Weaker property prices and demand in 2009

Property prices and demand will weaken by 5% to 10% in 2009 due to slower economic growth and a decline in foreign investment, says an industry official.

Association of Valuers and Property Consultants In Private Practice Malaysia (PEPS) president James Wong ruled out a property price plunge but said he expected a “gradual correction” as prices had peaked in the third quarter of last year.

“At this point, there is no panic and force selling. Our property market is more mature and there is less speculation,” he said.

Real estate investment trusts cutting back on property acquisitions, which had been a significant factor in the rising property market for the past two years, was partly blamed for the slowing property demand, he told a press conference yesterday.

Wong forecast property launches to soften this year and said he expected a prolonged economic slowdown.

To boost the property market, development and consumption had to increase, which he said were unlikely to happen this year as many potential buyers would opt to save.

“Many potential buyers and investors are adopting a wait and see strategy (and thus are not spending).

“How resilient our economy is in 2009 will depend on domestic demand and the recovery of the Asian giants, including China,” he said.

He added that the RM7bil stimulus package was too small to have a meaningful impact, as it only represented 1.4% of the national gross domestic product (GDP). He stressed that Malaysia needed a second stimulus package to prevent the economy from falling into recession.

“Government should reduce personal income taxes and increase disposable income to directly increase domestic demand and consumption.

“It should also improve the investment climate such as liberalising the Foreign Investment Committee (FIC) guidelines on foreign purchase of real estate, licensing, visa and work permit requirements and relaxing the foreign equity participation policy,” he said.

If possible, he hoped the Government would emulate the approval process adopted by Singapore and Hong Kong for manufacturing projects.

Wong also recommended further interest rates cut by Bank Negara to help revitalise the economy. - The Star

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