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.
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.
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.
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.
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.
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.