theSun Property April 2016

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>Views andpossible implications based on
Asia propertymarket sentiment survey report for H1 2016 Slow and steady
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ACCORDING to property
portal s
recent Asia property
market survey on the
industry outlook for the first half
of this year, Malaysia is still
recovering from:
1) various cooling measures
implemented by the government;
2) the introduction of the recent
goods and services tax (GST);
3) the current political and
economic climate;
4) the weakened ringgit; and
5) stringent bank regulations which
have resulted in difficulty in
qualifying for housing loans.
The ninth iteration of the survey
and the longest-running study
of its kind is reported to have been
conducted on the iProperty
Group’s websites in four countries,
namelyMalaysia
my), Indonesia and
, Hong
Kong and
and Singapore
). Data was
compiled from the response
from 13,000 individuals, 40% of
whomwere fromMalaysia.
According to the poll,
respondents were mainly property
owners looking to purchase
another property (39%) and first-
time home buyers (26%), with
some 15% just monitoring the
market.
iProperty Group CEOGeorg
Chmiel shared that the survey
revealed that the market is
expected to continue experiencing
a slowdown and higher loan
rejection rates will present a
challenging year for the industry.
Enlightening further, Chmiel said,
“Malaysia’s property sector is
expected to be flat this year, while
market prices will benefit those
looking to buy or rent houses.”
That said, we perused the survey
findings and deliberated its
implications and impact on the
market.
RESULTS ANALYSIS
Below are the findings from the
survey, which are in bold, along
with views and implications that
can be expected and possibly
impact the local property market.
Weakened ringgit spurs
interest fromSingaporeans
According to the
weakened ringgit has resulted in
higher interest from Singaporeans
looking to invest inMalaysia, more
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specifically, property in Iskandar
Malaysia. Survey respondents from
Singapore also revealed that
Iskandar Puteri (previously known
as Nusajaya) (59%) and Johor Baru
City (40%) are the preferred
investment locations within
Iskandar Malaysia, with a small
percentage showing interest in the
Western and Eastern Gate sectors.
Interested parties in property in
this southern region included
Malaysians and Johoreans.
No doubt, our diminutive
currency may have its drawbacks,
but at the same time it is also
attracting foreigners to invest in
property here, even move their
businesses over with the enticing
incentives and packages offered
(refer .
No savings due to high
household expenses
Survey results showed that half
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the respondents
(50%) can cover
their household expenses but are
unable to save. With more than half
of the respondents (60%) owning
the property that they live in, a
majority are still paying mortgages
with more than 20 years to go. The
findings also revealed that 54% can
manage their monthly loan
repayments, while 22% are facing
difficulties.
The repercussions would likely
include those facing mortgage
difficulties having to sell off their
properties; and for those with
“weak” holding power, possibly
having to sell their properties at
low or even belowmarket price,
depending on the urgency.
This can lead to a buyer’s
market, where the purchaser could
have the upper hand to negotiate
for better deals.
A spin-off on the other
hand would see clever investors
doing their homework, if time
permitted, to learn to negotiate
“lease option” deals as promoted
by Vincent Wong and John Lee.
Interested parties could go through
their book, A Step by Step Guide to
Lease Options: NoMortgage, No
Deposit, No Problem!
Low interest to invest
overseas
While the weakened ringgit has
also resulted inMalaysians having
low interest to invest in property
overseas according to the survey,
still some 23% of respondents were
interested to purchase in Australia,
Singapore and the UK.
The top two reasons which were
very consistent, were that these
locations offered good property
investment returns and there were
plans to migrate to that country in
the future.
The consensus on the findings
that Malaysians have low interest
in investing in property abroad is
that lesser cross-border
investments could be a blessing in
disguise but only for the short term
as more people will “buy local”.
However, in the long run, this
could lead to possibilities of
decreased opportunities for
expansion, relegating the
performance of one’s company
having to rely on the
economy of the country
and losing performance
potential by keeping local,
among others.
High interest to
purchase but
affordability continues
to remain amajor
concern
Despite a low percentage
of respondents who
purchased properties in
the last 12 months, many
still believe that it is
currently a good time to
invest in both primary and
secondary properties. The
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three most popular types of
property to purchase have been
consistent among the survey
respondents. These include:
a) private condominium / serviced
apartment;
b) terrace house; and
c) flat / walk-up apartment.
While 63% of respondents
were found to be looking to
purchase in the next 12 months,
a significant 37% seem to be only
looking to purchase in at least
two years’ time. The budget to
purchase, however, still remained
up to RM500,000.
In this case, we foresee either
rentals going up or developers
increasing their quota for less
expensive housing units, if not, a
glut of properties, empty and
waiting to be rented or purchased,
with developers or owners having
to sit and “wait out the cycle”.
Insufficient affordable
housing available
Despite the government’s efforts
to offer more affordable housing,
66% of respondents, especially
Kuala Lumpur-based house buyers,
felt that the additional affordable
houses were insufficient as there is
still a strong migration from low to
medium-low income households
from different states coming into
the Klang Valley.
An issue which has more than
oftenmade the news, there seems
to be a slightly improved provision
of affordable housing, with more
developers going into building such
units within their mixed property
development projects.
A boon, right up one’s alley for
the middle to low income earners,
as well as first-time property
buyers, but in the near future as the
government continues to push for
the development of more
affordable housing.
BOTTOM LINE
At a press conference, Chmiel
concluded by saying, “Even though
Malaysians are concerned about
the rising house prices and
affordability, property is still
viewed the most attractive
investment choice according to
the survey respondents. In fact,
our survey respondents have
informed us that property is the
most preferred investment option
due to capital growth opportunities
and it is also more stable compared
to other assets. As such, a flat
property sector provides excellent
purchasing opportunities for those
with access to funds. Aweakened
market is good for those with
holding power.”
Anyhow, Chmiel expects
some change around the second
half of 2016, anticipating the market
to “inch forward slowly and rise
again in a year or two”.
So, for those who have “saved
for a rainy day”, with excess funds
or good holding power, like the 35%
of respondents who agree, now is a
good time to buy.
Note: Some information in the
above article was retrieved from the
iProperty.commarket report.
Tabulations, tables and charts are
courtesy of
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Property trends for 2016
lower rentals
good buys
high loan rejection rates
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iProperty Group CEOGeorg Chmiel.
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theSun ON FRIDAY | APRIL 8, 2016