Property buying? Up in H1 2015

Assuming you can have just one choice. Do you think buyers would buy more within the H1 of 2015 or H2 of 2015? Actually, this is a trick question. If you have answered ‘H1′, it meant that you are positive about the market. In brief, it meant buyers may be rushing to buy before GST or that demand is slowly recovering. Yet, if H1 picks up, it is very likely that H2 would continue the momentum. From other countries’ experience with GST, most of the time, demand may be subdued just right after GST as they are not sure how to react. What if right after GST is implemented, the developers launch a ‘promosi besar-besaran’? Advertisement banners saying that they are absorbing all the GST and on top of that offering some free stuffs such as electrical goods or renovation packages? Fuel prices remain at current prices and the people have more money to spend since they are spending less on fuel? Economy moves along and Malaysia hits a lower growth than 2014 but still hit 5%? Okay, all these are presumptions but what’s the likelihood of this happening?
Personally, I believe buyers of today are much more informed than yesterday due to the easy availability of information. I also believe that Bank Negara Malaysia is more likely to adopt a pro-growth stance instead of worrying about inflation. Petrol prices downtrend is considered a good thing since it takes away the GST effects. Thus, the pressure to increase interest rates are much lower than when oil prices were high and yet GST was looming. Many people continue to predict that the market would continue to slowdown as the cooling measures are still around. I think they are right but be reminded, the current slowdown will not last forever. If you are still ‘homeless’ and are not buying to speculate or even buying for investment, it may be best that you view and offer a price you are comfortable with. As long as it’s also considered equitable, the chances for the seller to accept is much higher than say, 2011, 2012 and even beginning of 2013. Today, it’s buyers’ market after the crazy price increases for many years.
What has happened in 2014? According to National Property Information Centre (NAPIC), eventhough on an overall basis, the numbers of primary transactions increased, this was mainly contributed by property market transactions in Johor. In Klang Valley, this has dropped while in Penang, it has showed a very marginal increase. Do note that Penang is still a very small property market in comparison and even if it increase more, it is nowehere near Johor or Klang Valley. Second half would have shown that the growth is now negative. Even Johor was not spared. There’s just too much negative news; the toll rates increase, the fall in Singapore’s own property market, the way too many new supply from the huge China developers and more. Competition will be stronger and developers would be holding back, postponing or even launching at much ‘better’ prices.
I think for Klang Valley it should recover when the MRT project is nearer to completion. When people can see, then they have higher confidence to buy. When we ask around we would notice that many people are still saying they want to buy but has yet to buy. Some can even afford but still want to see if prices weaken further. Many of the 2012 transactions are entering the market this year, increasing the supply of new units. With the high prices, rental yield has gone down too. In fact for the new units, it is likely to be negative. The incentive to buy for rental yield is thus lower than few years ago. My personal 2015 plans? Buy a good unit for rental yield, even if the yield is zero. Perhaps I may just get a good unit at a lower than usual price. Wish me luck.
written on 5 Jan 2015
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