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Slow climb out of the housing property market doldrums in 2020

An article published in Star Property recently discussed some interesting points of view by experts on, among others, the outlook of Malaysia’s residential property market in 2020.

Despite the downward trend in this market segment, all of them agreed that there will be some slow and significant improvement during the next 12 months.

Property overhang
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Knight Frank Malaysia Managing Director, Sarkunan Subramaniam believed that pricing is the only cause for property overhang in this country right now.

He mentioned several other contributing factors such as mismatch of products, expected yield, unfavorable location in regards to accessibility, distance, lack of amenities and product type.

Photo: Greater Kuala Lumpur Development Facebook Page

On a different note, Sarkunan viewed that several areas like Desa Park City, Taman Tun Dr. Ismail, and Damansara Heights are capable of luring the upper-income group, high-net-worth people, and foreigners.

Besides, the spillover effect of Tun Razak Exchange is expected to benefit the Imbi and Pudu area once the financial district is open for business.

Secondary property market

For 2019, Sarkunan explained that the secondary property market experienced a higher level of productivity in 2018 due to the shift of the base year for real property gain tax from 1 January 2000 to 1 January 2013.

He added, among other factors that stimulated that market are the improved processing procedure for the Malaysia My Second Home application and the revision of price threshold for foreign buyers for unsold high-rise properties in urban areas.

Steady demand
Statistics provided by NAPIC as of the second quarter of 2019.

Meanwhile, Royal Institution of Surveyors Malaysia Deputy Chairman, Aziah Mohd Yusoff said, reasonable price and good location are among the factors which will ensure the steady demand for residential properties especially terraced units and condominiums.

She also believed the secondary property market, mostly in the residential segment, is experiencing a correction period due to poor market sentiment and strict lending rules imposed by Bank Negara Malaysia and the impact would likely to continue next year.

Affordable houses

Malaysian Institute of Estate Agents President, Lim Boon Ping forecasted, the residential property market will continue to be driven by affordable houses, mainly units sold under RM400,000.

For the past few years, he said, more than 60% of the total transactions were made up of residential properties.

Laissez-fare approach
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Finally, the Association for Abandoned Building Owners Malaysia Chairman, Dr. Mohamed Rafick Khan implied that the government should take a laissez-fare approach toward the residential property market.

He believed, the housing market must be free from the hands of the government because market forces will correct itself.

What the government should focus on, then? Mohamed Rafick said the government can spend more time on town planning and public transport systems which in turn will stimulate the demand for property.

He also forecasted the property market will not see an oversupply in affordable homes for the next three to five years despite the government has been consistently pushing developers to build more houses in that category.

Lower profit margins and risk are said to be the reasons behind developers’ indifferent response to that call.

Mohamed Rafick concluded prices for new properties will be expected to stay high although the price will be slightly reduced in the secondary market.

Points to ponder

Although things look a little bit promising in the near future, prospective homebuyers should exercise caution before deciding to purchase new homes.

Maybe the worst is yet to come for the residential property market in Malaysia if the domestic and global economies don’t show any sign of improvement next year.

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5 New Year’s resolutions that may help you buy a new home in 2020

It is less than a week left before we say goodbye to 2019 and greet welcome to 2020. Now maybe a good time to think about what your New Year’s resolutions will be.

If buying a home is at the top of your list, it will be helpful to have resolutions that can keep your financial health in shipshape

Cut down on monthly subscription services
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Yeah, it surely seems convenient to have monthly subscription services especially when the payments are automatically deducted from your credit cards.

But, one of the downsides of doing that is you may not realize those payments can hurt your credit rating.

To make things worse, the guy from the bank’s credit risk department may pull your report before you settle your credit card balance in full at the end of the billing cycle.

To avoid that kind of unpleasantness, only subscribe services that you need and better still, settle your bills by paying in cash via debit cards.

Pay your debts on time
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Easy to say but hard to do, all the more so for bad paymasters. Please keep in mind, nothing makes lenders happier than loans paid on time by borrowers.

Your ability to pay loans, credit cards, and bills on time will reflect positively on your credit history.

Anyhow, some people may think that it will be easier to secure loans if they haven’t borrowed money from any financial institution or made purchases using credit cards.

That is considerably untrue because your home loan application may be rejected due to your nonexistence in the credit realm.

Always monitor your credit
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You never lag in paying your loan installments and bills. So, you think your credit rating is OK. Then, you go and apply for a home loan.

All of a sudden, you find out the bank rejects your loan application because your best friend defaults on his business loan and of course, you are his guarantor.

You can save yourself from this unpleasant situation by checking your credit frequently. At least, do so once a year.

For Malaysians, you may get your credit scores from rating agencies like CTOS, Central Credit Reference Information (CCRIS), and Experian Information Services Sdn Bhd (Experian).

Resist the temptation to take big fat loans
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Forget about buying a new car or taking your family overseas on an expensive vacation. In any case, hold your horses until your home loan is approved.

Lenders are also particular about your debt-to-income ratio or to put it in layman’s term, the amount of your debt payment divided by your gross income.

Your loan application has a greater chance to be approved if you have a lower debt-to-income ratio.

The lower your debt-to-income ratio, the less likely you will face trouble in repaying the home loan in the event of financial hardship.

Don’t change jobs
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Although it sounds old-fashioned, the saying ‘a rolling stone gathers no moss’ always rings true.

Potential homebuyers should stick to their current jobs as a career move especially to a different industry may raise some alarm to lenders.

Job loyalty can be a positive factor in backing your home loan application as it allows financial institutions to forecast your future income easily.

Besides, the job market in Malaysia doesn’t look good these days due to unfavorable economic conditions which began last year.

On a final note, we at Red Angpow would like to take this opportunity to wish you a Happy New Year. May 2020 will bring success and happiness to all of us.