WITH less than a month to the new year, StarProperty.my asked industry leaders for their outlook and impressions of the property market in 2018

By HAKIM HASSAN hakim@thestar.com.my and AISYAH SUWARDI aisyahs@thestar.com.my

Khazanah Research Institute director of research Dr Suraya Ismail.

The housing industry can look forward to an exciting 2018 because the public has become more vocal in expressing their needs. And affordable housing seems to be the primary concern of Malaysians.

When people signal that they want housing in the price range of RM250,000 to RM300,000, some quarters claim that the market is crashing. It is not. People just want products that they can afford.

When what is produced does not match the demand, the result is the glut we are seeing now.

In my opinion, the recent property imbalance as reported by Bank Negara is due to the lack of comprehensive housing data as well as the mismatch of supply and demand in the market.

People want to buy affordable homes but the supply is not in tandem with the demand, so of course, there’s a glut.

This is why Malaysia needs a national housing survey. As mentioned in Making Housing Affordable, a book published by Khazanah Research Institute in 2015, the survey will be conducted at mukim (sub-district) level to provide input for the integrated housing database.

The survey will cover demand factors such as demographic patterns and assessment of household incomes, as well as supply factors such as assessment of land suitability with current land use, and existing and future housing stock.

It will be great for consumers if developers could provide quality products at reasonable prices.

Developers should also increase productivity by modernising construction methods.

There are several other technologies besides the Industrialised Building System (IBS) that could shorten the time taken to build a house, leading to reduced working capital and, hopefully, a lower-priced home in the future.

Proper planning and thorough research by the authorities could also help provide what the public needs while maintaining a healthy and balanced housing market.

Malaysian Institute of Estate Agents (MIEA) president Eric Lim.

Despite speculation that the property market will crash in 2018, members and real estate agents concluded that the market is somewhat stable and moving at a moderate pace.

It's true that the market has been soft for the past few years, but I think it is because buyers are savvier about the situation and thus more careful in making decisions.

Also, the restrictive lending policy by banks is an issue for estate agents. Many buyers backed out after booking because of loan rejection or low margin of financing in both the primary and secondary property markets.

Malaysia’s economy is doing quite well at the moment. In fact, we are on an uptrend with 6.2% of gross domestic product (GDP) in the third quarter of 2017 – which is one of the best in the region. So I think we can forecast good omens next year.

Our unemployment rate fell to 3.4% in September 2017 from 3.5% in the same month last year. The numbers show that Malaysia has almost full employment. High employment is good for the property market because people will have steady incomes, and they will have a location in mind when buying property.

We hope that in 2018, the banks will be a bit lenient in their lending because those in the market are genuine property buyers or investors. If the tight situation continues, the demand for housing will be affected. Banks are important in sustaining the property market.

As for MIEA’s strategy for next year, we plan to have more training for the real estate negotiator (REN) to ensure better service for customers as well as putting more effort into marketing strategy by utilising social media and other forms of digital marketing.

Retailer Group Malaysia managing director Tan Hai Hsin.

The group’s 2018 growth forecast for the retail sector in Malaysia is 6.0%.

To stimulate economic activity and boost consumer confidence, the general election should be held before the middle of next year.

The government needs to take more concrete action to strengthen the ringgit. It must return to 2014 levels of around RM3.26 against the US dollar before the end of next year to encourage consumer spending.

The depreciation of the ringgit since early 2016 has affected the price of retail goods, resulting in higher cost of living for Malaysians.

Retailers' profit margins have dipped severely because of the higher cost of importing raw materials, unfinished goods and retail items.

Internationally, the stable and sustainable economic data in China and the United States for next year will influence the local retail market as well.

This year, the retail segment has been affected by weak consumer spending, low consumer confidence and rising operation costs.

To spur retail sale, the government must improve the economic conditions in the country.

When economic growth is broad-based, more Malaysians will have higher take-home pay which translates to higher purchasing power.

The most critical problem faced by shopping malls in Klang Valley in 2016 and 2017 was a severe reduction in consumer spending due to the rising cost of living and weak economic conditions.

These were the main reasons that led to a fall in average occupancy rate and rental rate, which impacted even the popular shopping centres in Klang Valley.

Another reason is a retail oversupply in the Klang Valley for the last eight years. The oversupply problem is primarily at the more affluent locations including Kuala Lumpur city centre, Petaling Jaya, Damansara and Cheras. The situation is not so apparent in such areas as Klang, Bangi, Kajang and Kepong.

Nowadays, more Malaysian consumers are shopping online for retail goods. The recent success of the Double 11 Single Day is a strong indication of this trend.

However, the online sale of retail goods only accounts for 2% of the total retail market in 2016; it has yet to make a significant impact on the retail industry.

The online retail market will continue to grow but is unlikely to replace the brick-and-mortar retailers.

The first reason is that traditional retailers in Malaysia are now embracing modern technology. Many of them have introduced the online facility as an alternative distribution channel.

They are now competing head-on with pure-play retailers that only do business online. The latest is H&M; Malaysians can now shop online for H&M products or buy from its stores.

Pure-play online retailers are now setting up physical stores because their loyal customers tell them they still want to feel and try out the products.

With more consumers preferring to use the smartphone to shop online instead of laptop and desktop computer, retailers in Malaysia are beginning to accept mobile wallet payment.

Smartphone ownership in Malaysia accounts for 70% of the total handphone ownership. The smartphone is also getting cheaper.

This new method of payment will soon be widely accepted by Malaysian consumers.

Real Estate & Housing Developers' Association Malaysia (Rehda) president Datuk FD Iskandar.

The year 2017 has been a challenging year with pressing issues that continue to affect the property market.

Some sectors within the industry reported lacklustre performance, such as the overhang as reported by the National Property Information Centre (Napic) last month.

The recent freeze on approvals for shopping complexes, offices, serviced apartments and condominiums priced above RM1mil is expected to have an impact on the market further into 2018.

According to Rehda’s Property Industry Survey for the first half of 2017, about half of our members have a neutral outlook for the property market performance and residential sector growth for the year 2018.

The key challenges will have to be addressed for the market to truly recover.

The recent opening of the MRT in the Klang Valley is an active catalyst to spur demand for housing in the surrounding areas in 2018.

Homeowners are now looking to buy into areas with better connectivity or transit-oriented development (TOD). The implementation of transportation projects all over Malaysia, especially in the more urbanised areas, will have a positive spillover effect on the property market.

In all likelihood, the industry will experience growth in 2018 – even if it is not a major one. This could be of significance in the near future.

Malaysia has reported an increase in its GDP, which inevitably means improvement in the country's economic activities and more job opportunities. This will further increase the demand in the property sector.

As for the oversupply of homes, the mismatch of locations has affected the market the most.

The root of the problem surrounding oversupply is the mismatch between supply and demand.

There is a lack of data that hinders developers and other industry players from sufficiently and accurately providing housing to the rakyat.

Another factor concerns the disposable income and purchasing power of the average Malaysian.

While the per capita income of Malaysians has improved by about 46% since 2010, it is still not enough to sustain the rising cost of living in our country.

Many Malaysians cannot afford to purchase a property because their household debt is high.

We believe that measures have to be taken by the authorities to address this serious issue.

End-financing is another issue that affects the ability of potential homeowners to purchase a property.

We hope that the Government will address the end-financing problem that impedes some Malaysians from owning a home.

The journey in 2018 will not be smooth sailing. It will continue to be encumbered by challenges, but I have faith in the industry and its stakeholders to persevere as always.

Rehda fully supports government efforts to provide affordable housing as part of the national housing agenda.

The Budget 2018 announcement by our Prime Minister in October speaks volumes of the Government's commitment to providing affordable housing with more homes to be built under the PR1MA programme, allocations under the MyDeposit scheme to assist with down payment, and the extension of the step-up financing plan to include private housing developers as well.

The move by Maybank Islamic to launch HouzKEY, its Rent-to-Own scheme, will lift the burden of those who can’t afford to purchase their own home yet.

However, we hope that the Government will take cognisance of our request for incentives – for both buyers and developers – to promote affordable housing, such as fast-lane approval, higher density and discounted premium.

These incentives will undoubtedly assist in ensuring seamless delivery of housing for the people.

We also propose that the Government waives the stamp duty for first-time buyers as part of its efforts to promote home ownership.

Bon Estates managing director Goh Soo Sing (left) with the marketing director Angeline Liau.

This year has been somewhat flat for the property market. The company sees that market corrections introduced in for this year especially with the new ruling and regulations of the temporary freeze of property above RM1mil for residential, commercial, office for Kuala Lumpur would continue to affect the market in 2018.

It would be interesting to see how the market plans out itself next year as a more correctional measure are put into place. The temporary freeze and reduction in the supply of properties above RM1mil will certainly be a game changer.

Overall in 2017, housing loans approval have risen by 3%, Consumer Price Index (CPI) is at 4.3%, which is positive for the market.

However, property prices are not matched with income of potential buyers. Property prices are at 4.4 times of annual median income. Unsold developer units have risen to an all-time high as supply is not absorbed into the market in time.

The introduction of the freeze for projects above RM1mil in Kuala Lumpur is also another measure which has been introduced to curb the overhang issue. This has also affected the market certainly.

The year 2018 would remain a flat year, and the industry would instead focus on affordable housing.

However, there is still a positive market for new projects as there is still a constant demand in homes. The increase in loan approvals by banks could also contribute to boosts in property purchase.

As for the developers, the introduction of more IBS projects to increase productivity at lower costs.