For the past year, those vested have painted a bullish and rosy picture of the property market. To those who had a good run these past few years, congratulations. For those who are still dreaming of owning their own home, don’t worry. You will find your dream home soon. You may take your time because prices will taper a bit.
Malaysia’s property sector cooled off last year following the introduction of the government’s property cooling measures under Budget 2014, according to REHDA and government data.
Based on the property industry survey for 1H 2014 conducted by Malaysia’s Real Estate and Housing Developers’ Association (REHDA), nearly 90 percent of home builders across the country saw a slowdown in sales due to the government’s curbs.
In fact, affordable residential units priced below RM1 million were hard to sell as buyers were struggling to obtain housing loans.
Also, there is a lack of demand for bumi properties in locations where bumiputras do not traditionally reside while more than 80 percent of the respondents had a ‘neutral’ and ‘pessimistic’ outlook for Malaysia’s real estate sector for 1H 2015.
Figures from the Valuation and Property Services Department confirm that the growth in the real estate market has slowed down. According to the agency, the quantity of units sold and their combined value merely increased by 3.3 percent and 19.3 percent respectively in 1H 2014 versus the same period in 2013.
Empirical evidence also indicates that sales of developers have turned sluggish in the second half of 2014 as Bank Negara Malaysia’s stringent loan rules remain in place, while people were in no hurry to buy houses despite the planned six percent goods and services tax (GST).
Looking ahead, the country’s overall property market is expected to moderate further during the first half of 2015, particularly the residential segments of Johor, Penang and Klang Valley due to economic headwinds, tougher mortgage approvals, the government’s curbs and GST. But a major slump is unlikely.
However, buyers are likely to adopt a wait-and-see approach after the GST implementation for six to nine months, in line with the behaviour seen in most countries that have imposed this tax regime. The net effect is that 2015 could end up being a similar year to 2014 in terms of property transactions, which we would categorise as a lacklustre year.