KUALA LUMPUR (Feb 4): Moody's Investors Service expects the country’s residential property demand to slow further this year, crimped by property cooling measures imposed in 2013 and weak buyer sentiment.
“We expect the anticipation of higher mortgage rates in 2015 and the implementation of a 6% Goods and Services Tax in April to dampen sales in 2015, as buyers take a wait-and-see approach,” said Moody’s assistant vice-president and analyst Jacintha Poh in a report today.
She added the magnitude of the sales impact will depend on Malaysian property developers' target segment of project launches and pricing.
“We expect developers focused on residential projects located in popular cities such as Johor, Kuala Lumpur, Selangor and Penang, to face the greatest challenge in achieving sales targets, as properties in these cities are typically priced above RM1 million and are aimed at high-income households or foreign investors,” she said.
As for property price, Poh noted the growth in these popular cities has been falling since end-2013, reflecting the impact of the cooling measures.
“Nonetheless, we expect demand for owner-occupied homes priced in the middle-income range, to remain resilient,” she added.
The cooling measures was introduced in October 2013, to curb speculative demand in the residential property space.
Meanwhile, Poh expects the anticipation of higher mortgage rates this year; and the implementation of the GST will dampen sales this year, as buyers will take a wait-and-see approach.
“While we do not expect the GST to deter buyers from making a purchase decision, affordability may be a concern. Malaysia’s average home prices from 2001 to 2013, have increased at a compounded annual growth rate of 7.3%, faster than that of gross national income per labor at 6.3%,” she said.
Malaysia’s five largest-listed property developers by revenue — Mah Sing Group Bhd, S P Setia Bhd, UEM Sunrise Bhd, Sunway Group Bhd and IJM Bhd — will see a slowdown in sales volumes, but the impact will be mitigated by their projects targeted at the middle-income segment, as well as contributions from overseas projects.