Kenanga Research, Kenanga Investment Bank Bhd’s research arm, expects the supply-demand imbalance within the property market to persist amid the Covid-19 crisis.
“Essentially, the high inventory levels – comprising existing stocks and incoming supply of unsold units still under construction – will remain elevated in the foreseeable future,” The Borneo Post quoted it as saying.
“On the other hand, demand will likely weaken in the midst of economic uncertainties arising from Covid-19 and oil price slump.”
The expiry of the banking moratorium loans on 30 September could also see desperate sellers in the secondary property market competing with the primary market for buyers, said the research arm.
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“Depending on the severity of the situation (which would only be assessable post 30 September), these secondary sellers could possibly drag prices down.”
With this, potential buyers may hold off acquiring beyond 30 September in the hopes of getting bigger discounts.
Kenanga Research believes the confluence of these factors could aggravate the already weak supply-demand dynamics of the property market, reported The Borneo Post.
“Overall, property developers will find it increasingly challenging to clear their inventory of completed properties and achieve new property sales targets this year,” it said.
In fact, it has seen some developers slash their sales target by as much as 50% post-Q1 2020.
Kenanga Research, however, noted that the government had acted timely when it decided to reinstate Home Ownership Campaign (HOC), abolish real property gains taxes and allow 90% loan-to-value ratio for third home purchases.
Other policies that could help support the property industry include more automated mechanism to release unsold Bumiputera units in certain states, longer loan tenures and lowering compliance costs, it added.
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