2018 is a watershed moment for Malaysia's politics and the subsequent impact on the property market. We list down the key highlights in our 2018 property market roundups and our outlook for 2019.
By Khalil Adis
May 10 2018 was a watershed moment in Malaysia as it marked the first change of government in the country's history.
Since 1957, it had enjoyed an uninterrupted reign from the ruling Barisan Nasional (BN) coalition.
However, the high cost of living, falling Ringgit, the lack of affordable homes in the market, high unemployment among fresh graduates, the unfettered check on power and the 1MDB scandal proved to be the undoing for BN as Malaysians far and wide casted their protest vote in the ballot box
The message from Malaysians is clear - they have had enough and want a new, clean government to lead the way.
With the Pakatan Harapan government now in power, all eyes are on the newly elected old Prime Minister Tun Mahathir Mohamad and his team to solve the pressing bread and butter issues.
Here are the top five property market roundups for 2018 and our top five outlooks for 2019.
#1: Demand-supply mismatch has resulted in an increasing number of unsold homes
According to Bank Negara, 80 per cent of homes or 146,196 units priced above RM250,000 remained unsold as of end March 2018.
In comparison, 130,690 units were unsold during the same period last year.
"Imbalances observed in the property market continue to persist," Bank Negara had said in a statement.
#2: Rent-to-own scheme being rolled out
To help ease the entry for the first time property buyers, the private sector has come up with a few initiatives.
Some private developers like Ayer Holdings have introduced a ‘Stay & Own' scheme for their Epic Residence and Foreston projects whereby part of the rent will be converted to the downpayment.
This not only provides a temporary solution for those who urgently need a home but also a form of security.
Meanwhile, Maybank has rolled a similar initiative called HouzKEY which they have called as "a rent-to-own solution that helps you to own your dream home."
The scheme involves zero per cent downpayment with the monthly rental forming part of the home financing.
#3: Ministry of Housing and Local Government studying Singapore's HDB model
In July, Zuraida Kamaruddin, the Minister of Housing and Local Government paid an official visit to Singapore to study the HDB model.
Singapore has succeeded to build demand driven homes under its Built-to-Order (BTO) scheme to house 80 per cent of the Singapore population.
This is especially useful in Malaysia where there is currently a demand-supply mismatch as in point number one.
#4: Malaysia looking into having a single housing government agency
In Malaysia, there are so many affordable housing programmes being rolled out by the state and federal governments such as Rumah Milik Mampu, Rumah Selangorku, PR1MA, My First Home, Program Perumaha Rakyat and the list goes on.
This confuses the public.
The Malaysian government is currently looking into having a single housing agency to streamline the whole process much like the HDB model.
If implemented, this could solve the current Malaysian housing woe.
#5: More help for the B40, M40 and first-time homebuyers under Budget 2019
More help is on the way for these group of property buyers as announced under Budget 2019.
The measures included the Real Estate and Housing Developers' Association (Rehda) agreement to cut prices by 10 per cent for new launches, the exemption of the Real Property Gains Tax (RPGT) for properties that are priced below RM200,000 and the stamp duty exemption for properties priced in the first RM300,000 up to RM500,000 as well as those priced from RM300,000 to RM1 million.
Outlook for 2019
#1: Affordable homes to continue driving the market
There is currently a strong pent-up demand for affordable homes but where the supply is lacking.
As such, the affordable home segment will continue to be in strong demand for 2019.
However, there needs to be concerted efforts from both the government and private developers.
Under Budget 2019, the federal government has pledged to spend RM1.5 billion on such homes via the 1Malaysia People's Housing (PR1MA) and Syarikat Perumahan Negara Bhd (SPNB).
Meanwhile, Rehda has agreed to cut prices as stated above.
#2: South KL to be the growth area
There are many infrastructure projects and economic drivers that are in the pipeline that will further boost property prices in Southern KL.
One such project is Bandar Malaysia will serve as the terminus station for the Kuala Lumpur-Singapore High Speed Rail (KL-Singapore HSR) project linking both cities in 90 minutes flat.
The development for the project has been postponed to two years and will now commence construction in 2020 instead of 2018.
Meanwhile, the express service will only commence by 1 January 2031 instead of 31 December 2026, as originally planned.
Bandar Malaysia has been designated as a site for the Digital Free Trade Zone (DFTZ) initiative by Jack Ma. Home to the Satellite Services Hub, DFTZ is expected to create some 60,000 direct and indirect jobs. It will also possibly serve as the interchange to the MRT Line 3, which has now been postponed.
Another economic driver in the vicinity is Tun Razak Exchange (TRX).
TRX will be a mixed-use development comprising a Grade A office space as well as residential and commercial precincts.
To be developed in several phases over a period of 15 years, the first phase will comprise four investment grade A office towers, a lifestyle retail mall, two 5-star hotels and up to six luxurious residential towers with a target completion date by 2019.
In addition, Bandar Malaysia will house two MRT stations - Bandar Malaysia North and Bandar Malaysia South which will form part of the alignment for the Sungai Buloh - Serdang - Putrajaya Line (SSP Line).
#3: Properties along Sungai Buloh - Serdang - Putrajaya Line (SSP Line) will be sought after
Speaking of the SSP Line, properties along the alignment, particularly those situated in the growth areas of Sungai Besi, Bandar Malaysia and Cyberjaya City Centre are worth looking into.
Bandar Malaysia will house two MRT stations as stated above and located a few stops away from Tun Razak Exchange MRT station.
Meanwhile, Sungai Besi MRT station is an interchange station to the Sungai Besi LRT station.
It will serve as an interchange to the upcoming High Speed Rail station located in Bandar Malaysia, also in Sungai Besi.
Last but not least, Cyberjaya City Centre MRT station is a transit-oriented development (TOD) project to be developed by Malaysian Resources Corp Bhd (MRCB).
With its experience in building the transport hub in KL Sentral, MRCB will be developing a new city that will be integrated with the MRT station.
Phase one is expected to generate a gross development value (GDV) of RM5.35 billion.
It will feature a 200,000 sq ft convention centre, a 300- to 400-room business hotel, low and high-rise office buildings and a retail podium. Cyberjaya City Centre will have a development plan spanning 20 years.
The MRT station is located just opposite Lim Kok Wing University of Creative Technology.
#4: Penang to get a boost from Phase 1 of Penang Transport Master Plan (PTMP)
With Lim Guan Eng as Malaysia's Finance Minister, Penang's property market will get a further boost.
Just this month, Phase 1 of PTMP was approved.
It will comprise the Bayan Lepas Light Rail Transit (LRT) project, Pan Island Link 1 (PIL1) project and several main highways.
The proposed Bayan Lepas LRT line will be about 30 km in length with 27 stations running from KOMTAR to the future reclaimed islands in the south.
There will be three interchange stations - KOMTAR, Sky Cab Station linking it to the Sky Cab line across the Malacca Straits and The Light Station linking it to the George Town-Butterworth LRT line.
The LRT Line will also be integrated with the Sungai Nibong Express Bus Terminal at the Sungai Nibong Station.
Meanwhile, PIL 1 is a new 20km highway that will be aligned along the mountainous terrain of the island and will take around 15 minutes from between Gurney Drive to the Second Bridge.
There will be six interchanges in all - Dr Lim Chong Eu Expressway (LCE), Awang, Relau, Paya Terubong, Utama and Gurney.
#5: Johor Bahru to get a boost from the Rapid Transit System (RTS) Link
Meanwhile, over in the southern state of Johor, Iskandar Malaysia's muted property market will get a boost as the RTS Link will commence construction next year.
The RTS Link will link Bukit Chagar station in Johor Bahru to Woodlands North MRT station in Singapore when completed in 2024.
There are also plans for a Bus Rapid Transit (BRT) system within Bukit Chagar station to link it to the different areas of Iskandar Malaysia.
The BRT will feature a dedicated bus lane with three lines - BRT Line 1 will span from Bukit Chagar to Tebrau, BRT Line 2 from Bukit Chagar to Senai and finally, BRT Line 3 from Bukit Chagar to Iskandar Puteri.
However, based on market talk in the ground, there is a possibility that the BRT system will be upgraded to an LRT system instead.
Housing affordability remains a serious issue as there are still many Malaysians who cannot afford to buy a home. To solve this, Malaysia can take a cue from Singapore's public housing scheme which houses 80 per cent of its population.
By Khalil Adis
Ask any young Malaysians and chances are many are still unsure if they can buy their first home.
Their lack of knowledge, financial literacy, inability to get a loan and the lack of supply of such homes across Malaysia are further exacerbating the Malaysian housing issue.
From Johor to Kuala Lumpur, there is currently a demand-supply mismatch whereby most new launches in the market are priced above RM500,000.
This is far beyond what the average Malaysian can afford.
According to the first quarter of 2018 data from the National Property and Information Centre (NAPIC), Selangor has the highest number of existing stock of residential units followed by Johor and Kuala Lumpur at 1,516,960, 795,363 and 471,475 units respectively.
With Budget 2019 to be announced in November, perhaps the Malaysian government can take a cue from Singapore how the city-state is able to house 80 per cent of its population.
Step 1: Have a single affordable housing agency
In Singapore, there is only one government agency called the Housing & Development Board (HDB) which is tasked to provide affordable housing for every Singaporean.
In comparison, in Malaysia, there are so many affordable housing programmes being rolled out by the state and federal governments such as Rumah Milik Mampu, Rumah Selangorku, PR1MA, My First Home, Program Perumaha Rakyat and the list goes on.
This confuses the public.
The government should consolidate the affordable housing segment under one single government agency much like the HDB model.
Recently, Zuraida Kamaruddin, the Minister of Housing and Local Government, was in Singapore to study the HDB model.
By having it under one government agency umbrella, this will enable the federal government to better gauge demand from the public.
This leads to the next point.
Step 2: Build demand-driven homes
In Singapore, the HDB builds homes that are demand-driven called the Built-to-Order (BT0) scheme.
The public is then invited to apply for the various homes that are on offer in different parts of Singapore.
By doing so, this enables the HDB to gauge demand from the public and allocate homes using a balloting system.
The balloting system will then inform applicants of the status of their application.
If Malaysia were to follow such a system, this will help to solve the current demand-supply mismatch in the market and build homes according to demand.
Step 3: Introduce grants and subsidies
In Singapore, a first-time applicant can enjoy a housing grant called the Additional CPF Housing Grant (AHG) and Special CPF Housing Grant (SHG) of up to S$40,000 depending on one's household income.
To qualify for the AHG, applicants must apply for a 2-room flat or larger with an income ceiling of S$5,000 per month,
Applicants must also be employed at the time of application and be at least in employment for the past one year during the housing application.
On top of that applicants must not be an owner of any other properties in Singapore or overseas.
Applicants can also qualify for additional grants under the SHG here or if they live close to their parents.
By introducing such grants, it lowers the entry price to buy a home.
Likewise, if similar grants are introduced in Malaysia, it will mean more Malaysians can afford to buy their first home.
You can read more about the scheme here:
Think about it.
Step 4: Introduce housing loans direct from the housing ministry
In Singapore, most Singaporeans will opt to get a loan directly from the HDB which gives a concessionary interest rate at 2.6 per cent.
This means, regardless of the economy, the interest rate will remain the same unlike taking a bank loan.
In addition, the HDB is more compassionate if say, one is unable to service their loans.
The HDB will still require you to pay your monthly mortgage but will work out a plan that will ensure you will still have a roof over your head.
However, banks are less forgiving when you take a bank loan and will not hesitate to repossess your flat if you do not pay your mortgages on time.
In Malaysia, applicants must apply for a bank loan.
However, due to non-payment of PTPTN as well as bad credit, some applicants find their loans being rejected.
Perhaps, a way to get around it is to have a housing loan disbursed by the housing ministry with its own set of rules similar to the HDB.
Step 5: Introduce a rent-to-own scheme (for those who can't afford downpayment)
While there is no rent-to-own scheme in Singapore, this mode of housing ownership is getting popular in Malaysia.
For example, Ayer Holding introduced a ‘Stay & Own' scheme for their Epic Residence and Foreston projects whereby part of the rent will be converted to the downpayment.
This not only provides a temporary solution for those who urgently need a home but also a form of security
You can read more about the scheme here:
If you are completely clueless about buying your first home and need some pointers, this workshop is for you! The method of delivery will be very light-hearted but with the main points covered. Sign up here
An independent analysis from yours truly