PETALING JAYA: Real estate players say its unlikely that the property market will take a “terrible hit” in 2018 as predicted by property expert Ernest Cheong.
They said that the “facts and figures” pointed to a less negative outlook.
Yesterday, Cheong, a real estate veteran, said 2018 looked to be a tough year as developers and homeowners would find it hard to find buyers, and this could lead to a crash as consumers did not have the financial power to own homes.
Cheong had said this in the wake of Deputy Finance Minister Lee Chee Leong’s revelation that unsold completed residential units rose by 40% to 20,807 units in the first half of 2017 compared with the same period last year.
Henry Butcher Malaysia chief operating officer Tang Chee Meng told FMT that although the market was sluggish and that the stock of unsold houses could possibly increase in 2018, some projects priced under RM500,000, as well as those above that price range in popular locations, were still enjoying good take-up rates.
“So for anyone to say that the market will crash next year is a bit too pessimistic,” said Tang, adding it was important to note that the numbers didn’t paint such a bleak scenario.
For one, he said Malaysia’s economy was projected to grow between 5.0% and 5.5% next year. He also said there had not been any major retrenchment exercises, compared with a couple of years ago, when thousands in the aviation, oil and gas and finance industries lost their jobs.
Tang also pointed out that there had not been a significant rise in nonperforming loans (NPLs) or a substantial rise in foreclosed properties put up for auction.
“NPLs will go up only if borrowers are facing financial difficulties in servicing their loans and this will only happen if their businesses go bust or if they lose their jobs.”
But based on the latest economic data available, Tang said the employment situation, as well as the outlook for the business sector, did not appear to be so negative. This, he said, should provide overall confidence to investors and should support a stable property market.
He added that a number of developers had refocused their attention on the affordable homes segment, which should continue to enjoy stable growth in 2018, and that this would help developers overcome the sluggish market.
Tang also said some investors could also be holding back their purchases pending the outcome of the next general election (GE14).
Prices unlikely to drop
Meanwhile, the Penang Real Estate and Housing Developers’ Association’s immediate chairman, Jerry Chan, said it was unlikely that developers would drop their prices unless they were in financial trouble.
“But, most developers have been around for some time, had a good run and would’ve anticipated the current market slowdown. So I don’t think they have their backs against the wall.”
Chan told FMT the reality was that developers couldn’t afford to bring prices down because their margins were low, and would be more likely to change their products to meet the market’s requirements rather than just drop prices.
“You will see developers maybe making smaller units or putting less finishings. We can only lower prices if the authorities lower compliance costs such as levies, taxes and affordable housing requirements.”
In the past, some property experts had pointed out that forcing private developers to build affordable housing units, which were sold below market rate, would only force them to increase the prices of their other projects to cover the losses.
Chan said that the demand for housing would continue to persist and that consumers would always find ways to buy a home, whether through finding additional income sources or lowering their expectations of a home.
“I don’t see prices dropping more than they already have. When the market was at its peak, some developers set ridiculous prices and when the market slowed down, they dropped their prices a bit.
“But does this really mean that they dropped their real prices or merely slashed their inflated prices?”
He also dismissed the likelihood of a crash in 2018, citing strong exports, returning investor confidence, and the lack of mass retrenchments.