Monday, January 25, 2021

Property market shaky now but not on last legs yet

The property market is a cycle which, given enough time, will rebound, experts say.

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The property sector may have taken its share of hits due to uncertainties in the economic, political and now public health spheres, but experts in the field believe not all is lost and that brighter days may yet come for the struggling industry.

Acknowledging the difficulties that have long plagued the property market, Mani Usilappan, former director-general of the Valuation and Property Services Department, said the same factors that affected the economy would also affect the housing sector.

But while the onslaught of the Covid-19 pandemic brought most economic activities to a standstill, he said demand remained as there were still buyers looking for houses at reasonable prices.

“It is true, there has been a general slowdown in transaction volumes,” he told MalaysiaNow.

“But there are sales taking place which indicate that the market is on somewhat firm footing, especially the secondary market.”

The Covid-19 pandemic, which saw the government impose a three-month lockdown in a bid to curb the spread of infection, drove businesses to their knees, forcing many to close shop.

Mani admitted the gravity of the situation, saying issues related to Covid-19 were global and “too far widespread”.

“But they may not last forever,” he added. “We will have to face it and work through the uncertainties.

“As long as the economy is moving, there will be demand for housing.”

However, he cautioned that uncertainties linked to politics would continue unless the political scenario stabilised.

Demand on the way back?

NK Tong, vice-president of the Real Estate and Housing Developers’ Association Malaysia, said there was empirical evidence that demand was on its way up again.

But he added that the situation next year would be a better indicator of how the property sector would fare.

In a press conference at the recent Home Ownership Campaign-Malaysia Property Expo 2020 (HOC-Mapex 2020), he too spoke of the many uncertainties affecting the country.

But noting that Malaysia had tackled the pandemic with more success than some other countries, he said this would boost public confidence in the sector.

“Six months ago, everyone thought it was a trade-off between healthcare and the economy,” he said.

“Now, in hindsight, the whole world realises that both are interlinked. We have to tackle healthcare to invigorate the economy.”

Siva Shanker, CEO of real estate agency Rahim & Co International, attributed the drop in market to a number of “black swan events” including trouble in the oil and gas industry, the US-China trade war, turbulence in the global economy, political instability within the country and, of course, Covid-19.

“These aspects have unleashed the storm, not just on the property market but on all sectors,” he told MalaysiaNow.

He cited a report by the National Property Information Centre predicting a slowdown in demand given the depressed nature of transactions and property value.

According to the report, the property market recorded a transaction volume of 115,476 units valued at RM46.94 billion in first half of 2020. This was a drop of 27.9% and 31.5% in volume and value respectively from the 160,165 units valued at RM68.53 billion in the first half of 2019.

Patience key

But like the others, Siva is not ready to write off the property market just yet.

“It will take a long time (for the market) to recover to what it was before, but it will get back to the point,” he said.

“The property market is a cycle. If we wait long enough, it will come back to the (same) point.”

Despite the havoc wreaked by Covid-19 this year, he said the market was already down in 2019.

“In 2021, when the market settles a bit, we’ll have more clarity on it, and then we’ll see a slightly improved market,” he said, adding that the next high might come in 2022 or 2023.

He also played down the popular belief that the market had crashed this year, saying transactions had continued to take place with a large number of properties still marketed.

“HOC is back, Mapex is back,” he said, adding that he believed these would benefit the market although they might not succeed to the extent of previous campaigns.

For him, and for many in other sectors suffering from the shockwaves of Covid-19, the game-changer will be a workable vaccine.

He acknowledged that it might take years for everyone to be vaccinated, but said a surge of positive sentiment would drive the market.

“Certainly we will see an uptrend in the market, and all the pent-up demand will be released. Only then the market will surge forward,” he said.

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