Slower demand for residential property

Moody's Investors Service expects demand for residential property in Malaysia (A3 positive) to slow further in 2015, crimped by property cooling measures imposed in 2013 and weak buyer sentiment.

Moody's assistant vice president and analyst Jacintha Poh said: "We expect the anticipation of higher mortgage rates in 2015 and the implementation of a 6% goods and service tax in April to dampen sales in 2015 as buyers take a wait-and-see approach.”

"But the magnitude of the sales impact will depend on Malaysian property developers' target segment of project launches and pricing," she said.

Moody's expects developers focused on residential projects in Johor, Kuala Lumpur, Selangor and Penang, to face the greatest challenge in achieving their sales targets.

Poh said properties in these cities are typically priced above RM1mil and are aimed at high-income households or foreign investors.

“Nonetheless, Moody's expects demand for owner-occupied homes priced in the middle-income range to remain resilient," she said.

Malaysia's average home prices from 2001 to 2013 increased at a compounded annual growth rate of 7.3%, which is faster than the 6.3% for the gross national income per labour.

The five largest listed property developers in Malaysia -- based on their total revenues -- to remain resilient in 2015 despite a slowdown in their sales volumes.

They include Sunway Group Bhd (unrated), SP Setia Bhd (unrated); UEM Sunrise Bhd (unrated); IJM Land Bhd (unrated); and Mah Sing Group Bhd (unrated). - By The Star

1 comment

February 5, 2015 at 8:30 PMAL

I disagree with Poh's anticipation of higher mortgage rates this year as global economy will slow down resulting to recessions in many economies! Mortgage rates in Malaysia may go up when BNM increases its cash rate to strengthen its Ringgit or when Federal Reserve increases its cash rate to contain its inflation! With the introduction of 6% GST on 1 April, there will be psychological impact on consumer spending. Consumers will tend to be more cautious in their spending as their disposal incomes will buy lesser goods resulting to fall in domestic demand?