Property Outlook 2019: What can we expect? What do we look at?

Property Outlook 2019
At this point, no one can agree on how the property market will perform in 2019. Some associations and analysts are optimistic and say more buyers and investors will appear in the coming months. Other ‘experts’ and industry observers look at the large number of unsold residential properties (known as property overhang) and say the property market will continue to be soft much like previous years.

Looking back, Malaysia’s residential real estate market has been on a downtrend since 2013 mainly because of an oversupply of new property, slow economic growth and difficulties in obtaining financing.

While views are mixed, there are two points that everyone agrees on:

Performance of the property market will depend on economic performance

Malaysia’s economic growth looks to remain at a similar level in 2019 as in 2018 (i.e. around 5.4%). This year, the growing economy managed to lower the official inflation rate, boost consumer confidence and reduce unemployment. The mortgage approval rate has also improved. These are positive factors that, if continue to be seen in 2019, will lead to more buy/sell transactions in the property market.

New buyers will appear

Measures for first-time home buyers announced in Budget 2019 to help them obtain financing and wavier of stamp duties for homes below half a million are expected to revive interest for homes among those that have never bought a property before. The inability to secure financing from banks is a problem faced by many buyers in recent years. If the problem of securing a housing loan is efficiently addressed through government measures such as the mortgage guarantee for buyers with a household income of up to RM5,000 and the crowdfunding platform for homes, then demand for affordable homes will pick up.

The rental market

Growth in the office rental market in Kuala Lumpur looks limited given more supply due in 2019. Weak demand leads to lower rental levels and heightens competition among landlords. Commercial clients will shop around so be ready to assist them in this.

2019 will also offer plenty of choice for tenants in the residential rental market especially in urban areas. This market is expected to remain active with more homeowners providing short-term rental options such as homestays and Airbnb-type rentals. This gives agents a chance to look for the best deals for their commercial and residential rental clients.

In summary, different sectors of the property market is likely to perform differently in 2019. Demand to buy high-end homes is likely to stay weak without any measures to stimulate this segment. Affordable homes, however, have brighter prospects if new buyers take advantage of the measures laid out for them.

Finally, if the economy continues to grow and the government practices fiscal (spending and revenue collection) discipline and acts wisely to improve the lives of Malaysians, then the property market should eventually break free from its five-year downtrend, starting with more transactions in the affordable homes segment.