KUALA LUMPUR (Jan 3): A research team from  Universiti Tunku Adbul Rahman (UTAR) has concluded that the current property market downturn plaguing the country will not be as turbulent as the ones that occurred some two decades ago.

The research on the Malaysian housing market was conducted under the Higher Education Ministry’s Fundamental Research Grant Scheme (FRGS).

The first part of the research findings was released by UTAR today,

The study suggested that the market had experienced three property market cycles: during the periods from 1990-1993, 1994-1997 and 2010-2016.

“The first two cycles involved a rapid increase in house price followed by sharp drop. It is also the basic characteristics of a housing bubble,” said the research team in the statement.

The third cycle, which is the current cycle, demonstrates a comparatively more gradual rise, peaking at a year-on-year increase of less than 20% between 2010 and 2013 when the trend reversed.

“The downtrend [of the current cycle] is also taking a gentler gradient. This means that this time around, the housing market will not be as turbulent as the last two cycles two decades ago,” the research team suggested.

It attributes the current situation to timely government interventions and adaptive approach of housing suppliers.

However, industry interviewees for the research concluded that the bottom line is still market sentiment and purchasing power.

“From the point of the consumers though, with the low confidence in the economy and future prospects, people are paring down their expenses and re-assessing their financial balance sheets. Would people be willing to pick up another long-term big mortgage bill?” it asked. 

Purchasing power is significantly linked to disposable income, which is also dependent on economic growth.

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