The profile of the price per square feet curves reveal in a flash a whole situation – the history on an era of real estate prosperity. Malaysia residential property price has a great run for the last 2 decades and like other good things, it must come to an end. Peaked in 2014, volume has since slowed down. Prices have been stagnant for most of property types and prices for high end high-rise is currently experiencing downward pressure.
Rising tides lift all boats. It was easy to make money when the real estate industry is prosperous. Fueled by lower interest rate environment, developer interest bearing schemes, huge discount to cover for down payment, EPF withdrawal for installment and down-payment, relaxed bank mortgage lending, low real property gain tax and creative financing the growth of property sales has been astonishing that resulted to the growth of mortgage loan balance more than 10% compounding rates over the last 2 decades. The last group of buyers that jump into the bandwagon are already feeling the heat as the euphoria subsides and selling real estate gets harder everyday.
With such a tiny margin on mortgage loans for the banks, we doubt that some banks could not absorb the impact of credit loss should the property crisis occurs. Crisis that will lead to depreciation of property prices and lengthened disposal of foreclosed properties. As for some banks that proactive that wants to take preemptive measures on managing property loans, they have turn to us to get updates on property prices movement as we unique offerings that no one else offers – a comprehensive property analytics of Malaysia real estate.
We are not trying to say that every property is bad. They are pockets of clear and present dangers that we can avoid and there are also pockets of opportunity that we can take advantage of. Real estate is a game of numbers and we are good at it. We have the sophisticated ability to identify property prices movement faster than anyone else. With our cutting edge predictive model we can accurately estimate the fair value of a property price. Artificial intelligence is our friend and we have been in the banking industry and real estate for a long time. We are area the subject matter expert that are armed with sophisticated tools.
Ok, enough with the brags. Let’s take a look at the charts below, analyze it, and decide for yourself where it might head.
Note: data for year 2018 is only up to Jul 2018.
High-rise residential property
Landed Residential Property
While it is pretty clear that demand for property price below 500K is there, developer are taking more risky bets and build property type of expensive high-rise of above 500K.
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