On the surface of it, the latest figures published by the National Property Information Centre in its Property Market Report 2015 seem alarming, but in reality, there is no cause for panic, says Deputy Finance Minister Datuk Chua Tee Yong.
Certainly, there is cause for concern as we weather the impact of a slowdown, but there are positive signs that the market will readjust and recalibrate before stabilising, he said.
The poor performance in 2015, Chua pointed out, was largely due to poor market sentiment and immediate knee-jerk reactions to cooling measures implemented by the government.
“However, the cooling measures did serve to help slow down the spiralling hike in residential price growth,” he said, explaining the necessity of the tough cooling measures.
As at 4Q2015, the national House Price Index stood at 227.5 points, up 5.8 per cent on an annual basis. Prior to this, between 2011 and 2015 house price growths were in double digit territory, which was unsustainable. In 2014, it was growing by 7 per cent, which why action needed to be taken.
Saying that the market needed time to adjust to this, the deputy minister now expects this year will bring much-needed market readjustments and this will lead to a measure of stability.
Indeed, market watchers agree with this sentiment, adding that prices are still growing, but not as high as previous years. Given the poor sentiment, they also foresee that there will be no significant change in price this year and it will likely plateau at current levels.
Another point Chua addressed was the high loan rejection rate from banks, which was recently determined to be at 50.2 per cent.
He said that between 2011 and 2014, rejection rates hovered between the 47.9 per cent and 52.9 per cent mark. This was a period when the country was still doing positively on the economic front.
Therefore, a figure like 50.2 per cent is well within the acceptable range and should not be a cause for alarm.