On the property sector’s outlook — Is the worst over?

Continues from:  On ways to lift the market

‘Prices will not come down but ...’

Soam: I think it will be quiet for the rest of this year and next year. Because as I said, there’s nothing much in this Budget 2017 for private developers. But overall the government’s initiative to promote housing for the B40 category is a noble idea.

Foo: Coming up with a policy is one thing, implementation is another thing. Policy and implementation must be aligned.

Chong (pictured): Housing property prices will not come down. So, if you see any cheap property, just grab it.

Tan: It’s a good time for first-timers to shop around. It’s a good time to buy homes. It’s going to be quiet and challenging this year and next. Confidence must be restored and people must not always be worried about being laid off. And the housing industry must be stabilised to support the economy — stabilised in terms of not letting non-performing loans rise and big projects go unrealised.

Soam: It’s a buyer’s market. And you see, even though the housing sector isn’t doing so well, it’s different for the construction sector because they have infrastructure projects to attend to. People in certain sectors still have the power to purchase properties. It’s not all doom and gloom. Of course each sector has its own challenges.

Chong: If we want to bring housing prices down, all of us need to hold hands together. It’s going to be challenging. However, if people find developers who are desperate to ease their cash flow lowering their property prices, please grab it.

Soam: The leverage on EPF Account 2 and step-up financing [to reduce the loan rejection rate] have been discussed in the industry from 10 years ago. The model [that was discussed back then] was slightly different. We don’t want a systemic failure in the banking industry as well. Our household debt is 89% so we have to be very careful and patient.

Cheng: Is the worst over? For Tier 2 states like Kedah and Perlis, I would say the worst is over. Next year could be slightly better than this year due to the incentives given in Budget 2017. We’re not majorly affected by all the negative sentiment issues and political issues. Also, a majority of real estate are owner-occupied, there is little speculation and we’re mostly an agriculture-based economy. Hopefully housing transactions pick up slightly next year. Price-wise, I don’t expect prices to increase; if we can maintain the current prices, we will be happy. The worse is over so far for Tier 2 states.

Wish list for the housing sector: ‘Compliance cost should be reduced’

Soam: Ease financing for the lower income sector to spur sentiment and maintain the level of input cost — state governments should realise that cost is a subset to selling price. It is important that more government land be used for affordable housing programmes. We hope this can be done fast. We also hope that what’s given to PR1MA homebuyers can be extended to others as well.

Foo: For us contractors, we hope the government can reduce the cost for IBS and cut down the GST for building materials and heavy machinery to ease cash flow.

Tan: We have quite a large number of foreigners living here. We shouldn’t put a cap for foreigners to buy properties at RM1 million and above because there’s ample supply. So I would say that the government should lower the cap amount to encourage foreigners to buy and reduce the red tape. We’re being edged out due to land scarcity in Kuala Lumpur city, so we also need incentives such as those given to mega projects such as Bandar Malaysia and the Tun Razak Exchange. If possible, the government should give those incentives to developers in KL.

Cheng: Compliance cost should be reduced. Don’t tax us so much. We also need more efficient processing of applications for development. Speed up the application process when we seek approvals to develop a piece of land. Lastly, this is on financing — whether it is a private bank or government loan, speed up the application and approval process. For smaller states, government loans are important financing sources for homebuyers.

Chong: Reduce the compliance cost and subsidy cost. I also hope that financing for homebuyers can be eased.

Zulkifly: I agree with everyone — that there be easier financing, especially end-financing. I also hope for a lower compliance cost.

Tan: In Kuala Lumpur, we have a very fast-approving authority and developers are very active as the government is encouraging high-density projects in the city. This will act as a stimulus to the market. Do not disturb the local market but encourage foreign buyers. We should lower the cap amount to RM500,000 for foreign buyers.

Cheng: Maybe in Kedah and Perlis, this can be done due to lower property prices.

Soam: I totally agree with Datuk Rick Cheng. In Perlis and Kedah, you can hardly get a RM1 million property.

This story first appeared in TheEdgeProperty.com pullout on Oct 28, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.