It isn’t easy to buy a house in Malaysia nowadays with the skyrocketing prices but that may soon change, based on a real estate expert’s opinion.
According to FMT, Ernest Cheong, a chartered property surveyor and consultant for more than 40 years says that the property market looks bleak next year as developers and home owners will have a hard time looking for buyers. Sad, but true!
Here’s what he has to say about the property market in Malaysia;
1. Buyers cannot afford to buy houses anymore
Source: the star
This is because buyers are unable to afford the houses, which could lead to a market crash as more and more buyers cannot pay their monthly installments. #LifeIsHard
Cheong says that he expects this crash to happen as early as early as February and adds, “The panic (within developers and house owners) might start after Chinese New Year in February or later if the government decides to pump in money to strengthen the market.”
2. There are too many unsold units in the market
Source: mmo
Compared to 2016, there was a 40 per cent increase in the number of unsold completed residential units which amounted to 20,807 units in the first half of 2017, Deputy Finance Minister Lee Chee Leong had said in the Real Estate Market Briefing 2017 earlier. These units were worth a hefty RM12.26 billion, with the majority of the homes costing more than RM500,000.
These units are only from the primary market such as developers’ launches and doesn’t include numbers from secondary markets such as home owners selling their homes. As available buyers are slowly dwindling, Cheong says that this has forced developers to take desperate measures.
3. Developers stand to lose their financing if not enough homes are sold off
Source: mmo
“Previously, house buyers needed to pay 10% as deposit. Today, the situation is different. Developers are in a desperate situation. That is why they are allowing buyers to pay 1% of the property price and pay the remainder upon completion,” he explained.
Cheong said that the developers created this “generous payment mode” as it is getting more difficult for them to sell off new properties. In case you didn’t know, if a developer sells off less than 40 per cent of the total units, they could lose their bridging finance from the bank!
He added, “This is where the danger starts. I predict if this continues, markets will crash within 24 to 30 months because consumers do not have the financial capacity to buy properties any more. Furthermore, developers who started building two years ago are expected to flood the market further with their units.” Guess it’s supply more than demand, now?
4. Property prices are expected to drop from RM500,000 to RM300,000
Source: kini biz
Cheong estimates that the amount of units in the secondary market is about RM4 billion which makes up a grand total of RM16 billion of houses in the market. “So about RM16 billion of properties are waiting for buyers. But there is no demand. The reason is that people don’t have the money,” he said.
He believes that the property crash is happening early next year and estimates that house prices would fall from RM500,000 to RM300,000. Whoa, that’s a very steep drop!
5. If you can’t afford to buy a house, rent first
Source: shutterstock
Another piece of advice he offers is that Malaysians shouldn’t buy homes unless they have the ability to save up to RM1,000 a month for a year for their rainy day funds.
The Employees Provident Fund also shows that 89% of Malaysians earn less than RM5,000 a month so Cheong urges Malaysians to be cautious with their money. Instead, he advises us to invest and said, “There should not be any urgency to buy a property at the moment. Try renting first.”
What do you think of this issue? Let us know in the comments below!
Also read: Many Homes in Klang Valley Are Actually Affordable, But Malaysians Unaware
