KUALA LUMPUR: The Malaysian residential property sector is expected to remain flat going into 2017, weighed down by uncertainties in the global economies.
However, this might not necessarily mean that things have taken a turn for the worst, said the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) organising chairman Elvin Fernandez.
“We expect the local residential market to be flattish for a while, extending into next year. But this is not really a bad thing,” he said during a press conference yesterday at the Malaysian Property Summit mid-year review 2016, which was organised by PEPS.
“Flattish is good... Because it means yields are still reasonably alright and people are not going to easily default on their loans, unlike during the Asian financial crisis,” said Elvin.
He added that the “flat” projection was based on the uncertainties in the global economy and slowdown in the local property market.
“The property market is correlated to the economy,” Elvin said.
PEPS immediate past president Datuk Siders Sittampalam said the number of launches had reduced in light of the slowdown in the local property market.
He, however, said prices of residential properties in “good locations” would still hold.
Kenanga Investment Bank Bhd equity research head Sarah Lim, in a presentation, said the property down cycle could last “longer than usual.”
“We’re expecting a more flattish ‘U-shaped’ down cycle because tightening property measures had already helped the market cool off, resulting in greater prudence amongst developers, banks and property buyers.”
Valuation and Property Services Department director-general Datuk Faizan Abdul Rahman said residential property values and volume had dropped since peaking in 2012.
However, he noted that the drop had not been drastic, but had instead been declining at a steady rate.
“I do see prices going down, and any increase will be slight.”
Faizan said demand for affordable housing had picked up, while sales of properties over RM500,000 had declined this year.
Elvin concurred that there has been an increase in demand for affordable homes.
“There is a big first-time homebuyers market out there now,” he said.
Faizan also said Bank Negara’s recent cut in the overnight policy rate (OPR) would be good for the local property market.
“Interest rates will be reduced and the terms of borrowing will cost less for buyers,” he said.
Earlier this month, Bank Negara slashed the OPR by 25 basis points to 3%.