ANNOUNCEMENT BY REHDA

The report titled “Affordable Housing Report” released this morning cited fragmented playing field between public and private sectors, rigid housing policies, unsuitable location, land scarcity, cross subsidies that purportedly made houses more expensive, rising material costs, unproductive use of public funds that led to oversupplies, lower financial approval rate for the lower income groups, and absence of latest market data. 

“At the moment, there is a lack of coordination between the public and private sectors in providing affordable homes,” Rehda Institute chairman Datuk Jeffrey Ng said at the media briefing session.

MISMATCHED

SUPPLY

Offices - glut

Retail - very glut

Condo or service apartment - glut for RM500k-1,000k per unit

DEMAND - is way above supply for condo or service apartment for RM250k and below (The price of a MINI Cooper).

Total Mercedes and BMW sales per annum for 2017 is totalled about 25,000 units.  Price easily above RM250,000.  Have we counted how many Mercedes and BMW in Malaysia.  I hope in future more people uses Tata cars, costing about RM6,000 per unit.

RESIDENT PROPERTIES (LANDED AND HIGH RISE)

As recently reported, there are about 35,000 units unsold (average price RM650k, or RM500k to 1000k), worth RM22 billion. To help the private sector, government should consider lower their cost for foreign buyer to RM500k, or waive the bumiputra quota, and encourage bank relax on lending policy for first time buyers.

Hope the new government can "replicate" some of the Singapore concept on public homes(if viable), to satisfy the demand for property of RM250k and below.  Allocate a large piece of land "nearby" LRT or MRT (provide shuttle transport), and build affordable units with higher density.  Special loan - given by banks with government support on lower rates.

Hong Kong, Shanghai, Beijing, Singapore - glut and price on properties are many time worst than Malaysia (price of properties in city/average household income in city).  Comparatively, our property prices is quite competitive. (of course, its not very comparible).

PROPERTY STOCKS

It's cyclical.  So, given time, few more years, demand and supply will sort it out again.  Unless we think this is a permanent glut.  In fact, land prices did not crash post 2015, so, it is unlikely cost for building condos/service apartments will reduce much.  Most cost has increased, labour, building materials, cement, steel, etc.  Unlikely the cost will come down.

Properties is a long term investment (20-30 years) and a good hedge against inflation.  Land is even better, if the infrastructure is good.  

It is unlikely property prices will drop a lot taking into account now that government has invested >RM100b in LRTs/MRTs and even HSR.  

Similar to stocks, there are some properties selling below launch prices, but, funding is not available.  Government should also consider lower the RPGT and also provide some incentive to banks to subsidise or lower rates.

WILL LISTED PROPERTIES RECOVER?

Yes, especially those well branded property and reasonable pricing.  Many listed stocks are way lower than its RNAV value.  So, no harm to consider some with strong fundamentals.