BY: NURUL ASMUI, JONATHAN ROBERTS, CAITLYN NG

Taking a look at the property market in 2017 from the point of view of subsale experts.

The Budget 2017 that was announced on October 21 contained a substantial amount of goodies that benefited multiple sectors including property development, infrastructure, financing, energy sustainability and tourism.

To gain some views and insights from professional real estate agents on the Budget as well as the property market, Propwall.my recently organised a post-2017 Budget roundtable discussion. The roundtable was moderated by StarProperty Sdn Bhd assistant general manger Ernest Towle.

One of the Budget’s main goal is to enhance the affordability for first-time homebuyers, as house ownership is seen as an essential part of wealth creation.

“The Budget focuses on the agenda of the citizens. It has always been an issue with the property affordability where demand and supply does not match. That is why the government intervention in terms of public housing comes in, and is much welcomed.

“One of the things that caught my attention was the allocation of 10,000 units of executive property for rent. It is an interesting approach because previously, we focused more on purchasing, but now the government is trying to buy time for the younger generation by giving them this kind of opportunity,” said Reapfield Properties Sdn Bhd group chief operating officer Jonathan Lee.

“The new plan shows that this Budget has a little bit of innovation, but it is something to be analysed and studied further as it is not a usual intervention in terms of housing in Malaysia,” Lee added.

“When I look at the budget, I think that it is trying to achieve a balance between the affordable and the more expensive properties. The stamp duty has been given a complete exemption for properties below RM300,000, but it has been increased for properties above RM1mil. The impact of this will be quite substantial, but the government has taken these measures for the purpose of cooling down the market,” said S.K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng.

Her statement was echoed by Chester Properties group chief executive officer Kam Jun Yin, “One can see that there are many cooling measures implemented by the government which indicates that the direction they are headed in for the year 2017 is to stop the property prices from rising too rapidly. Even though the stamp duty has been raised from 3% to 4%, we are currently still very low as compared to other countries in the region, which have already recorded double digits.

“The government is also seeking to help out the first-time homebuyers by building affordable housing such as PR1MA, which one can see that the amount is increasingly yearly. For 2017, there will be more than 30,000 houses built at strategic locations, to be sold between RM150,000 and RM300,000.”

The differences between primary and secondary market has raised some concerns among the agents that are in the subsale industry.

“Nowadays the primary market is competing with the secondary market. It becomes a competition as developers have more resources on hand to attract more buyers. I feel like I am competing with developers that have more resources and more marketing exposure for their products,” said Lee.

“The primary market has a different approach in marketing in a sense that they can give out packages for easy ownership. Whereas we don’t have that kind of advantage in the secondary market, and that is why the pressure comes to us,” said Kam.

Despite the competition that the primary and secondary market is facing respectively, the secondary market has benefited from the technology innovation and transacted data available. These handy resources assist both homebuyers and agents in the process of buying or selling a home.

There was also a consensus amongst the subsale experts that there was a pressing need to train the real estate agents and negotiators, so that they will be equipped with the right skills in order to assist their clients who are not exposed to the information that they need regarding property purchasing.

This is so that the large gap between those who are experienced and those who are unprepared will be diminished. More informative campaigns are needed to educate the public, geared mostly towards the youths.

“Today we can see that the behaviour of consumers has changed tremendously due to the presence of technology, and also the available data and information. Consumers want to be empowered in order to make their decision. Therefore, agents and the sales people must be trained effectively to give them the best information, input and assistance,” said Lee.

“Transacted data helps owners make better decisions; agents too, get to give better advice in terms of the right property pricing. This data can be helpful as it is now very open to the public to access it,” said Chan, echoing on the same sentiment.

“Bankers are also very helpful in getting evaluation prices because most buyers these days would prefer to know how much the bank would value a particular property so they know how much of a loan they have to get. These two things are really helping to balance the prices in the market, and also to close a deal in the secondary market,” Chan added.

When asked if there a noticeable lack of financial know-how among the younger generation, the answer from the panellists was a resounding, unanimous yes. As banks tighten home loan rules, many are finding it harder to purchase a property. According to the Real Estate and Housing Developers Association (Rehda), the rejection rate for affordable home loans are hovering above 50%.

Instead of pouring scorn on the banks, Vivahomes Realty head of sales and marketing ML Lim reckoned young homebuyers must shoulder the blame as it is their poor financial decisions that led to the home loan rejection.

“People from the younger generation tend to have a more lavish lifestyle, spending much of their earnings on exorbitantly priced gadgets. This ultimately pushes up their debt service ratio (DSR), thus causing the bank to not approve their home loans,” said Lim.

Lee opined that financial illiteracy is the number one enemy, “Many young people have little inkling of how the financial system works.

There needs to be more education on financial management. Our education system should incorporate the subject of personal finance into the syllabus from a very young age. Young people make up the majority of the population, and if the majority does not possess high financial literacy, it is bad for the country.”

One advice that was given to first-time homebuyers was to ensure that they have been given the necessary education when it comes to buying a property. With information today readily available at one’s fingertips through the internet, it is also possible for parents to cultivate good spending habits in their children.

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“If youths have plans to purchase their first property by the time they’re 30 years of age, it would be recommended for them to start building up their financial profile as early as possible, say at 20. This is where the parents come in. Loans are not necessarily bad. Youths must learn the difference between good debts and bad debts. As personal loans and credit card debts are some of the major factors which contribute to a bad profile, parents can adopt a simple explanation process.

“They can start by working backwards, where one calculates the approximate amount needed to pay off a mortgage and a car loan, and include the daily basic expenditures. From there, the child can then see how much they would need to earn. This would teach them the value of money and how being well-prepared is very important,” enthused CBD Properties head of training Sherry Chew.

While there are many goodies in the Budget 2017, there was still some room for improvements.

“In my opinion, it is very hard to stimulate the property market as it is not a stand-alone; in fact, it is dependant on the condition of the economy. This is where the government should focus more on high impact economic activities and can implement policies that will spur the market.

“Malaysia is positioned in a strong regional location, and any industrial or commercial development here will be the ones that will attract foreign investors and MNCs; tax breaks should be given so that they will be encouraged to enter and set up base, thus creating more job opportunities,” opined Lee.

Chan is of the same mind, “Once the government puts into place activities that stimulate the economy, allowing it to recover, then only will people begin to feel confident again. Market sentiments will thus improve, which means that there will be an overall increase in spending once more, which includes for property buying purposes."