As developers pledge to slash prices by at least 10%, such discounts would not dent the backlog, say experts
By FARA AISYAH / Pic By TMR
The impact of the government- backed home ownership campaign to erase some of Malaysia’s unsold residential properties would be minimal and any substantial reduction could only be seen in the next 12 months.
Malaysia’s unsold homes are estimated to reach a staggering RM20 billion and the government is pushing to mop these units out of the developers’ books to prevent a rising bubble.
Recent numbers had already shown a drop in home prices as developers looked for compromised price points to boost the take-up rates of the estimated 30,115 unsold units nationwide.
Some 180 property developers had pledged to slash prices of their unsold homes by at least 10%. But such discounts would not dent the RM20 billion worth of backlog, according to industry experts.
VPC Asia Pacific property consultant Bruce Lee said such home expo will help the market, but it would not resolve the root cause of the problem.
“The Home Ownership Campaign (HOC) will definitely help the market, but the question is, to what extent? The campaign will help particularly first-time home- buyers to meet developers and financial institutions and access the information they need to purchase homes.
“Will it totally resolve the issue from the root cause? The answer is ‘No’,” he told The Malaysian Reserve.
The government is championing a HOC to help match developers and buyers in an already sombre market, a situation propagated by over building and high pricing.
Despite the average purchasing power of less than RM300,000 for many Malaysians to own a property, some developers had focused on higher priced homes and condos, leaving many pockets of unsold properties.
The situation is worsened by the rising unsold units of commercial, retail and office buildings.
Lee said the Housing and Local Government Ministry won’t be able to do this alone.
“It will need to collaborate with the other ministries to solve the issue,” he said.
He said the result of this campaign might only be observed in six months to one year after it was held.
Lee said such housing campaign is a marketing event which has little difference with other property exhibitions conducted by developers on their own.
Meanwhile, PPC International Sdn Bhd MD Datuk Siders Sittampalam said developers need to offer more discounts to clear more of the unsold units.
“Developers are already giving around 10% to 20% discounts right now. So, there is nothing special about it. Unless developers have agreed, and say they will give at least 40% discount, I do not expect to see much transactions during the campaign.
“The next question is, how will the buyers — particularly the bottom 40% group — fund their homes? In addition to substantial discounts, the banks more importantly can help to relax their financing, without exposing them to the risks,” he added.
The banking sector is already shouldering more than RM500 billion in property loans, the biggest segment of consumer lending.
It is not known how much more the banking sector can provide the loans without having to put the financial sector at risk in the event of an economic slowdown.
From the total 30,115 units of unsold properties, 17,971 units are priced below RM500,000, while the remaining 12,144 are units between RM500,000 and RM1 million.
PropertyGuru Malaysia country manager Sheldon Fernandez said such campaigns are a good way to get the private and public sector to work together to address home ownership issues, but there must be sufficient promotion to create public awareness.
“The right products must be featured, for example affordable homes. This is essential to ensuring success.
“And this must also be supported by the presence of banks who help buyers secure financing or more importantly, find out if they can truly afford their homes,” he said.