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Challenging 2018, Hopeful 2019

Dec 28, 2018

Edgeprop, 28 December : Top three challenges for the property market in 2019

1. Looming oversupply in the office and retail sectors in the Klang Valley will put more pressure on occupancy rates and rentals.
2. Sluggish sales take-up in the residential sector, caused by weaker consumer sentiment exacerbated by global uncertainties and slower economic growth. Meanwhile, potential buyers continue to face difficulty in securing maximum loan margins.
The increased stamp duty rate for properties prices above RM1 Million and the imposition of the RPGT on properties sold after five years will dampen the higher-priced residential property segment. Despite developers pivot to affordable homes, the high rates of withdrawals are a problem, as potential buyers face difficulties in securing the required loan margin and coming up with the loan differential sum.
3. As banks adopt a more cautious stance, property developers, especially the smallest ones without a strong track record, will find it more challenging to obtain bridging/financing facilities for their projects.

Market Catalysts

There do not appear to be any major catalysts for the market in 2019. Uncertainties on the global stage such as the China-America trade war, if resolved, may raise prospects of better economic performance and improved investor and consumer sentiments. This may, in turn, provide a boost to the property market. The stamp duty exemptions announced under Budget 2019 for the first time purchasers are expected to provide a boost to the residential property market especially in the first half of 2019. The allocation of RM1.5 billion to build affordable homes, and the further RM1 billion via Bank Negara to help first-time home buyers with monthly household incomes of less than RM2,300 to finance purchase of homes costing less than RM150,000 at a lower interest rate of 3.5% should help boost demand and building activities in the affordable homes segment.

Advice for Investors

1. Buy for long-term investment and not speculation.
2. Carry out your homework before investing.
3. Check with professionals and obtain proper advice before deciding.
4. Invest in established location or growth areas.
5. Buy from established developers with a good track record.

Describe 2018 in one word:

Challenging - The property market in 2018 although challenging, has remained relatively stable with no drastic drop in values.

Describe what 2019 would be like in one word:

Subdued - The property market in 2019 in the absence of any major catalysts, will remain subdued.

This article have been published at pullout issue 2800/2018

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