Slight uptick in property sales but no reprieve for the overcommitted, says expert

Those who invested in residential property may have to bite the bullet and sell their properties at a much cheaper price, says real estate agent Ernest Cheong.

PETALING JAYA: An expert cautions that the worst is not yet over for those struggling to find buyers or renters for multiple properties despite the slight improvement in the property market last year.

Speaking to FMT, chartered surveyor Ernest Cheong said the combination of the US-China trade war and the battered stock market means that many are likely to hold back from buying property.

He said he has at least four clients with multiple properties who are now trying to cut their losses.

These clients had been investing in property for the past five years but are now struggling to get returns amid the property glut and challenging economic climate, he said.

“I have one client with around six properties. He can only get renters for three of them, earning him around RM20,000 per month.

“But he has to pay back at least RM60,000 to the bank each month because these are expensive, high-end properties.”

Cheong, who has over 40 years of experience in the industry, said his client had also been affected by the stock market’s poor performance.

“The property market is bad and the stock market is bad. It’s a mix of bad decisions and bad luck,” he said.

He said those who are financially able to hold on to their properties would eventually see a return on their investments. However, how long this would take is anyone’s guess, he added.

“There is little the government can do because many simply cannot afford homes at their current prices, or they cannot get home loans.

“Some incentives like stamp duty exemptions may help a bit. But for those who are overcommitted, they have to bite the bullet and sell their properties for a much lower price to those who are waiting for a fire sale.”

Adding that he had seen such trends following the Asian Financial Crisis in the late 1990s, Cheong said home owners could also speak to the banks and renegotiate their loan repayment amounts or schedules.

Chartered surveyor Ernest Cheong.

“From there, work backwards and take lower rentals to meet the loan repayments,” he said.

Meanwhile, Henry Butcher Malaysia chief operating officer Tang Chee Meng said loan approvals, the rising cost of living and investor confidence remain the main challenges in the sector.

He said residential property sales had picked up since the launch of the public-private Home Ownership Campaign in March, with buyers appearing to take advantage of the stamp duty exemption and discounts offered.

He added however that the US-China trade war had made house buyers more cautious.

He said they are also unsure whether the slight rebound in interest in the residential property market can be sustained if global stock markets and the economy are negatively affected by the trade war.

On what Putrajaya could do to help the situation, Tang said it could look into ways to bring down the cost of development, such as land and compliance costs.

“This is so that house prices can be kept at levels which match the income levels of the people,” he added.

Recent figures from the National Property Information Centre showed a slight increase in the volume (0.6%) and value (0.3%) of property transactions in 2018 compared to the year before.

However, the overhang of residential properties increased from 24,738 units in 2017 to 32,313 units last year.