Slower sales in the Malaysian residential property market will be the new norm, according to the latest research published by DBS Group Research this week.
The firm said it believes the optimism emanating from certain quarters about a recovery in 2H16 is likely to be misplaced as sentiment in the property market remains weak. This year could be even more challenging in light of the tepid economic outlook and persistently poor consumer sentiment.
The accelerating incoming supply over the next two years could further dampen the weak sentiment, as buyers may continue to adopt a wait-and-see attitude in anticipation of lower selling prices.
DBS said it has seen various promotional incentives being “dished out” to property buyers in order to boost developers’ property sales, which are expected to decline in 2016. Also, developers have been incorporating more affordable homes in their launch pipelines, as demand for affordable housing remains strong despite the weaker sentiment.
Absolute property prices have been kept low by offering smaller built-up units. This is mainly to address the affordability issue, as buyers have been priced out by the skyrocketing prices.
Developers have been facing difficulties in converting their initial high bookings to sales because of stricter bank lending policies, as banks get more cautious towards the property sector despite the keen interest shown by potential home buyers, especially genuine home-occupiers who may be purchasing properties for the first time, or upgrading to better homes.
While the property market has been rather lacklustre compared with the past few years, the overall house price index remains on the uptrend, albeit at a slower pace. Affordable landed properties with ready infrastructure and amenities remain in demand, as attested by some of the recent launches.
Developments that are integrated with current or planned public rail stations continue to be sought after, and property buyers have been increasingly seeking value-adding properties as more affluent buyers continue to upgrade their lifestyle.
