Here are the top 3 property market news featured for you this week:
Freeze on luxury developments eliminate “non-serious” developers
Following on Bank Negara Malaysia (BNM) reports with the excess supply of luxury projects, government has frozen luxury property development worth more than RM 1 million which includes high-rise condominiums, shopping malls and commercial units.
This issue has led to many affection especially towards the developers who are handling the luxury project. Finance Minister II Datuk Seri Johari Abdul Ghani said that the purpose of this issue is not only to control the excess supply but also to eliminate the non-serious developers in this industry.
He also said that these non- serious developers will kill the serious developers in the industry.
“We don’t want these property players that come from manufacturing or trading industry (for example) simply because they have a few million in cash and they start buying land and start trying to become developers,” he added.
He mentioned that some of the “non-commit” developers are building high-end residential projects that are not sustainable which lead to cause oversupply in segments and make the price falls.
However, Johari noticed the struggle in building residential projects in prime areas and revealed that he will address this matter to Prime Minister Datuk Seri Najib Razak to grant approvals to luxury project development in certain locations such as Kuala Lumpur City Centre, where the land cost is high.
“But for offices and shopping malls, please take a break,” he said, as the shopping malls and office spaces are currently in oversupply.
Hence, this situation can help to give way for serious developers to survive in this industry for a long-term and build more affordable house. However, this issue may seem impractical as land prices for certain areas in the country are higher.
Unsold units disrupt property managers too
Who else are facing the issue in property unsold units?
Malaysia property market are facing oversupply and there are high numbers of unsold units. This happens because there are too many developers out there are at rush to build more high end project even in a lower rise income level.
In addition to that, this matter does not only affect the property development, but also property management to collect their service charges, said Malaysian Institute of Professional Property Managers (MIPPM) president Sarkunan Subramaniam.
A property manager is a third party who is hired by developers to handle the daily operations of the property.
“Currently, the developers are also facing a cash flow problems as their project is not fully sold and the maintenance fees of the unsold units need to be paid by the developers itself. However, some of the developers try to attract the buyers by charging a lower maintenance fees which lead to the property manager to have insufficient funds to manage the property” he said.
According to him, The Strata Management Act 2013 (SMA 2013) stated that developers should never hand over the liability to a property manager and need to pay the overall service charge for unsold units. Hence, MIPPM would not compromise with any developers regarding this matter.
This shows that developers should find other alternatives such as rent out the unsold units in order to recover the maintenance fees.
Will General Election 2018 affect the property market?
Can you predict what will happen to the property market in year 2018?
As Malaysia are facing property excess supply in 2017, property market are expected to improve after the General Election 2018. However, there are also some property experts predicted that property market will face a major market crash.
“The property market is affected by three significant factors, which are the country’s economy, employment stability and the bank’s lending,” said Malaysian Institute of Estate Agents (MIEA) president Eric Lim.
He explained that current market is rather stable and moving at the moderate pace while affordability is the main factor of the property market.
Looking ahead Eric said many developers are shifting to the affordable home segment priced between RM300,000 and RM500,000 in support of the government’s call to answer the needs of the B40 segment.
“But I would like to appeal to the government to also give incentives to the M40 segments. Financial institutions should also provide more flexibility to younger borrowers, and the announcement of step-up financing [in Budget 2018] is one way to go,” he added
Hence, the property market will not be affected much by the GE. The property market will mainly be affected by the affordability of project and in order to avoid any market crash, both developers and financial institutions should provide more initiatives to reach out younger homebuyers.
*B40 refers to the bottom 40% of households with monthly income of RM3,900 and below
*M40 refers to the middle 40 percent with household income of between RM3,860 and RM8,319