2016 expected to be a tough year for property market

2016 expected to be a tough year for property market

Investment guru Datuk Gavin Tee expects 2016 to be “the worst year for Malaysian property” on the back of weaker economic growth, loss of pricing power and dimmer financing, reported The Malaysian Reserve.

“2015 was bad, and 2016 will be worse,” said Tee at a briefing in Kuala Lumpur.

“I’ve travelled all over the region, speaking to ministers, developers, investors and the media. The feedback (on Malaysia) is something you don’t want to hear.”

Notably, property prices within the secondary market dropped by 15 percent this year, due to weaker demand and the absence of speculators.

With this, Tee expects prices to drop even further compared to the past few years as buyers do not foresee significant positive changes in 1H 2016.

And while property prices may not go back to 2009 to 2010 levels, they will be at their lowest for the next eight years, he said.

Lower prices, however, will not translate to more sales for developers given the slowing demand for property.

“Demand is low in the sense that there are a lower foreign investment and job creation, lower purchasing ability from Malaysians, as well as the poor economic and political situations,” explained Tee.

A more critical dilemma is high loan rejection rates, which stands at over 50 percent for KL-based properties and 80 percent for Iskandar-based properties.

Tee said the Malaysian government should relieve cooling measures as well as take more steps in making it easier for investors to acquire property.

He noted that if financing policies would not change, the government would not be killing the Malaysian property industry but the “Malaysian pockets”.

“If you make it difficult for local investors, the wealth will transfer to foreign hands,” he said.

Resources: propertyguru.net