Property experts are generally positive about the bottoming out of the market which many believe signals a great buying opportunity especially for first time homebuyers who are inundated with incentives from the government and private sector.
The answer is an overwhelming YES,
according to forum panellists at the recent
Swhengtee 4th Annual Expo held in
Kuala Lumpur. “For the next few years,
from 2019, it’s a very good time to buy,” sums up Dr
Peter Yee, author and property consultant.
Yee, who is also moderator of the forum explains
that there are 4 seasons to a property cycle with
every cycle lasting about 3 years.
“We are now at mid-winter season where prices
are low; 2020 will be late winter, followed by early
spring. Now is the time to ask for discounts as
there are many motivated developers and sellers,”
The veteran property investor also said that he exited the market around 2013/2014 when the market was at its height. “The market had become unsustainable and it could only go down from there,” he explained.
“I have seen several cycles of the property market
in Malaysia and during this round in 2019, I
believe it is the right time to buy from now till the
next few years.”
He was especially sanguine about commercial
properties saying that business tenants would fork
out money to renovate and would take good care of
the property, thus benefitting the owners.
The other very good investments are subsale or
secondary market properties where there now exist
very good below market value bargains. “Subsale
properties can be very worth it because they were
built during the good times when materials and
workmanship were of good quality and were
probably already renovated. If they are now offered
at a discount, it’s a very good buy. Secondary market
prices are more attractive too because prices can be
much lower than the primary market with some
even showing a difference of RM200K!”
However, according to Yee, there are still a few principles that one should follow to maximise one’s investment. Among them are as follows:
Choose properties that are not too far from your workplace or facilities. Don’t buy far away although these properties are cheaper e.g. Bukit Beruntung. Any property within city limits is good. Buy near your own location because it is hard to manage your properties if they are located in other places; in any case, they should not exceed a maximum of one hour’s travel time away.
Location determines price appreciation; hence this factor is still one of the top 3 considerations when choosing your property.
Malaysia is still attractive to the Chinese from China, but maybe not so much to other foreigners. So, one needs to decide who your preferred potential tenants or subsale buyers are.
The Ringgit has depreciated quite substantially making Malaysian properties a discounted best buy. It’s better to buy in Malaysia now than in any other country in ASEAN.
If buying retail commercial units, you might need to re-strategise due to the burgeoning e-commerce sector. In the future, banks or other shops might not be in sited at malls or shoplots anymore.
The other panellists pretty much concurred saying
that in the last 10 years, property prices in Malaysia
have almost doubled in many areas. The year 2012
was the best performing year, after that the market
began to lose steam following cooling measures by
the Central Bank (BNM). Q3 2018 was the least
performing quarter; but prices were not falling, in
fact, there was a small uptick amid a general uptrend.
“The fact is the Malaysian market was doing better than other markets like China, Hong Kong, Singapore and the UK where prices were falling amid the US-China trade war,” said Dato Sri Matthew Yeoh, Managing Partner of Yeoh Mazlina & Partners.
“Quiet markets can be seen around the world especially in developed countries or almost developed countries. In Malaysia, there was still a marginal increase in prices, so don’t panic,” he quipped.
The well-travelled lawyer added that in China, there
are 65 mil of unsold units in ghost towns or cities!
“China lost 40% of its value in the stock exchange in 2018. So compared to Malaysia, we have nothing to panic about. Investors still like Malaysia as we have good infrastructure and good workforce, transportation hubs, language ability and certainty in the law. Compared to Thailand, Vietnam, Myanmar and China, we don’t have the language barrier, the restrictive laws for foreign purchasers or political uncertainty. Malaysia is still a comparatively very good place to invest.”
Yeoh however cautioned that one must take into
account at least 5 factors before placing a deposit.
“Don’t rely on just one positive factor, for example,
the now deferred KL-Singapore High Speed Rail
(HSR). Do your due diligence but check also your
own resources; take a long-term view,” he advised.
OVERSUPPLY OR MISMATCH?
According to chartered accountant Ng Wee Kwong, since 2014, the market has been trending downwards. “The year 2018 should be the bottom but we changed the government so the down cycle was prolonged. The new Budget 2019 did not help investors too much. Let’s see how the new National
Housing Policy 2.0 works out. The KL-Singapore
High Speed Rail has been deferred indefinitely while
the controversial East Coast Rail Link (ECRL) is
still under negotiation. As a result, we might see the
bottom only in 2019.”
Amid the gloomy scenario, Ng said this is the best
time for first time homebuyers to seek a roof over
their head. This is because of the sheer amount of
incentives for this group. Examples include stamp
duty exemption for Sale and Purchase Agreement,
rent-to-own schemes and a host of other financing
and ownership schemes.
Property author and consultant, Khalil Adis who is
based in Singapore said that although the change
in government created a period of uncertainty, the
pent-up demand is still very strong in Malaysia due
to its young population.
“In Malaysia, most housing developments are driven
by private developers who are interested in profit;
not surprisingly there are lots of units geared towards
the high-end segment, resulting in a demand/supply
mismatch. In general, many Malaysians need homes
but can’t afford them. So the government is needed
to build affordable homes. But the flipside is that
this will one day cause an oversupply of affordable
housing,” Khalil noted.
Founder of Wealth Momentum, Dr Ivan Kok revealed that every year, an additional supply of 100,000 units get into the market. “Malaysia has 33.8 mil population with only 5.5 mil existing homes, therefore it looks like there is no oversupply. Assuming each unit can house 4 persons, Malaysia needs 8.5 mil homes. So, do we really have an oversupply situation,” he asked.
Kok added that since 2013, loan restrictions were
put in place to avoid the sub-prime mortgage crisis
that happened in the US, “as a result, it looks like
the government is managing quite well.”
The government is also pushing developers to
reduce prices amid a trend for lower priced
properties, for example, properties below RM300K
are very sought after while properties below
RM500K are generally still getting buyers.
Many investors are also buying to rent out through AirBnb or other home-sharing platforms. In 2018, Malaysia was ranked as the third most visited country in Asia with arrivals of 26.8 mil, ahead of Hong Kong’s 26.6 mil. “Tourism contributes about 15% to our economy, hence it’s becoming a trend to own tourism-related properties. Although the government now requires AirBnb operators to register themselves, the opportunities are still there,” Kok said.