While speculative demand in Malaysia has evaporated, the property cooling measures is expected to remain in place, said Sunway University Business School economics professor Dr Yeah Kim Leng.
This comes as affordability is still a concern in the country, he said in the presentation of his paper entitled “Economic Outlook for 2018 and Beyond” at the 27th National Real Estate Convention.
“Speculative demand [in real estate] has evaporated but no major correction is expected as the overall Malaysian economy remains healthy.”
With this, he expects Malaysia’s moderately strong gross domestic product (GDP) growth, hike in general income, full employment and expanding working age population to support property prices and demand.
“We will see slower but still positive credit growth underpinned by strong domestic liquidity and continuing credit flows as banks remain healthy.”
However, he expects the local real estate industry to face major challenges such as the large price-income gap and oversupply.
“Affordability issues and oversupply in higher-end segments exacerbate supply-demand mismatches in selected property segments and location.”
On the overall economy, Yeah believes the cyclical upturn will continue this year as GDP growth is bolstered by improving external demand, which it expects to increase at the higher end of the 5.5 percent to six percent range this year.
“The economy will be remain resilient in the short term. Our strong financial system can cope with volatile short-term capital flows but overcoming long-term structural challenges such as insufficient highly-skilled workforce, industrial upgrading and productivity-led growth will need greater policy effectiveness,” he noted.
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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