How malaysian general election 14 will affect housing market 5
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Malaysia’s 14th General Election (GE14) is just around the corner and everyone is asking the same question, what is going to happen? It doesn’t matter which vertical you are looking at, every market type, including the property market, will be affected by GE14 in one way or the other. No one knows for sure how things will progress.

However, when it comes to property investment, the first thing that you must be very clear of is the fundamentals of property investment. This is shared by the seasoned property investor and real estate consultant, Sean Teo, from Petaling Jaya, Selangor.

The Top Five Fundamentals of Property Investment are as follows:


1. Supply vs demand, including future rezoning and development

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In the property market, the one thing that takes precedence over most others is supply and demand, or more importantly supply versus demand. Whenever a demand is greater than supply, the prices of real estate will go up. Nevertheless, if a certain population does not increase in a specific location, or offices and industry are down, then the price will be reduced or remain stagnant.



2. Population growth over the long term

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Over the past few years, the trend in new housing supply has been towards the higher-end housing market. Now, the Malaysian property market is characterised by an oversupply of non-affordable housing due to the failure of the market to produce enough of affordable housing for the masses.

Since the population of the middle classes is more or less the same, the demand may stay stagnant during or after GE14; and then the property value will go down or stay the same. We will need to wait and see how demand changes before GE14. One must note that the property market also moves with GDP (gross domestic product) growth, and the growth is currently very solid and on the upsurge.



3. Income vs debt ratios

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The debt-to-income ratio is a method for lenders, including mortgage lenders to measure an individual's ability to manage their monthly payment and repay debts.

Yet some investors also adopt a wait and see attitude and there are also those who see the property market of Malaysia as being soft and think that there will be uncertainties in the time period leading up to GE14. These feelings may also affect the market sentiments. They want to wait until the election settles down, so the path that the market will take becomes clearer.



4. Ensuring the property purchase is viable irrespective of tax breaks and depreciation

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Investors are also looking at GE14 from various different angles. Some want the incumbent to win as they have already attained political and economic stability. Others are looking for a change because they want new alternatives and are tired of the way things are now. There are also those who are looking at the bigger picture i.e. they are looking at it from a global perspective. They are analysing the situation and seeing what will happen if the incumbent wins or if the opposition wins.

As such, they are all keeping their money on hold and waiting for the results to come out before they start spending and taking risks. Some investors have already made up their minds and are already planning for their future investments even now.



5. Buying at the right point and focusing on the long term

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If after GE14 is over, more mega developments are initiated, consisting of infrastructures that will ultimately increase the connectivity of the cities in our country and provide better living experiences, then the economic value of real estate will surely go up. Once the economic activities start moving forward, property values will also increase.

For example, there was a lot of buzz behind MRT line 1 when it was in development, with the media talking about how it will reduce congestion on the roads and benefit all Malaysians who lived and/or worked along the line. It also talked about the economic benefits the line would bring as well as the health and environmental benefits of better connectivity. After the MRT line 1 was up and running, even sellers from Kajang Satay benefited from it.

Of note, with better connectivity and a limited supply of industrial properties in Kuala Lumpur, the demand for office spaces and industrial developments may shift outside the city.


Conclusion

In short, 2018 is the year of a corrective cycle in terms of property value. The market sentiment in the first half will generally be slow or remain stagnant in view of the elections; however, it will most likely improve positively once the election is over and there is a clear direction in political view.

Also, despite the short-term implications, the elections will not change the market or the economy in the long run. Investors will continue to put their money in relevant properties even after the election is over and Malaysia’s economy will continue to grow as time goes by.

As what Teo said, “At times like this, it is more pertinent to look at the bigger picture rather than focus on the here and now.”



(Written by: Felicia Soon, 11th April 2018)

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Own dp small

Agreed on this article. Property market definitely slowing, during the first half year due to the election. But it really depends on many factors as there may be correction being done to the evaluation of the property and Supply vs demand. I don't see much demand but high supply.

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@JohnL agreed with you john! High supply but demand less, depends on the price also.

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In the long run, I believe Property is still a viable and stable long term investment. 

If your investment appetite is for high return in a short period of time (high risk), there is always the KLSE Stock Market.

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@domng yes but like what you said, high risk for klse

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@windzneom 

If you have the cash to spare... No harm learning to trade in the share market. Think of it as paying "tuition fees" if you lose money, haha.

However, one must consider thoroughly and NOT simply use your precious PROPERTY as collateral for Investment Bank Margin Account... You might earn a lot, and you might also LOSE it ALL in a short period of time.

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@domng ya agreed with you! is a side income too! haha! thanks for sharing!

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As for now, I think the price of the entry point to buy a property is of most crucial. To reduce the risk as well as maximizing the yield

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Anyone feel any effects on the property sector after General Election 14 on 9th May 2018?

Billing 123 small

PAKATAN Harapan won!

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@sam123 

Definitely looking forward to the abolishment of GST. The last time i checked, commercial property ownership transactions are subjected to GST.

Own dp small

With the abolishment of GST which from 6% to 0%, but there's some thing can't be change of not having the tax. Not all item is non gst taxable from what I have know. We shall see how the government will control on the massive developments which can't really occupy all. High supply low demand = Kill yourself

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How much will the zeroing of GST affect the overall property market?

For developers, building materials by right should be cheaper?

Billing 123 small

@domng Well, technically should be cheaper, however news regarding SST will be implement to take over GST , which again will charge the initial buyer therefore price will remain increase back in the long run. 

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@domng yes should be cheaper,but developer won't decrease the price of the property too. Did you ever see property price dropped? Very less chance.

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@domng WOW! thanks for sharing dom! 

Billing 123 small

@domng Oh wow, din't expect any developer to drop the price due to GST abolishment so promptly. 

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@sam123 

The competition in the property sector will be very intense from now on...            Look at the Car Dealers slashing their prices!

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@domng ya toyota first one. 

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@windzneom 

For me, property is still a better investment... Cars are never an investment, unless it is a limited edition vintage car, actual or scaled down size.  :^)

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May be some project which not yet get approval before GE-14 , a bit difficult to get approve already ... 

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@kksah5097 

You mean government linked projects or private corporation projects?

I have heard, even those government projects which have issued the SST (Surat Setuju Terima) @ LOA (Letter of Acceptance), will be reviewed again.

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@domng yea a lot development will be review again by the new government

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@domng ofcourse investment on property! 

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@admin_ps thank you for your great sharing