Translated and edited by NG PAU LING pauline@thestar.com.my

BETWEEN the year 2010 and 2014, the Malaysian housing market had faced an upcycle, enjoying double-digit price growth, peaking in 2013.

However, the market since 2014 has begun to soften following the various implementation of cooling measures, showing a 7.4% price growth in 2015 and 7.1% in the following year.

The underlying question is whether the property market has hit rock bottom? Is the industry finally prepared to make a comeback after a slowdown in the past three years?

“The property market has remained sluggish this year with a price growth moderated to just 5.3% in the first quarter,” said economist Dr Yeah Kim Leng in a recent interview with Chinese media.

He said that the residential property prices across the nation still rise, albeit at a slower pace, which is mainly dependent on the property types and their locations.

“The prices for Semi-D’s and bungalows have softened when compared to terraced-houses and high-rise property.

“On a separate note, the market is noticing that the house prices are stabilising in some states since the fourth quarter of 2016, including Kuala Lumpur, Penang, and Negeri Sembilan,” said Yeah.

Moreover, the adjustment of the supply has taken place following the noticeable change on the market’s demand. With economic recovery and income growth, there might be light at the end of the tunnel.

“First-time homebuyers and upgraders make up the majority of local property transactions, especially on middle to low-end properties.

“As for the luxury property segment, we foresee a continuous drop in transaction volume due to a situation of oversupply and tightening domestic demand.

“Nevertheless, we projected 5% to 10% increase in transaction volume this year underpinned by better-than-expected economic performance, improved consumer sentiment, higher house-loan approval rate, stable employment and wages growth,” said Yeah.

As the house prices rise faster than the income growth, affordability is still the biggest issue in the current property market.

“The balance in supply and demand must be addressed immediately. Government regulations and incentives should be in place to drive the supply of affordable houses, as well as to bridge the gap between salaries and prices,” he added.

When asked about the impacts of China’s capital controls, Yeah pointed out that foreign buyers make up just a small chunk of the property transactions in Malaysia.

Only the projects which focus on Chinese investors will be adversely impacted by the law.

“Domestically, the cooling measures are still necessary at this point. Although property prices are becoming more stable, the overall market demand is still weak.”

Yeah said the strong economic performance supports the market demand, but it is offset by fundamental issues such as oversupply and slow income growth.

For the property upgraders, only the developments in strategic locations will be on the radar.

The housing developers should put more effort on value creation or risk a lacklustre performance when it comes to the residential market.