Aerial view of Penang.
Even with the challenging headwinds ahead, independent economist Lee Heng Guie believes that the medium-term prospects for Malaysian property are still promising, reported The Star.
And while property prices may ease further, he does not expect a significant drop.
“This is because Malaysia is not heading for an economic recession,” said Lee during a presentation at the 9th Malaysian Property Summit recently.
“The softening property market renders the buyers the opportunity to purchase property. For foreigners looking to invest in real estate in Malaysia, the weaker ringgit comes as a boon.”
However, he noted that the market is still hampered by weak economic growth, cautious sentiment and affordability issues.
“The prospects of higher domestic interest rates in 2017 may be a dampening factor,” he said.
“Likewise, the banks are expected to maintain vigilance in the evaluation of property loans while ensuring the good credit-worthy borrowers will continue accessing home financing.”
Lee hopes that the government will keep the property cooling measures in place for now.
“The right time to adjust some of the measures is when the market equilibrium is a lot more certain and sustainable. An over-adjustment of the property sector must be avoided for now.”
In addition, the authorities should closely monitor the supply and demand conditions in order to prevent overbuilding in some segments and avoid a systemic risk to the banking sector, in case of prolonged economic slowdown and severe correction in property prices, said Lee.
“While ensuring a sustainable property sector, Bank Negara should ensure the banking institutions continue to lend to those eligible borrowers,” he added.
“Fiscal incentives such as stamp duty relief and developers’ interest bearing schemes should consider for the first time home buyer and for the property priced below RM1 million.”
Mangalesri Chandrasekaran, Editor at PropertyGuru Malaysia, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
