Real Estate Market is SOFTENING

Real Estate Market is SOFTENING

The real estate market start softening in the beginning of 2016. The events in 2015 such as GST, ringgit depreciation, property cooling measures, banks tightening measures even earlier government policies have all played a part in influencing the market to what it is now.

Prices of properties in some areas have adjusted downward over past few months.
However, the properties transaction volume has remain low.
According to data from National Property Information Centre (NAPIC), the transaction volume in the first three quarters 2015 decrease 12% in Q1, 3% in Q2 and 18% in Q3. 
(Overage -11% in first 3 quarters 2015)

 
The Malaysia poor economic performance, RM depreciation, unstable political situation are factors contributing to the problem.
From the report from REHDA, 68% developers expressed that their unsold property is kept around 30%.
Unsold properties in Selangor and Johor are mostly in the RM 500k to RM 1 million bracket while those in Pahang, Penang Mainland, Perak and Kedah are mostly in the EM250k to RM 500k bracket. 




Developers have change strategy to launch more midrange or affordable houses. In addition, government have introduced several schemes to help increase the affordability of buyers.
However, the measurements are not effective as the people is still facing problem of affordability. 

Main issues that cause people not affordable to purchase a house despite the real estate market is soft:


1. Implementation of GST
2. High Inflation
3. The working class is faced with salary increment that can barely keep up with the rising cost of living.
4. Banks tighten mortgage loan rules

Financial experts have pointed out that the poor financial planning skills amongst Gen-Y as one of the pressing issues leading to inability to afford houses.

Many of today's youth:

1. stuck with massive car loans or credit card debts
2. has some form of long-term loan (those with tenure more that a year)
3. monthly spendingis beyond what they can aford
4. lack of proper documentation to apply for a loan
5. being placed on CCRIS due to late payment

The affordability problem is one issue that many steps have been taken with little result to show for.
The Malaysian government introduced stringent cooling measures and the banks tightened their lending restrictions had caused the softening of real estate market.
However, the measures do not solve the affordability problem.