28/12/2019
𝟐𝟎𝟏𝟗 𝐌𝐀𝐋𝐀𝐘𝐒𝐈𝐀 𝐑𝐄𝐀𝐋 𝐄𝐒𝐓𝐀𝐓𝐄 𝐌𝐀𝐑𝐊𝐄𝐓 𝐒𝐔𝐌𝐌𝐀𝐑𝐘
(If you have no idea what happened in 2019, this is a good summary to 𝐫𝐞𝐚𝐝 𝐚𝐧𝐝 𝐬𝐡𝐚𝐫𝐞 out)
Well, we have almost come to the end of the year, and as such, today let us revisit the top real estate stories of 2019.
On a side note, in just a few days time, we will be marching into year 2020, the year Dr.Mahathir calls it as Vision 2020.
Do you think we have achieve as a nation what he envisioned in 1991?
𝐈𝐍𝐓𝐑𝐎𝐃𝐔𝐂𝐓𝐈𝐎𝐍 𝐓𝐎 𝐘𝐄𝐀𝐑 𝟐𝟎𝟏𝟗
Malaysia’s property market has been in decline since 2012.
Even if prices still rise, we’ve seen modest increases in the past 5 years.
𝘗𝘳𝘰𝘱𝘦𝘳𝘵𝘺 “𝘨𝘶𝘳𝘶𝘴” 𝘸𝘩𝘰 𝘴𝘵𝘪𝘭𝘭 𝘨𝘰 𝘰𝘯 𝘳𝘰𝘢𝘥𝘴𝘩𝘰𝘸𝘴 𝘵𝘦𝘭𝘭𝘪𝘯𝘨 𝘵𝘩𝘦 𝘱𝘶𝘣𝘭𝘪𝘤 𝘵𝘩𝘢𝘵 𝘱𝘳𝘰𝘱𝘦𝘳𝘵𝘺 𝘸𝘪𝘭𝘭 “𝘥𝘰𝘶𝘣𝘭𝘦 𝘶𝘱” 𝘦𝘷𝘦𝘳𝘺 10 𝘺𝘦𝘢𝘳𝘴 𝘪𝘴 𝘫𝘶𝘴𝘵 𝘧𝘶𝘭𝘭 𝘰𝘧 𝘤𝘰𝘸 𝘥𝘶𝘯𝘨.
In 2017, prices increased by 5% on average, the lowest rate since 2009.
We see a similar trend in the number of transactions, where we only had 311,824 transactions in 2017, a record low since 2012.
Below you can see a yearly NAPIC comparison by showing annual changes for house prices.
🔻2012 : 13.4%
🔻2013 : 11.2%
🔻2014 : 9.4%
🔻2015 : 7.4%
🔻2016 : 7.1%
🔻2017 : 6.5%
🔻2018 : 3.1%
🔻2019 : 1.7%
𝐓𝐇𝐄 𝐑𝐄𝐀𝐋𝐈𝐓𝐘 𝐎𝐅 𝐑𝐄𝐀𝐋 𝐄𝐒𝐓𝐀𝐓𝐄 𝐌𝐀𝐑𝐊𝐄𝐓
Do note that most of the property price increases published are not adjusted for inflation.
➡️ If we adjust the prices for inflation, property prices have been in 𝐃𝐄𝐂𝐋𝐈𝐍𝐄 in many places throughout 2017, 2018 and 2019, including Kuala Lumpur, Selangor, and Penang.
➡️ Rental market on the other hand, declined by -6.3%.
NAPIC backs my statement above, claiming that Kuala Lumpur saw a 1.7% year-on-year increase of housing prices.
If we adjust to inflation, there’s even been a negative growth.
𝐖𝐇𝐘 𝐃𝐈𝐃 𝐖𝐄 𝐏𝐄𝐑𝐅𝐎𝐑𝐌 𝐁𝐀𝐃𝐋𝐘?
🔴 𝐎𝐕𝐄𝐑𝐒𝐔𝐏𝐏𝐋𝐘
Residential property overhang numbers continue to rise in albeit at a slower rate than the previous year.
Out of the overhang units, 43% are condominiums or apartments.
This is the breakdown.
- 𝐑𝐌𝟐𝟎𝟎𝐤-𝐑𝐌𝟑𝟎𝟎𝐤 (𝟐𝟐.𝟑%)
- RM300k-RM400k (17.5%)
- More than RM1 million (12.8%)
🔴LACK OF FINANCIAL KNOWLEDGE
Initially what everyone thought about overhang homes were those that are priced above RM1 million but the reality is that most of them are priced at RM200k-RM300k, which are categorised as affordable houses.
𝗜𝘁 𝗶𝘀 𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝗹𝘆 𝗻𝗼𝘁 𝗮 𝗹𝗮𝗰𝗸 𝗼𝗳 𝗮𝗳𝗳𝗼𝗿𝗱𝗮𝗯𝗹𝗲 𝗵𝗼𝘂𝘀𝗲𝘀 𝗶𝗻 𝗠𝗮𝗹𝗮𝘆𝘀𝗶𝗮, 𝗶𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗹𝗮𝗰𝗸 𝗼𝗳 𝗟𝗔𝗖𝗞 𝗢𝗙 𝗙𝗜𝗡𝗔𝗡𝗖𝗜𝗔𝗟 𝗞𝗡𝗢𝗪𝗟𝗘𝗗𝗚𝗘.
How many youths you know waste their money on items like cars and holidays first rather than save up to buy their 1st property?
Is it surprising Paul Tan blog gets way way more readership than any financial knowledge blogs?
And when you continue to accumulate bad debts (personal loan, car loan, credit card loans…etc), is it a shocking news that you cannot get your housing loan approve?
𝗠𝗶𝗻𝗶𝘀𝘁𝗿𝘆 𝗼𝗳 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝘀𝗵𝗼𝘂𝗹𝗱 𝗻𝗼𝘁 𝗳𝗼𝗿𝗰𝗲 𝘁𝗵𝗲 𝗯𝗮𝗻𝗸𝘀 𝘁𝗼 𝗴𝗶𝘃𝗲 𝗼𝘂𝘁 𝘀𝘂𝗯𝗽𝗿𝗶𝗺𝗲 𝗹𝗼𝗮𝗻𝘀, 𝗶𝗻𝘀𝘁𝗲𝗮𝗱, 𝘁𝗵𝗲 𝗳𝗼𝗰𝘂𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝗯𝗲 𝗼𝗻 𝗲𝗱𝘂𝗰𝗮𝘁𝗶𝗻𝗴 𝗠𝗮𝗹𝗮𝘆𝘀𝗶𝗮𝗻𝘀 𝗼𝗻 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁.
Ministry of Education, please take note.
Maybe introducing financial management module in Form 4 and Form 5, learning things like Debt Service Ratio, Loan to Value Ratio…etc will actually help our young Malaysians more in the real world.
🔴 𝐒𝐋𝐎𝐖 𝐄𝐂𝐎𝐍𝐎𝐌𝐈𝐂 𝐆𝐑𝐎𝐖𝐓𝐇
Malaysia’s economy has slowed down more than expected.
This has affected the median incomes as well as the local purchasing power.
In Q3 2019, the GDP growth was still not impressive and at 4.4%.
Still, the sentiment on the street among businesses is that the LOCAL MARKET HAS GONE DOWNHILL since Pakatan Harapan took over.
𝐓𝐎𝐏 𝐌𝐀𝐋𝐀𝐘𝐒𝐈𝐀 𝐑𝐄𝐀𝐋 𝐄𝐒𝐓𝐀𝐓𝐄 𝐍𝐄𝐖𝐒 𝐎𝐅 𝟐𝟎𝟏𝟗
🔵 𝐇𝐎𝐌𝐄 𝐎𝐖𝐍𝐄𝐑𝐒𝐇𝐈𝐏 𝐂𝐀𝐌𝐏𝐀𝐈𝐆𝐍
The objective of the campaign was to trim some of the existing property overhang and unsold units in the market.
The campaign was expected to achieve a total sale of RM15 billion by the end of the year.
To date, the total value is for about 28,000 homes sold during the period and the association is expecting to achieve a total RM24 billion in sales.
𝐏𝐫𝐨𝐩𝐞𝐫𝐭𝐢𝐞𝐬 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐑𝐌𝟓𝟎𝟎𝐤-𝐑𝐌𝟕𝟓𝟎𝐤 𝐦𝐚𝐝𝐞 𝐮𝐩 𝐭𝐡𝐞 𝐛𝐮𝐥𝐤 𝐨𝐟 𝐭𝐡𝐞 𝐬𝐚𝐥𝐞𝐬 𝐟𝐨𝐥𝐥𝐨𝐰𝐞𝐝 𝐛𝐲 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐢𝐞𝐬 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐑𝐌𝟑𝟎𝟎𝐤-𝐑𝐌𝟓𝟎𝟎𝐤.
Again, what happened to those overhang properties below RM300k?
Are we really lacking affordable properties or are Malaysians lacking in knowledge to buy affordable properties?
🔵 𝐄𝐂𝐑𝐋
East Coast Rail Link (ECRL) was kick started (or U-turned) and by October, the project to date has been 11% completed.
🔵 𝐁𝐀𝐍𝐃𝐀𝐑 𝐌𝐀𝐋𝐀𝐘𝐒𝐈𝐀
In April, Malaysia signed a framework of agreement with China to revive the Bandar Malaysia project (another U-turn).
𝐎𝐧 𝐃𝐞𝐜 𝟏𝟕, 𝐓𝐑𝐗 𝐂𝐢𝐭𝐲 𝐒𝐝𝐧 𝐁𝐡𝐝 𝐨𝐟𝐟𝐢𝐜𝐢𝐚𝐥𝐥𝐲 𝐬𝐢𝐠𝐧𝐞𝐝 𝐭𝐡𝐞 𝐑𝐞𝐢𝐧𝐬𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭 𝐨𝐟 𝐁𝐚𝐧𝐝𝐚𝐫 𝐌𝐚𝐥𝐚𝐲𝐬𝐢𝐚 𝐅𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭 𝐰𝐢𝐭𝐡 𝐈𝐖𝐇-𝐂𝐑𝐄𝐂 𝐒𝐝𝐧 𝐁𝐡𝐝 𝐭𝐨 𝐝𝐞𝐯𝐞𝐥𝐨𝐩 𝐁𝐚𝐧𝐝𝐚𝐫 𝐌𝐚𝐥𝐚𝐲𝐬𝐢𝐚.
🔵 𝐌𝐑𝐓 𝟑
The MRT Circle Line is being reviewed (another U-turn) and the “U-turn” government is studying various funding options.
The goal is to lower costs.
Some reports state that M*F intends to get property developers and owners to partially fund the project.
This is modelled after Singapore and Hong Kong’s “Rail plus Property” model which could see the private sector partially funding the project, since the government cannot fully do so on its own.
🔵 𝐌𝐄𝐆𝐀-𝐃𝐄𝐕𝐄𝐋𝐎𝐏𝐌𝐄𝐍𝐓𝐒
LAKE CITY VERSUS KIARA BAY
This will be the big battle of Kepong which I will write about next year. Stay tuned for my Kepong area analysis.
TRX
Exchange 106 at the TRX development was completed and its developer Mulia Property Development Sdn Bhd received the office building’s Certificate of Completion and Compliance (CCC) in October.
MNC tenants are already beginning to move in.
🔵 𝐑𝐄𝐕𝐈𝐒𝐈𝐎𝐍 𝐎𝐅 𝐑𝐏𝐆𝐓
RPGT market value is set to 1 Jan 2013 as the property acquisition price for properties acquired prior to the date as compared with the previous base year of 1 Jan 2000.
🔵 𝐒𝐀𝐌𝐄 𝐌𝐀𝐈𝐍𝐓𝐄𝐍𝐀𝐍𝐂𝐄 𝐑𝐀𝐓𝐄𝐒 𝐅𝐎𝐑 𝐌𝐈𝐗𝐄𝐃 𝐃𝐄𝐕𝐄𝐋𝐎𝐏𝐌𝐄𝐍𝐓
An Oct 4 ruling by the Court of Appeal held that Joint Management Body (JMB) committees CANNOT CHARGE DIFFERENT RATES to property owners in a mixed development.
This effectively overturned a High Court decision that JMBs have the power under the Strata Management Act to determine or fix different rates of service or maintenance charges for different parcels in a mixed development.
The ruling implies that residents in high-rise buildings that DO NOT HAVE STRATA TITLES YET, where there are also offices and retail lots, will have to pay service or maintenance charges according to a FIXED FORMULA following the landmark court decision.
🔵 𝐇𝐎𝐔𝐒𝐈𝐍𝐆 𝐂𝐎𝐍𝐓𝐑𝐎𝐋𝐋𝐄𝐑 𝐂𝐀𝐍𝐍𝐎𝐓 𝐆𝐑𝐀𝐍𝐓 𝐄𝐗𝐓𝐄𝐍𝐒𝐈𝐎𝐍 𝐎𝐅 𝐓𝐈𝐌𝐄
The Federal Court in November ruled that the Housing Controller under the Ministry of Housing and Local Government has NO POWER to grant an extension of time (EOT) to property developers.
Chief Justice believes by modifying the prescribed terms and conditions and granting the developer the EOT, the controller has denied purchasers the right to claim for LAD for late delivery.
PARTING WORDS
Well, there you go, a short summary of what happened in 2019.
For those of you who have been to my Holy Grail conference, you guys should know which area and property to focus on and which property to avoid next year in 2020.
Unfortunately, I will not be conducting anymore real estate analysis conferences next year (subject to U-turn, just like our government) due to a lack of time.
But most importantly, my wife is expecting our second child and therefore I would like to spend more time at home next year.
Well, that’s all guys, just want to wish everyone a Happy New Year!
Looking forward to year 2020!
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