The iProperty.com Asia Property Market Sentiment Survey (H2) 2015, which is the eight iteration of the survey, was conducted on the iProperty Group’s leading websites in Malaysia (iProperty.com.my), Indonesia (Rumah123.com and rumahdanproperti.com), Hong Kong (GoHome.com.hk and Squarefoot.com.hk) and Singapore (iProperty.com.sg).
The survey polled over 15,000 respondents and 43% of respondents were from Malaysia. 76% were from Selangor and Kuala Lumpur and majority (74%) were aged between 21 to 30 years old. 55% considered themselves as investors, 24% as first-time homebuyers, 12% were just monitoring the market and the remaining 8% were real estate agents, expats and renters.
According to iProperty Group’s Managing Director and CEO Georg Chmiel, the survey findings showed that the country’s relatively young population and labour force between the ages of 21 to 30 years old are looking to get into the property market but are hindered by high property prices.
Demand for Affordable Housing Increases further
“Although various affordable housing schemes have been introduced by the government over the years, it’s not enough to meet the demand. This is why, respondents are calling for more affordable housing schemes to be introduced,” shared Chmiel.
Perbadanan PR1MA Malaysia (PR1MA) has to-date approved 153,000 units of affordable houses to be built in 110 locations nationwide, except in Labuan, and is targeting to have another 250,000 units of affordable housings to be approved by the end of the year 2015.
He added that in lieu with the upcoming Budget 2016 announcement, respondents are hoping that the government will introduce other effective schemes that can help the under 30’s afford a property by also taking into consideration affordability of current property prices, inflation rates and income levels.
“The people also hope that the housing limit under the Malaysia My First Home, a scheme introduced in Budget 2011, and PR1MA, established under the PR1MA Act 2012, will be increased and also built in strategic locations with good public transportation,” said Chmiel.
Cost of living has increased leading to a more cautious approach to property in 2015
The introduction of the GST has not deterred people from investing in real estate, in fact 56% of the respondents said GST would not deter them from purchasing properties, up from 53% before the introduction of the GST.
But according to 42% of respondents, the GST has increased their cost of living by 5% to 10%, while 36% are of the opinion that their living expenses has increased between 10% – 30%.
“It’s not surprising that respondents are seeing an increase in the cost of living compared to six months ago. The sharp decline in oil prices, the abolishment of fuel subsidy in December 2014, the depreciating ringgit followed by the steep introduction of the GST at 6% have certainly seen an increase expenses across all goods and services in the country,” explained Chmiel.
“Compared to six months ago, where 58% of respondents were eager to purchase a property in less than 6 to 12 months, now 50% are looking at purchasing in 1 to 2 years and more,” said Chmiel.
Higher priced properties expected to be in demand in 2016
He also shared that it was also interesting to note that there was an increase in the budget to purchase, a shift in the motivation to purchase and type of property to purchase.
“This is evidenced by the fact that close to half of the survey’s respondents are now looking for property priced between MYR500,000 to MYR1 million with condominiums being the favourite. As such, the respondents are holding back on purchasing property now to probably try to save more for a down-payment” added Chmiel.
Low Ringgit leads to Increased Interest from overseas buyers, such as Singaporeans in Iskandar Malaysia
The weaker Ringgit has made properties in Malaysia even more attractive for overseas buyers. The survey findings showed that compared to six months ago, there is an increase in the number of Singaporeans looking to purchase property in less than 6 months to 12 months. The top three motivation to purchase were that they viewed the property as a good investment, expectation to migrate or retire there and that the economic slowdown has brought prices down.
The Budget to purchase has also increased from less than SGD500,000 to SGD$1 million to SGD $1.5 million.
The Budget 2016 – critical for a further recovery
In the previous survey, 78% of respondents felt that the various measures introduced in Budget 2015 to address the need for affordable housing in the country were not enough.
With Budget 2016 just days away from being announced, the top four concerns that respondents are hoping that the government will look into are:
- Having better control on property prices
- Reducing housing loans & interest rates
- Introducing better options for housing schemes
- Reintroduce the Developer Interest Bearing Scheme (DIBS)
Aside from this, they are also hoping that the government will provide more tax incentives for landlords as it will encourage property owners to focus on renting properties out rather than selling for profit.
“With the demand for affordable housing on the rise, respondents are also hoping that the government will look at bringing back the DIBS scheme but target it specifically for first time home buyers that have a low to medium income”, added Chmiel.
Conclusion – a Better Market is expected for 2016
Chmiel concluded saying that a better market is expected in 2016.
“Even though Malaysians are concerned about the rising house prices and affordability, the love-affair for Malaysian property remains strong, from within Malaysia and increasingly from overseas” said Chmiel.