IF you were thinking of investing in property here in Malaysia, now is perhaps a good time.
This is mainly because developers of new properties around urban centres in the country are expected to reduce the prices of homes to drive up sales amid a cooling real estate market.
“These developers will be more eager to accelerate their sales by reducing selling prices via hefty discounts,” leading bank RHB research said in a report published Tuesday.
SEE ALSO: What’s behind Malaysia’s property glut?
According to The Star, the level inventory of unsold units in the country is continuing to “worsen” even though developers are aggressively unwinding their unsold units over the past two years.
RHB’s report said numerous developers were still launching various new projects to boost property sales despite existing projects and a slow-moving inventory.
“Based on the latest financial data, unsold and ongoing projects and revenue, as well as unsold and ongoing projects and sales target ratios for many companies have worsened, as property sales and billings from newer or ongoing projects have been slow, while older projects with low take-up rates are being completed.”
RHB Research pointed out the major developers such as Sime Darby Property Bhd, IOI Properties Group Bhd and UEM Sunrise Bhd pointed out that the value of unsold and ongoing projects under them were two-to-three times their annual turnover.
“Having said that, overseas projects may have partially contributed to the amount of unsold and ongoing projects, as revenue is only recognised upon completion of the developments.”
Most of the property areas affected were concentrated in Iskandar Malaysia, located in the southern state of Johor in an area which was a stone’s throw away from Singapore. This was due to weak demand, the report said.
“According to the Real Estate & Housing Developers’ Association’s survey in the first half of 2018, the glut is mainly in the high-end segments such as detached and semi-detached units, as well as the high-rise segment in Johor.
Other affected areas were nearer to the capital Kuala Lumpur, in Puchong, Shah Alam and Seremban.
On what this year looks like for the market, RHB research said property sales are expected to remain flat due to developers remaining cautious amid subdued sentiment levels.
Other than a cool outlook for the year, the government has also announced a stamp duty waiver for first time home buyers, enabling them to save thousands.
This applies to properties RM300,000 (US$72mil) and RM1mil (US$240,000) for the first half of 2019 as part of the National Home Ownership Campaign.