by Sharina Ahmad
WITH the housing market in limbo, worsened by the economic effect of the Covid-19 pandemic in Malaysia, savvy home-buyers and property investors are hoping to get value for money and will bargain for the best price.
Developers are going through a phase of liquidity crunch. As home sales continue to be sluggish in many parts of the country, they are becoming more open to price discounts.
However, the question to ponder is whether the property prices have hit rock bottom and the transactions reflect the true value in the market.
Another major concern is the property overhang which caused the market to be subdued. According to the National Property Information Centre, the number of unsold homes at the end of September 2019 was 31,092, compared with 30,115 units in the previous corresponding period.
The value of unsold residential units dropped to RM18.8 bil in the third quarter of 2019 compared with RM19.54 bil a year earlier.
Independent property blog kopiandproperty.com founder Charles Tan observed that property price is dependent on demand and supply as data has shown a mismatch in types and prices versus demand and affordability. Hence, the number of unsold properties has been rising every year.
“Overall, property transactions have dropped since 2013 until a marginal recovery year on year in 2018, and another positive number is likely for 2019 due to the Home Ownership Campaign (HOC). During the HOC, developers provided the discounts because they needed to sell and manage their cash flows,” he told FocusM.
For the newer launches, Tan said the focus is based on affordability since developers have learnt that prices will not go up continuously.
“However, in the secondary market, the holding power is dependent on the owner who does not have financial difficulties. He is not going to sell his property at a lower price than the market’s.
“As an owner myself, the slow market does not affect my decision if I want to sell. Only if I am desperate for money. If we look at how Covid-19 is changing the market, it may have pushed up a few more sellers willing to sell lower.
“So, find those units and quickly buy them if one is really looking at discounts. To wait for the whole property market to crash, that would have to be preceded by a stock market crash and a prolonged recession.”
Tan said real estate investors/agents may prefer a good price (usually below the market) so that they could sell faster or for the investor to buy it at the lower price. “The current sentiment does give them a small advantage though the moratorium (on loan repayments) does give many owners breathing space of six months to sort out their financial issues.
“At this juncture, we need to stop focusing on timing because no one will be able to predict the lowest and the highest point. However, is it a negative situation today and thus prices are more negotiable?
“The answer is yes, it is. Just remember that during times when the property market was hot and you were trying to negotiate, the owner would just say thank you and move on to the next prospective buyer.”
REI Group CEO Dr Daniele Gambero said there is no doubt that at this moment there are plenty of sellers around which makes bargaining simpler for cash-rich buyers.
“Have we seen the worst? It is difficult to make a forecast based on solid supporting data as the worldwide current situation is a ‘first time ever’ in history and no one should do simple forecasts without valid and strong supporting data,” he told FocusM.
Gambero said real estate investors who are cash rich are surely bargaining and shopping around now. “We were already in a buyer’s market before the pandemic and consequent with the movement control order (MCO), we are still there.”
He noted that now is definitely a good time to buy the property providing the holding power is good and the cash available is abundant.
Has the rental market dipped?
Kopiandproperty.com’s Tan said the rental market does not change as fast as property. “With every transaction, the property price could be changing. However, if someone has signed a rental agreement, the owner cannot change the rental every other month.
“This is why when we look back at the rental yield, it has come down tremendously from the days when rental yields could even be double digits. This is because as rental stays almost the same, the property price has been rising until it reaches a point when the investor no longer wants to buy because the rental yield is no longer attractive.”
He mentioned that with many completed units nowadays, rental is coming under heavy pressure and this has caused rental yields to become weaker. “This will take some time to recover but we need to remember that there is a reason why owners are called landlords.” – April 22, 2020
