First of all, 2018 was a pretty subdued year all around, not just for the property market, as negative sentiments seemed to have dominated people’s thoughts and actions.
Many lamented that they could not spend more when they travelled overseas because the ringgit kept depreciating.
In reality, the ringgit only depreciated a little, much lower than 5%. At the end of the day, the fact that so many Malaysians could still afford to travel overseas said a lot about their earning power.
Anyway, many agreed May 9, 2018 was a turning point for the country. Well, if it was, why then the persistent negativity? Why not listen to what one property expert has to say?
The following is a reproduction of an interview with Lim Boon Ping, president elect of the Malaysian Institute of Estate Agents (MIEA), that appeared in EdgeProp.my.
Top three challenges for the property market in 2019
- How to keep the property market vibrant while managing price hikes. It’s always a tug of war between the two. When the market gets vibrant, property prices increase, leading to affordability issues. On the other hand, too many cooling measures may affect many other industries related to real estate.
- How to ease the lending process, but still ensure that only those who can afford to, obtain bank loans. While many complain about the stringency of the current lending policy, the bank has to ensure that the people who borrow are truly qualified.
- The reach of affordable housing to those who need them. Although there are many so-called affordable housing projects in the market, are they really “affordable”?
Market catalysts: Technological innovation and crowdfunding will change the way properties are transacted or owned.
For instance, developers have started to sell their properties through online shopping portals like Lazada and through the FundMyHome scheme.
Developers are trying to incorporate Real Estate Investment Trusts, or issue bonds through Special Purpose Vehicles into home ownership in Malaysia. All these will bring a paradigm shift to the property landscape.
Advice for investors: It doesn’t matter when you bought your property, it matters when you sell. As long as you hold your property long enough, it’s almost an assurance that you will make a profit out of it.
Describe 2018 in one word: Uncertainty
Describe what 2019 would be like in one word: Recovery: The property market has actually started to shrink since 2012. We believe the market has hit rock bottom in 2018, in light of the weakened market sentiment and uncertainties from the change in government and its new policies.
In 2019, people will have a better and clearer direction as to how the new government is going to run the country, including the policies affecting the property sector.
Business confidence will improve as a result of greater transparency and better governance.
We should help Malaysians own a home but never to the point that we relax the rules so much that even those who don’t qualify for loans have their applications approved.
We should remember the Sub-Prime Mortgage crisis of 2008 and learn from it.
If a downpayment is needed, the potential owner of a home MUST somehow be disciplined enough to save for it instead of paying nothing yet still getting to own a home.
So, it should be a question of how to get these people to save more, either through earning more or changing their consumption habits.
This article first appeared in kopiandproperty.com
Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.