Real estate to see slight dip in 2016

Malaysia’s property market which has been on a steady decline since 2014 is expected to continue its downward trend this year, industry experts said.

Fiabci Malaysia vice president Michael Geh forecasted that the first half of 2016 will see about 115,000 in transactions, just a slight drop when compared to 119,603 total property transactions in the first half of 2015.

“The property market for 2016 will not be that bad, there will still be thousands of transactions and my forecast is that it may only dip slightly by about 5 per cent,” he told the Malay Mail Online in a recent interview.

He based his forecast on the property trend in the past few years where there was a drop in transactions between 2012 and 2013 before the market remains stable with slight increases and dips between 2013 and 2015.

The total number of property transactions in the country for 2013 and 2014 were 246,225 units and 247,251 units respectively.

“For the first half of 2015, a total 119,603 units were transacted and I expect the second half of 2015, about 120,000 units will have been transacted to bring the total estimated property transactions for 2015 to over 239,603 units which is lower than 2014 but it was not a drastic drop,” he said, referring to statistics released by National Property Information Centre (Napic).

Napic has released the latest statistics for property transactions and the value of transactions up to the third quarter of 2015.

“The first half of 2016 will see property transactions with a total value of about RM35 billion,” he forecasted based on the market trends. The total value of transactions for the first half of 2015 was RM36.38.

“The volume will be lower but this does not mean the market will crash,” the chartered valuation surveyor and senior partner of Raine and Horne International said.

Real Estate and Housing Developers Association (Rehda) Penang branch chairman Datuk Jerry Chan said there is still demand for housing because home ownership is still low among the younger generation.

“Developers are targeting the more affordable sector and foreign money is still keen on the property market here,” he said.

Chan concurred with Geh that transactions for this year may be lower than 2015 but it will not be a large drop like from 2014 to 2015.

“It is not likely to rise too if commodity prices remain low and the ringgit doesn’t recover,” he said.

Malaysian Institute of Estate Agents (MIEA) education and training chairman Siva Shanker also believed that the first and second quarter of this year will be very quiet for the property market.

“There’s been about 7 per cent drop in the residential property market in 2015,” he said.

He said the first two quarters of 2015 was very quiet due to the GST and the third and fourth quarter in which the market should have picked up also suffered due to the political and economic situation of the country.

“Buyers were scared off by the 1MDB scandal so the third and fourth quarter of last year were also very quiet,” he said, referring to the controversies surrounding sovereign investment firm 1 Malaysia Development Berhad.

He believed the market will be able to find its level by the third and fourth quarter this year.

“Property speculators who have bought into high end condominiums in hope of flipping it for profit will be suffering this year because there are no demands for their properties and there is a glut of such properties,” he said, referring to condominiums that are priced between RM600,000 and RM900,000.

He predicted a better renters’ market as the speculators, who are unable to sell, will be forced to rent out the premises at lower rates to cover the instalments for the properties.

The years 2017 and 2018 will see the market slowly inch forward and Siva believed that by 2019, after the general elections in 2018, the market will start to rise again and be high again by 2020. - By Opalyn Mok (The Malay Mail Online)

1 comment

January 6, 2016 at 6:52 AMAL

My prediction is that the property market may drop by up to 20%! Foreign investors will be reluctant to buy Malaysian properties until the 1MDB scandal is resolved and clearer picture of GE14 outcome! Hence, the property market will be softened till 2018 or after GE14!