MEASURES to be announced by the government in the much-awaited stimulus package to bolster the economy from the ill effects of the Iraq war will be a shot in the arm for the property and construction sectors, according to Economic Planning Unit macroeconomics and evaluation senior director Datuk Dr Victor Wee.
He said the two sectors were very sensitive to any upswing or downturn in the country's economic performance and additional measures by the government to boost the economy would augur well for these sectors.
In the medium term, the gross domestic product (GDP) will be affected by the global economic scenario, especially the Iraq war, unless pre-emptive measures are taken to offset the decline in various sectors, including the manufacturing sector.
The GDP growth for 2003 is projected at 4.5%, but then there are concerns about the rippling effects of the Iraq war, he said in his paper entitled The Housing Industry: A Catalyst for Economic Growth at the National Housing & Property Summit in Kuala Lumpur yesterday.
Wee said the private sector should intensify efforts to increase productivity as the industry had been bogged down by traditional methods of construction which were labour intensive and almost devoid of research and development as well as new technologies.
Go for more innovative designs incorporating information and communication technology as well as those involving energy conservation concepts and cost savings, he said.
He said the government had in the past introduced measures to generate growth in the property sector, including lowering the base lending rate, so that financial institutions could introduce more attractive loan packages and had also exempted various fees and stamp duties.
The government will continue offering housing loans to civil servants especially for those who qualify for second housing loans. This will have an impact on the property sector because there are now 900,000 civil servants in the country, he added.
Real Estate & Housing Developers Association past president Datuk Eddy Chen said the demand for residential units was still strong in tandem with the increasing population of the country but the sector needed further growth stimulus measures from the government.
According to Chen, the property development sector is crucial to the country's economy because of its trickling effects. The production of 100,000 new houses for example, will generate about RM15bil worth of market activities in terms of job creation, manufacturing of building materials, bridging financing and interest charges by the banks as well as conveyance fees for lawyers.
Finance Ministry deputy director-general of Property & Valuation Services Department Datuk Mani Usilappan, in his presentation (on Future Trends - Where do We Go from Here?) said a downtrend in new housing projects was expected in the next two years due to the overhang in property supply as well as the increasing number of completed houses.
The medium term outlook for the property sector is dependent on the national economy and the continued income of the average wage earners. We can't expect any drastic increases in demand, he said.
He said unsold properties constituted about 20% of all new launches in the country.
Did you find this article insightful?