Malaysia’s property market expected to recover from 2H2010

KUALA LUMPUR: Malaysia’s sluggish property market is expected to improve from the second half of 2010 as the country’s economy is anticipated to recover next year.

Real Estate and Housing Developers’ Association (Rehda) deputy president Datuk Micheal K C Yam said based on the findings of its Property Industry Survey for the Second Half of 2009, over half of those polled are optimistic that the property market will recover after the second quarter of 2010.

“From the survey we obtained, the respondents are optimistic that the property market will improve amid cautious optimism, with houses between RM100,000 and RM250,000 continuing to enjoy good demand,” he told reporters after a briefing on Dec 17.

A total of 163 out of Rehda’s 963 members took part in the survey. Respondents are from all 12 states in Peninsular Malaysia including the Federal Territory of Kuala Lumpur.

Yam said the majority of respondents envisage that property prices would increase by up to 20% over the next six months while some opined that prices will remain stable.

“Only 21% of respondents retained their current pricing for their new launches while another 38% anticipate that they will increase their pricing for new launches,” he said.

Yam noted that most developers are cautiously optimistic and agree that the economy will recover next year.

Yam also said that the impact of the re-imposition of 5% real property gains tax (RPGT) to owners might not be as bad as the damage to the country’s image and branding efforts as it is seen by foreigners that the government is still flip flopping with policy measures.

“The re-implementation of RPGT is punitive to owners of existing housing units who bought their properties decades ago,” he said.

The timing of the tax is not right and the RPGT should be imposed only to curb speculation and not across the board. If imposed at all, it should only apply to transactions within a specified period, he added.

“In its current mechanism, property price in the secondary market will increase by a minimum of 5%,” Yam said.

Some 42% of developers reported that the incentives offered by the government have neutral impact towards boosting property demand while another 36% felt that the incentives have insignificant impact.

Meanwhile, RAM Holdings Bhd’s economist Kristina Fong said the property market is expected to improve in line with stronger gross domestic product performance expected in 2010.

“The GDP growth forecast for 2010 by RAM Holdings is 4.9%. It is more optimistic than the government’s (2-3%) or the World Bank’s (4.1%),” she said at the same event.

She said private consumption in the country is anticipated to recover to slightly above half pre-crisis trend growth of 8% next year.
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