December 29, 2018

Top three challenges for the property market in 2019
1.    Controlling house prices — REHDA members will reduce house prices by 10% which is one way to liven up the property market. Sales and Service Tax (SST) exemptions could help reduce house prices by reducing the cost of developing houses. However, there are other costs and fees to be paid, such as land, financing, compliance and professional fees. The government should look at reducing the statutory contribution and compliance costs paid by developers and ensure a clear, transparent and rapid approval process.This would also minimise mistakes, faults and delays. For instance, a direct release mechanism can be effected for unsold bumiputra units within a certain time frame. 

2.    Financing — Stamp duty exemption is good news for Malaysians looking to own a house. Unfortunately, the tightening of lending by banks is deterring first time house buyers. We shouldn’t blame the banks because most first time house buyers do not qualify for the loan or pass the credit assessment. Some parties are experimenting with crowdfunding the purchase of houses. This has to be carried out carefully to avoid aggravating the debt situation. 

3.    Affordable housing —    One of the new government’s pledges is to build 1 million affordable homes within two terms. Demand is high but homes must be in the right location, with easily accessible amenities, facilities and public transport. A proper definition of “affordable” is needed. Housing developers are capable of offering affordable homes, but they are hesitant as it is a segment with lower profit margins. However, this should not be a deterrent if the government offers incentives for them to develop affordable homes.

Market catalysts
The new government will be one of the main catalysts for the property market in 2019. If the current government could do what the previous government failed to accomplish, it will help strengthen the market. Eliminating leakages, implementing bold policies and fair practices to level the playing field will bode well for the market in the long run. 

Advice for investors
This is a good time to buy your dream property IF you can afford it as the property market has softened, relative to the boom years. However, one must conduct thorough research before buying a property. Check the current market value, work out the financing commitments, inspect the property carefully and explore the exit options. It is crucial to understand the dynamics of the locality. 

Describe 2018 in one word:
Moderate:  Malaysia’s economy expanded 4.9% in the first half of 2018 compared to 5.7% the previous year and is expected to moderate further in 2019. The property market recorded a marginal decline in the first half of 2018 in line with a challenging economic and financial situation. According to the Valuation and Property Services Department, a total of 149,889 transactions worth RM67.74 billion were recorded in 1H2018, showing a decrease of 2.4% and 0.1% respectively from the same period last year. Many major developers experienced a fall in share prices, with some up to 30%. Many potential causes exist, such as the overhang situation, affordability issues, loan rejections and median wage.

Describe what 2019 would be like in one word:
Cautious: Going into 2019, the approach would be cautious due to the challenging national debt situation. The overhang situation would take time to resolve while the general economy is expected to moderate. 

Read the entire original post here: https://www.edgeprop.my/content/1457815/challenging-2018-hopeful-2019