Property is a hot topic these days, as the government plans to launch a new housing policy to address the issue of home-ownership in Malaysia. There are three main factors affecting supply and demand in the Malaysian property market: social, economic, and political. All the individual factors in play are interconnected and contribute to a vibrant and healthy property market.
As mentioned before, economic performance and consumer confidence are the main drivers of the property market. Employment rate will also affect consumer spending, as people who want to buy property need to have income in order to service their housing loans. This in turn affects loan application rates, whereby housing loans will only be approved when the applicant is able to pay for their mortgage. However, policies to relax housing loans, as well as the zero-rated Goods and Services Tax (GST) “holiday” are likely to spur the property market and increase demand for properties, particularly commercial property.
Purchase of properties is also influenced by market trends, while overhang properties indicate a lack of interest and transactions for certain property types. Savvy investors are those who look at long-term prospects with an eye on the business conditions in Malaysia, and make decisions based on their ability and insight into the property market.
Market sentiment plays an important part in determining the direction of the property market. Expectations of future price may prompt buyers to purchase sooner rather than later, as property prices may rise as the economy improves and capital gains bear fruit. Also, supply of homes is now abundant, so investors have plenty of choice in both the primary and secondary markets. Nevertheless, some may still adopt a wait-and-see attitude concerning the property market, due to changes to the housing policy under the new government.
However, some changes such as the review of key mega projects, as well as the re-introduction of Sales and Services Tax (SST) are also a source of worry for property investors, as they present uncertainties in the market that may negatively affect their current and future investments.
Other Factors To Watch Out
While the factors mentioned above will directly or indirectly affect the property market in second half of 2018, there are several other things that keen-eyed buyers and investors should look out for in the property market. With overseas investors gaining interest in Malaysia, it would be prudent to keep an eye on the global trading condition cloud. Future policy changes and implementations by Malaysia and its allies could also affect the market, such as transparency in trade and balancing between social and economic interest. Political stability is also an important factor to foreign investors, along with the (positive) performance of domestic and international economy.
At the end of the day, it is up to the individual to do their research, survey the market, and weigh all options before buying a property. Many thanks to registered valuer, estate agent and property manager Kit, Au-Yong for the insight into the factors that affect the property market in Malaysia.
