Stimulus needed for secondary property market – The Edge 1 Aug 2021

Stimulus needed for secondary property market - The Edge 1 Aug 2021

Written by: Raymond Chong

Source From: https://360kiranaresidence.com/

By theedgemarkets.com | 2021-08-01 09:30:00

KUALA LUMPUR (Aug 1): The soft secondary property market is likely to remain soft for another year due to the resurgence of Covid-19 cases, and property consultants are calling for incentives to be extended to subsale properties.

Rahim & Co International Sdn Bhd chief executive officer of real estate Siva Shanker said policy-based decisions and a level playing field are needed for the real estate market as secondary properties make up a big portion or about 80% of all property transactions. “A big portion of the real estate market has been ignored and all the attention is given to a small portion of the market (primary market)... I think it is fine if the government gives developers a hand. But if the idea is to strengthen the market, then strengthen the whole market, I believe a flat-based policy should be there for everyone, rather than one that helps only one part of the fraternity.”

According to Knight Frank Malaysia deputy managing director Keith Ooi, secondary property transaction volume has been affected due to the Home Ownership Campaign (HOC) incentives offered to properties on the primary market. “The overall number of transactions will likely decline if the HOC is not further extended to the secondary market. We believe that by extending the benefits of the HOC to the secondary market, it will further spur activity in the overall residential market.” Nonetheless, Henry Butcher Real Estate Sdn Bhd chief operating officer Tang Chee Meng said interest in properties priced above RM1 million in the subsale market will likely not be affected. “The secondary market, without the incentives offered under the HOC, will continue to attract more affluent buyers who cannot find their dream homes among the current offerings of affordable homes on the market, and these would be higher-priced properties in popular locations”

Opinion from Raymond

In my humble opinion, none of the experts in the Edge's article mentioned the biggest elephant in the room. While the wider Malaysian property market continued its upward trend, the KLCC Property Market has been on the decline for a number of years for reasons that have nothing to do with the pandemic or even the lack of stimulus measures to make it easier or cheaper to buy high end million ringgit KLCC properties.

The high end KLCC property market remains in the doldrums because there are far too many sellers who want to sell their properties at prices no buyers are willing to pay. It's Economics 101 Supply & Demand, folks. You want property transactions to increase ? Easy peasy. Cut your property prices, sellers. Then you might find buyers for your property.. Or better yet - get the property developers and the MOH to cut the future supply of KLCC condominiums and serviced apartments. But with more than 10,000 units already in the pipeline, it might be a case of shutting the door after the horse has bolted. Oh I forgot to mention the other elephant in the room. No I am NOT talking about our “backdoor” this or our “backdoor” that.

I am talking about foreign investors in Malaysia that are complaining about operating conditions in the country - eg the frequency of changes in the regulatory regime which predate the pandemic. If they pull out of Malaysia and move to some neighboring countries that are more welcoming, THEN who ELSE is coming to rent our factories or hire new employees that will rent our apartments? But let's not lay all the blame squarely on the foreign investors for the woes in the local property market. Hey, even Malaysian investors now prefer to invest their spare money in the UK and Australia property markets. Property markets there are doing just fine without stimulus measures. You can probably figure out the reason why UK and Australian properties are in demand by domestic and foreign investors. Hint: anyone remember what the Ringgit v Sterling or AUD rate was in the past 5-10 years?

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