2018 propertyoutlook
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According to The International Monetary Fund (IMF), slow and steady seems to be the name of the game in 2018 with inflation in the Malaysian economy expected to rise at a slower pace.

Overall economic growth continues unabated with real GDP growth for the year projected at 5.0 to 5.5%. This is supported by continued strength in global trade as well as domestic demand.

In spite of all this, those in the property industry should brace themselves for some rough seas ahead. That being said, the real estate market seems to still be in the midst of correcting itself, displaying a steady downward trend. Here are some of the things you can expect in 2018.



1. Affordable Homes Are On Demand

Based on Bank Negara Malaysia’s statement, there’s a supply-demand imbalance in the property market which has increased since 2015. Due to that, Malaysia is now in a decade-high of unsold residential properties most of which are above RM250,000.

In response to the overhang/oversupply, a freeze on luxury property development above RM1 million has been initiated by the Government. To add, a pause on approvals will also be maintained for offices, shopping complexes and serviced apartments in the city that cost over the said price.

This is expected to bring oversupply to a downtrend. Locations in Kuala Lumpur, Selangor, as well as Penang may see possible marginal drops in real estate prices.

However, the freeze is apparently a temporary measure which will be in place until excess supply has been cleared and approvals will be evaluated on a case-by-case basis.

Hence, developers are now focusing their attention on affordable homes. There has been a talk in the industry of improving the supply of these types of properties and even the possibility of making it compulsory for developers to build affordable homes.



2. Possible Real Estate Crash

Ernest Cheong, a chartered property surveyor, mentioned that skyrocketing real estate price and the imbalance of supply and demand will lead to market crash because the consumers do not have the financial capacity. He also claimed the property prices will plummet from RM500,000 to RM300,000.

However, according to Henry Butcher Malaysia COO, Tang Chee Meng, divulged a bubble burst will depend on factors such as unemployment rate, a significant rise in non-performing loans (NPLs) or a substantial rise in foreclosed properties put up for auction.



3. The Rise In Rental Market

The issue of a mismatch between what is available on the property market and what consumers are able to afford is set to be a key point of contention in 2018.

Therefore, we may be witnessing a possible shift towards a ‘rent economy’. It has been said that the rental economy is 3 to 5 times more than the property transactions among professionals and it is expected that the market will be receptive to viewing renting as a viable option.

Furthermore, the millennial demographic is comfortable with moving to a new location whether for work or for a lifestyle change. Being tied down to a specific location or huge commitment may not fit the market’s mindset or particular requirements.

Budget 2018 showcases that the Government is looking into reformulating the rental act which may bolster regulations that protect landlords and tenants. There is also initiative such as ‘rent to own’ schemes from the private sector i.e Maybank Islamic, which can help to further strengthen this ‘rent economy’.



Conclusion

Looking at the points that have been highlighted, if you are thinking of playing a part in the property scene this year, consider focusing on affordable residences on the outskirts. You should also be open to cashing in on the new, innovative rental market while keeping an eye out for good purchases in case of a steep price drop which may still be on the horizon.

Do you have any 2018 Property Market insights that you would like to share? Post it in our comment section below.



(Written by: Rauf Fadzilla, 16th Jan 2018)


W  f39c12 small

do u think GE will have major impact?

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@wilsonwwws2 

My personal view: If your property is in a state whereby the state government changed hands to the opposition party... I would say the impact is more significant than remaining with incumbent state government.

Own dp small

It will be very important on where your property located at for Property owners and is there any amenities around that neighborhood to really secure the rental or demand for it.

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@JohnL 

Agree with you.

If a investor is able to anticipate/foresee a huge future development beside the property... then that would maximize his investment profits!

Crystal ball fortune telling anyone? haha