Concerted efforts on the right path
IN May, Southern Property reported that developers have started shifting their product mix to gear them towards Malaysians who are in need of a home.
Additionally, the Government has taken steps to heed the call for more affordable housing with schemes such as PR1MA and the MyDeposit First House Deposit Financing Scheme, for which approximately RM200mil has been allocated.
However, the 9th Asia Property Market Sentiment Report for the first half of this year by iproperty. com revealed that housing affordability is still a common concern among Malaysians – 49% of those surveyed were interested to buy, but many have difficulties qualifying for loans. As many as 66% of respondents felt that the existing affordable homes are insufficient to meet demands.
Recent statistics from the Real Estate and Housing Developers’ Association ( Rehda) confirms that property buying in the principal property market has slowed down in the first quarter of this year, with a 17.9% drop in value of transaction against the first quarter of last year.
Enforcement is key
Khalil Adis, noted property journalist and founder of Khalil Adis Consultancy Pte Ltd, says that while housing schemes such as PR1MA is laudable, young prospective buyers have reported that they applied years ago but have yet to receive acknowledgement or status updates of their application.
“In view of this, those who are in desperate need of a home may want to consider alternative schemes from private developers and the state government,” he says.
Vincent Thambyrajah, retired project manager from the State Development Corporation of Selangor, also believes the relevant ministries should enforce innovative technologies to bring the cost of building homes down.
He illustrates this using the example of pre- fabricated homes, where components are manufactured in a controlled environment, then transported to the site and assembled.
This allows for faster, cleaner, higher- quality construction with lower labour costs since not as many workers are needed to assemble than to build.
Also known as the Industrialised Building System ( IBS), the benefits of this sustainable method are recognised by Malaysia’s Construction Industry Development Board ( CIDB).
In fact, CIDB prepared a roadmap for 2003 to 2010 to promote IBS as the preferred construction method, but it has yet to yield widespread results.
Assistance to boost interest
“One of the reasons property prices have skyrocketed in recent years is the growing list of requirements imposed on developers. The cost of building these extra fixtures are then included in the selling price, which is borne by the buyer at the end,” says Vincent.
He opines that more should be done to identify the true needs of property buyers and incorporate these needs with projects on the ground, as opposed to offering extravagant packages that price out people who need a roof over their heads.
In a tough, speculative market, developers have to amp up their offerings and they attract buyers with promotional activities, value- added packages and assistance in financing.
Besides taking advantage of such offerings, you can make a smarthome purchase by conducting research on the developer and project, studying the area’s masterplan to understand the infrastructure development, and buying at an early developmental phase after determining the property’s potential for capital appreciation.
Looking up
Property researchers believe the market will pick up in a couple of years and that it is already showing signs of improvement in the second half of this year.
Down south, Khalil believes the market is facing a bit of a conundrum at the moment but this is a temporary situation that can be tackled with proper planning and wise purchases in up- and- coming areas.
International demand is balanced out by the commercial and industrial sectors – for example, projects in Iskandar Malaysia are appealing to Singaporean organisations looking to expand or relocate their manufacturing facilities at a minimum cost.
“The property market in the south is not as robust as before as it was mainly driven by foreign investors from Singapore. Private developers had built luxury homes for these buyers while the supply of affordable homes has been lagging behind.
“Demand among foreigners has waned now, but there is still strong pent- up demand for affordable homes among locals,” says Khalil.
Strict loan approvals have been one of the main deterrents of property purchasing among Malaysians, but this may improve following Bank Negara’s recent overnight policy rate cut of 25 basis points ( bps) to 3%.
Earlier this month, PublicInvest Research estimated that this would reduce mortgage amounts by about 3.2%, which would certainly boost affordability and help pave the way to the recovery of the property market.
Central to this improvement is public opinion and action, which, according to the iProperty. com survey, is still leaning towards the positive.
Managing director and chief executive officer of iProperty. com George Chmiel says that although Malaysians are concerned about rising house prices, property is still viewed as the most attractive investment choice due to its capital growth opportunities and stability as an asset.
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