By the time you read this, the 2018 Budget announcement would have been over and you would probably have had enough time to digest its main points. If you are an avid property investor, your focus would no doubt have been on the part of the 2018 Budget that was property related.
Although there was nothing spectacular about the 2018 Budget announcement this year, there was nevertheless some goodies for the property sector. The main focus seems to have been on the affordable housing sector. To me, this is indeed a move in the right direction. In the past few years, there has been much talk about the affordable housing sector, but not much progress has been made to address the shortcomings faced.
There is a huge pent-up demand for affordable housing in Malaysia. This demand has largely been unmet for a long time. Many people, especially the B40, as well as the lower middle class have long complained that they are unable to buy a house, largely due to the spiralling prices of residential properties in Malaysia.
Between 2010 and 2014, residential properties saw an unprecedented surge in prices. This was largely due to demand from speculators who saw property investment as a way to quick riches. Easy financing and creative marketing made this process easy, simple and within reach of many people.
However, only a small portion of the population was able to purchase these properties. Of course, some bought multiple properties, in the hope of making big gains. By the time this speculation was brought under control via various cooling measures adopted by the authorities, it was already too late. The market had risen to such a level that it made housing unaffordable to the large majority.
The clamouring for more affordable housing then started. But it was too late as land prices had also shot up, due to the great demand of the preceding few years.
Thus, it is refreshing that the government has placed much more focus and emphasis on affordable housing. Various schemes and incentives have been put in place to encourage this sector. Prices are being kept as low as possible, and innovative financing schemes are being put in place to enable the financially lower strata of society to buy their first property.
This will augur well for the real estate market. As more of these schemes are released into the market, there will be a surge in buying, as the long pent-up demand is released. Slowly, some confidence will start returning to the market, buoyed by the buying in this sector.
I believe that the buying in this sector will have a “trickle up” effect on the entire market. As the demand for affordable housing continues to be satiated, it will lead to an improvement in perception that the market is on its way to recovery. This feel good factor will then lead to improved investments in other sectors of the residential market. As the residential market continues to improve, other sectors of the property market will follow suit, and the whole market should start seeing good, steady recovery.
If you are looking to buy a house, the window of opportunity to buy something at today’s seemingly lower prices is fast closing. Prices will not stay deflated for much longer. The market will not continue in its current sluggish state forever. The next few years will see the market steadily improving. The time to take action is now. Buy while the going is still good, before it’s too late, and the market starts its upward swing again.
Make hay while the sun shines.
Till then, happy hunting, and may the force be with you.