In the morning hours of May 14, our office phones were buzzing with calls from our friends, clients, investors, property developers, owners and writers.
All of us were wrapping up the results of Malaysia’s general election (GE14), held just a few days earlier on May 9. Trusting us as registered valuers, estate agents and property managers, the community was asking our opinion on how the change of federal government for the first time in 61 years is going to impact the property market.
We had no choice but to decline requests for interviews. At that time, everyone had a limited understanding of what policy changes to expect from the new government. In fact, we think at that time, no one could actually tell.
About 3 weeks before the election, we shared our thoughts on the property market basing on the Property Market Report 2017 released by the Valuation and Property Services Department, Ministry of Finance. We believe it is a great read for everyone with real estate aspirations: http://landserve.com.my/is-our-property-market-bottoming-out
While we highlighted some promising signs that the market seemed to be bottoming out, one thing was clear: in view of the upcoming election, we needed to observe the market a little longer. It was important to see whether the momentum of growth and investor confidence which underpinned the property market in 2017 would continue into the second half of 2018.
Undoubtedly, much change can now be expected after GE14. To assess in which direction the economy and property market will be heading under the new government, we first need to get answers to some fundamental questions:
1) How is the Malaysian economy going to react to the abolishment (now zero-rating) of Goods and Services Tax (GST)? During this period of fiscal reform, will our public revenue suffer?
2) What will our foreign policies be under the new government? Will we be able to sustain and increase trade volumes and foreign direct investments with our major trading partners and foreign investors?
3) Will the high-impact projects launched by the previous government stay part of the equation? From Mass Rapid Transit (MRT2 and MRT3), Bandar Malaysia and Tun Razak Exchange (TRX) to Kuala Lumpur – Singapore High Speed Rail (HSR), Petronas' RAPID Project in Penggerang, East Coast Rail Link (ECRL) and Pan Borneo Highway, will these projects still define our national economic strategy?
4) It is now reported that Malaysia’s debt is at an all-time high with foreign investors leaving Bursa Malaysia, and Ringgit and stock prices sliding downwards, what are the measures to be taken to put market confidence back on track?
5) Will our growth momentum falter? Will we be seeing the 5.5% to 6.0% growth that was forecasted earlier for 2018, if not better? Will employment across the country follow this lead?
6) As for the property and housing sector, what would the Housing and Local Government Ministry’s plans be? Will all the schemes and affordable housing initiatives launched by the previous government continue? This is a crucial factor as the residential sub-sector constituted 62.4% of our total transaction volume in 2017.
Time flies, and we have just surpassed the midpoint of the new government’s first 100 days. As changes unfold, we find much comfort in the stance and actions taken by the new Housing and Local Government Minister, YB Zuraida Kamaruddin.
She announced that one of her priorities is to establish the National Affordable Housing Council (NAHC) to oversee all affordable housing schemes and related matters under one umbrella. This will help to resolve discrepancies in demand and supply. To reach this goal, her ministry will build a one-stop online application platform that will enable Malaysians to submit their applications to the various government housing schemes.
In other news, to address the issue of affordability, the newly appointed Minister has started engaging with the Ministry of Finance, Bank Negara Malaysia, commercial banks and the Employees Provident Fund to ease housing loan requirements for homebuyers in a bid to reduce the residential overhang in the country.
Such actions, which are instrumental in meeting the Minister’s goals to create an efficient, transparent and fair housing sector and make Malaysia’s property industry a vibrant and inclusive one, ought to be lauded by all Malaysians.
So what is our take on the property market at this juncture? If you ask around, as always, there are mixed views. Try talking to property developers, consultants, investors, homebuyers, etc. and you will see this first hand.
Many would say that the property market will pick up driven by renewed optimism. At the moment, it’s not entirely clear whether those who make such comments will actually invest in property any time soon. Of course, there is also an opposing view that the market will slow down as investors stay on the sidelines or possibly hold off their investments in property. Others might believe that the market will stay flat for the rest of 2018.
While we do not expect property demand to surge in the second half of 2018, we are confident and optimistic about its growth curve. We expect developers would still have a lot of work to do in holding marketing campaigns to lure buyers with attractive discounts and freebies. Their primary focus is to clear their stocks and unlock their capital. Greater clarity is what they need before venturing further.
For property developers, business owners and investors who have large cash piles or in expansion mode and engaging a long-term view, the time is now as opportunities to own land and properties at attractive prices are aplenty.
Residential properties in the mid to upmarket segment in both the primary and secondary markets are now available for sale at discounted prices, while choice commercial and industrial properties including landmark buildings and prime lands that were rarely for sale, are now in the market.
Contact us to find suitable properties or list your very own property with us!
Be guided and happy investing.