CAN THE UPCOMING BUDGET 2018 PROVIDE IMPETUS TO LIFT SPIRITS?
Remember how market players were more optimistic about 2017 back in 2016? Well, things evidently haven’t panned out as planned and this has soured the overall mood considerably.
If ever there was a sign that developers remain jittery about the market it would be the latest survey by Real Estate Housing Developers Association (Rehda), which found that only 31% of the developers surveyed launched new projects in the first half of 2017.
Others, just like the buying market, seem to be in “wait-and-see” mode. While most can hardly be blamed for this state of inertia – given the poor economy and stringent loan climate – concern is beginning to set in about the economic impact of a prolonged slowdown.
The construction and development industry is one of the prime movers of the national economy, and until an equilibrium can be found between rising costs, available financing and housing demand (which still exists among affordable homeseekers), then everybody is in for an extended bumpy ride.
Indeed, Rehda’s Property Industry Survey and Market Outlook for 2H17/1H18 report pointed out that 76% out of 153 respondents anticipate that their sales will be below 50% over the next 12 months.
Breaking it down, survey results show that 39% of respondents anticipate sales in 2H2017 and 1H2018 to be between 26% and 50%, while 17% expect sales to stay below 25%.
In spite of the market slowdown, a handful of developers have proven to be trend-buckers in this climate. This was reflected in the survey, where 16% said they were looking at sales to be between 51% and 75%, while 2% are optimistic about achieving above 75% sales in the final half of this year and the first half of the next.
There also be a glimmer of positivism in the fact that 48% of the respondents declared they would be launching properties in 2H2017, with approximately 17,535 property units in the pipeline.
Among the 17,535 planned supply, 9,647 are high-rise residential units, 7,386 are landed homes and 502 are commercial properties.
Rehda president Datuk Seri FD Iskandar Mohamed Mansor said, as purchasers are taking a longer time to secure their loans and market sentiment remains weak, most developers are adopting a “conservative view” on the performance of future launches.
This makes the upcoming Budget 2018 announcement one to look at closely, as tax incentives would not only help alleviate the burden of builders and buyers alike, but such a move could also be channelled to encourage affordable housing projects – which is where the real demand lies.
FD Iskandar said the survey revealed that 45% of property purchasers in 1H2017 were first-time homebuyers, followed 33% upgraders. He also noted that most buyers were purchasing homes for own stay, or to upgrade, or for family members. There are now fewer investors in play.
The good news for house buyers, however, is that more developers are seeking out innovative ways to help you afford a home and aid with downpayments. Because they expect the dampened market sentiments to extend to next year, more and more developers are adopting flexible pricing strategies to lure buyers.
For example, the Rehda survey noted that Penang developers are beginning to lower the price range of properties on offer to RM250,001 to RM500,000, from RM500,001 to RM1 million in previous quarters.
This trend could expand to other key urban markets in the country, given that the overall outlook for most of next year among developers is likely to stay pessimistic unless the upcoming national budget provides a catalyst to change the mood.