Property outlook rosy in 2014 despite cooling-off measures - Part 2

Focus MALAYSIA WEEKLY ISSUE 055

THE WEEK OF DECEMBER 21 – DECEMBER 27, 2013

Review 2013 / Outlook 2014 --

By: FocusM

This year was generally a positive and vibrant one for the property sector, with the low-interest regime, special schemes like developer interest-bearing scheme (DIBS) and higher loan margins of up to 90%, despite some house-buyers holding off on the purchasing decision before the general election in May.

The recent cooling measures announced in Budget 2014 and those taken by Bank Negara Malaysia to end special schemes offered by developers are seen by many as timely moves to curb speculative activities.

As the market takes time to digest and absorb these measures, will there be renewed interest in the property sector, given that demand outstrips supply?  Will this be the right time for potential property buyers to go into the market, more so with the implementation of the GST on April 1, 2015?

FocusM spoke to developers, the Real Estate and Housing Developers’ Association, the House Buyers Association and an analyst on the performance of the property sector in 2013 and the outlook for next year.

Mr. Khoo Cheng Hai @ Ku Cheng Hai, KSL Holdings Bhd Group managing director

How did the year pan out for your company?

It has been a volatile year, in which buyer sentiment was affected by the general election and budget measures.  But overall, our project in Johor Bahru is doing very well due to our strong brand there, and sales from the Klang Valley are within our expectations.

What are your expectations for your company and the property sector in 2014?

We hope next year will be a better year than the current one, as there will be fewer events which affect investor sentiment.  Our company is in relatively healthy condition, while we are still actively looking for a suitable landbank for development.

We hope for more investment-friendly guidelines to ease the burden of developers, and we hope local government can wipe out unnecessary red tape and speed (up) the process of application and approval.

What do you think will be the key events and challenges that will shape the outlook of the property sector next year?

The main challenge next year is to look at the impact of GST implementation in 2015.  The selling price of a house is not taxed under the GST but the cost of materials is.  We need to carefully plan the timing of launches, keeping track of construction progress and tax implications when the GST comes into effect.  With (regard) to that, we advise first-time buyers to make their house purchase as early as possible.  The cost of construction is a linear progression, as is cost of living.  It is more expensive to buy next year compared to the current one. 

Another key challenger is to build affordable houses.  The rising costs of materials, various contributions to the government and the scarcity of land add up to the appreciation of property prices.  However, developers cannot just raise prices beyond the buyers’ ability to afford, as this will affect sales.  We also government will build more infrastructure to ease the traffic impact in the city centre, providing a better environment for citizens.