Property growth set to slow as cooling measures, market uncertainty hit

Malaysia’s real estate market is expected to keep expanding at a lower rate this year, weighed down by Putrajaya’s cooling measures and mounting economic uncertainty, international property consultants Knight Frank said in its outlook for 2015.

The high-end property market is set to be hardest hit in the residential sector, with fewer projects reviewed or launched in the second half of 2014 compared to the first half of the year.

“Overall, the slew of macro prudential measures by the central bank has succeeded in cooling the property market.

“The market is anticipated to continue its lacklustre performance into 2015 amid uncertainties surrounding the implementation of the Goods and Services Tax (GST) in April 2015,” it said in its analysis of the local property market for the second half of last year.

In 2012, Putrajaya doubled property gains tax and prohibited developer interest bearing schemes in a bid to rein in spiralling home prices.

Spiralling household debt that has hit nearly 87 per cent as a ratio of gross domestic product also led Bank Negara Malaysia to tighten lending guidelines last year, raising the bar for potential loan applicants.

The report also said that the continued slump in crude oil price and Malaysia’s lower trade surplus could further affect the property market’s performance, and that the uncertain economy has shifted focus towards affordable housing, prompting a surplus in luxury property.

“In the high-end condominium segment, demand continues to trail supply, and with an estimated 4,929 units anticipated to enter the market by the first half of 2015, coupled with the high level of existing supply in the market, the overall outlook is one of caution,” the report said.

It further noted that housebuyers’ bookings for residential homes have yet to translate into actual sales due to the high rejection rates for loan applications while potential buyers have also held back in their purchases.

The added competition and deteriorating market may prompt developers to review their prices and alter existing marketing strategies in order to move their units.

“More developers are also widening their target catchment by marketing overseas,” it said.

But the report also pointed out the office and retail market in the city capital and in states like Penang and Johor continues to enjoy high rental and occupancy rates, and that Malaysia continues to be a popular location for overseas retailers to conduct their business operations.

“Prime and established shopping centres in Klang Valley and Penang continue to enjoy high occupancy in excess of 90; and in Johor Bahru and Kota Kinabalu, more than 80 per cent occupancy.” - The Malay Mail Online

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