Home builders amassed RM1.3 billion in gross profit last year despite the prevailing weakness in Malaysia’s property market, according to the latest statistics from the Valuation and Property Services Department (JPPH).
This was achieved even though total home sales for the first three quarters of 2017 declined by 6.1 percent to 142,493 units compared to 151,671 units reported during the same period in 2016.
Despite the lower transaction volume, the combined value of homes sold in Malaysia in 2017 reached RM49.8 billion, up 2.6 percent from RM48.5 billion in 2016.
“I don’t expect the value to go down for 2018,” said JPPH Director-General Nordin Daharom, after presenting the figures at the Malaysian Property Summit 2018 held in Kuala Lumpur on Tuesday (23 January).
The growth in overall value indicates that some property developers benefitted from the spike in home prices in the past. For instance, prices in major cities across the country increased by nearly three times over the past six years because of speculation made possible by lax loan rules.
Consequently, the central bank implemented stringent lending guidelines. Although these measures are now preventing speculation, prices of existing residential properties continue to be high.
In fact, Bank Negara Malaysia (BNM) warned that prices of dwellings remain “severely” unaffordable for most Malaysians.
Nevertheless, the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS) thinks that the property developers’ shift towards low-cost housing could help in bringing down prices.
“I think overall the market will rebound in 2018 and we will see a general decrease in value (prices) as more developers are going into the RM350,000 and below segment,” said PEPS President Foo Gee Jen.
In cities, dwellings costing under RM350,000 are considered “affordable” by most home builders. But for the central bank, low-cost housing should only be equivalent to three years’ worth of income.
Image sourced from Malay Mail.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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