PROPERTYGURU International (M) Sdn Bhd has taken a neutral stance on the market outlook for 2020 due to weak sentiment and poor global economic outlook.
Country manager Sheldon Fernandez said both interim and long-term measures to address the challenges in Malaysia’s property market will take time to impact established patterns.
“There have been targeted measures introduced in Budget 2020 to address specific issues in Malaysia’s property landscape, along with scattered feel-good factors for the market, such as a positive interest rate environment.
“However, mixed internal and external economic indicators, including a global economic slowdown due to US-China trade tensions as well as volatility in the ringgit, have hindered growth prospects moving forward,” he said during the PropertyGuru 2020 Market Outlook Forum on Dec 5.
Fernandez said the disparity between homebuyers’ income level and bank loan financing is one of the main challenges for Malaysians as home seekers cannot afford to buy properties or the loans required to purchase them.
“The pressures driving these issues are complex and interrelated. It has been building for decades, leading to calls from some quarters for a fundamental restructuring of the property industry in Malaysia.
“Short-term measures aimed at easing homeownership challenges among Malaysians include the Home Ownership Campaign (HOC) and Bank Simpanan Nasional’s Youth Housing Scheme, both of which have been extended from their original time frames,” he added.
These measures, along with the aforementioned emphasis on rent-to-own schemes, address homeownership among younger and first-time purchasers.
The HOC, as well as provisions for lowered purchasing thresholds for international purchasers, also seeks to reduce the ongoing residential property overhang.
After all, the residential overhang is a direct result of the supply-demand imbalance in the market, as developers build properties which buyers cannot afford to purchase. The number of residential overhang was recently estimated at 52,666 units in 2Q19, including 32,810 residential units, 18,186 serviced apartment units and 1,670 SoHo (small office home office) units, according to Nawawi Tie Leung Property Consultants Sdn Bhd.
Nevertheless, affordable housing quotas and initiatives such as Rumah Selangorku, the Federal Territories Affordable Housing Project and Cagamas Bhd’s My First Home Scheme are bridging the gap between consumer demand and developer portfolios.
That said, the need for these alternative solutions also underscores the ongoing issues facing domestic property, and these issues are set to continue into the next year. Affordability, supply-demand imbalances in the market and loan financing remain key challenges for Malaysian homebuyers.
With regard to loan financing, for example, Bank Negara Malaysia has seen an uptick in defaults from 2018 through 2019, particularly among those with variable income and those with properties worth more than RM500,000.
“These issues are not limited to the Malaysian property market and are a product of increasing population pressure and decreasing land availability in urban hotspots. As more purchasers compete for fewer properties, prices are driven up, with developers catering to segments with higher profit margins,” said Fernandez.
