this has not been addressed yet. There will be a cascading effect because when that segment at the top starts to have some sort of impact from the freeze, it will trickle down to land in other segments below.
Another key topic discussed was on the future of renting. To a question by PropertyGuru Malaysia’s country manager Sheldon Fernandez on whether the rent-to-own scheme was a long-term viable option or a short-term good measure to tackle affordability issues, Suraya said it was important to understand that one did not rent just because one could not afford a house.
“Renting is not a substitute for home ownership but is complementary. It is not an inferior choice, but you have to look at it in terms of the rent-to-income ratio,” she said.
She cited research she was currently undertaking in relation to renting and how to take those in the vulnerable urban group out of social housing projects once they had reached a certain income threshold.
Therefore, what needed to be monitored is the rent-to-income ratio and the house price-to-income ratio.
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