Assuming vaccines are developed, expert says it would still take another 3 months for the market to recover

by FARA AISYAH / pic by MUHD AMIN NAHARUL

THE reduction of the interest rate will not alleviate the negative sentiments on the property market due to the worsening of Covid-19 outbreak, property analysts said.

CBRE-WTW (CBRE Group Inc and CH Williams Talhar & Wong Sdn Bhd) MD Foo Gee Jen said Bank Negara Malaysia’s (BNM) move to cut the Overnight Policy Rate (OPR) for the second time in three months is to boost consumer spending.

Assuming vaccines are developed against Covid-19, Foo said it would still take another three months for the property market to recover from the impacts of the epidemic.

“Unfortunately, the rationale behind the OPR reduction is not so much to aid the housing industry, but to help consumers during the challenging time and boost spending in the country.

“I doubt the confidence in the property market is going to be high due to the lower OPR, because almost all businesses are affected by the Covid-19 outbreak,” he told The Malaysian Reserve.

Last week, BNM slashed the OPR by 25 basis points (bps) to 2.5%, a level last seen in May 2010.

The central bank said the reduction in the OPR is intended to provide a more accommodative monetary environment to support the projected improvement in economic growth amid price stability.

Malayan Banking Bhd, Public Bank Bhd and CIMB Bank Bhd had also lowered their base rate and base lending rate (BLR) by 25bps.

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said the lower BLR is crucial for property owners and business operators to stay afloat during difficult time.

“The feedback I heard is many are struggling to stay afloat. So, lowering the interest rate is good for them.

“With the lower monthly payment, it may encourage prospective buyers with borderline financial standing to buy residential properties,” he said.

As the current business operating environment is quite challenging, Chan does not expect companies to expand their commercial or industrial spaces, even with the lower OPR.

The government had also introduced a RM20 billion economic stimulus package aimed to soften the impact of Covid-19.

The package focuses on “bolstering confidence, stimulating growth and protecting jobs” in light of the Wuhan-originated virus outbreak.

The Health Ministry confirmed 20 new positive Covid-19 cases in the country yesterday, bringing the total number of cases to 149 (as at press time).

Health DG Datuk Dr Noor Hisham Abdullah said Case 78 had recovered and was allowed to go home, bringing the total number of those recovered and discharged to 26.