New govt to address property overhang, unaffordable prices and purchasing power
By FARA AISYAH / Pic By TMR
The gloomy property market is expected to improve as a result of rising confidence among consumers with new policy measures, following the recent change in Malaysia’s government.
With Pakatan Harapan winning the recent 14th General Election and Tun Dr Mahathir Mohamad appointed as the seventh prime minister, property experts foresee sentiments in the industry will likely improve gradually.
However, buyers will still be cautious with a wait-and-see attitude until the country’s economy steadily recovers.
CBRE-WTW MD Foo Gee Jen said there will be a much stronger political will for the federal and state governments to work hand in hand and rectify the fundamentals in various states and areas, including the Klang Valley, Kuala Lumpur (KL), Selangor, Johor and Penang.
“Land price has always been the issue for housing development and land matters which are under the state governments’ controls. States like KL, Selangor, Johor and Penang are facing crucial affordable housing issues.
“Now, for the first time, those state governments are in line with the federal government, and I believe we will have stronger political will to coordinate and address the housing affordability issues properly,” Foo told The Malaysian Reserve (TMR).
Pakatan Harapan took over the Federal Territory of KL and Johor from the Barisan Nasional coalition, and maintained its hold in Selangor and Penang in the recent elections.
Foo said although other states like Perak, Pahang and Kelantan do experience housing affordability issues, the challenges are more relevant in the more urbanised states.
He added that measures are now required for the new government to address the issue of property overhang, unaffordable property prices, as well as the purchasing power of the first-time home buyers.
“In the shorter term, foreigners will be sceptical about the direction of the market. In the long term, however, once the governance issues have been addressed, perhaps it will give a lot of confidence to foreign investors to come and invest in Malaysia,” Foo added.
VPC Alliance (KL) Sdn Bhd MD James Wong said the new government is also expected to improve foreign investors’ confidence to purchase Malaysian properties.
“From our assessments, Malaysia was rated quite low in terms of foreigners’ confidence to invest in the country due to many issues of corruptions and accountability.
“There were a lot of times when we offered the properties to foreign clients, and they shied away because the investment climate in the country was not favourable,” Wong said.
He added that the change of government, which promised to fight corruption, would augur well for Malaysian economy as well as the property market.
Wong also expects big corporations, especially multi-national corporations, to be keen in buying Malaysian properties.
As for the mismatch in demand and supply, Knight Frank Malaysia MD Sarkunan Subramaniam said the situation will remain as it is for a while until people start to see transparency in the new government.
He also lauded Dr Mahathir’s statement that the government will review the agreements in relation to projects with parties from China. as well as other mega developments.
“It is very important to review those projects. For instance, the East Coast Rail Link project seems to be bloated in terms of its cost. The KL-Singapore high-speed rail is not something we need to cancel, but the new government will review it. In a government that condemns corruption, the country’s infrastructures will be priced appropriately,” Sarkunan told TMR.