Property to improve but affordability still a concern

PETALING JAYA: Housing affordability remains a key concern among Malaysians, driven by a disparity between supply and demand particularly in residential properties priced below RM500,000 alongside sluggish income growth, says AmInvestment Bank Research.

This was despite anticipation that the local property sector will likely improve next year underpinned by various factors, it added.

The research house, in its latest report ,said there was decelerated growth in the Malaysian House Price Index following the earlier property boom from 2008 to 2013.

The challenge is exacerbated by lower household savings and difficulty in securing high margins of financing to purchase high-end housing, AmInvest Research pointed out.

The research house noted: “With interest rates normalised, potential buyers will be more discerning in purchasing decisions.

“Additionally, property investors holding three or more housing loans are still subject to a lower loan-to-value limit of 70%.

“These factors are anticipated to contribute to a moderation in house price growth and a cap on prices of higher-end residential properties in the near term.”

AmInvest Research also said the potential for a more robust growth in high-priced residential properties hinges on factors such as increased income level and the creation of high-value job opportunities under New Industrial Master Plan 2030.

The research house, which remains “overweight” on the property sector, said it expects a gradual recovery in property transaction volumes and brighter sentiments on the sector, moving forward.

It expects the recovery to be aided by the estimated gross domestic product growth of 4.5% in 2024, job recoveries, revivals of mega infrastructure projects and government initiatives to develop Johor.

“For 2024, we anticipate an average earnings growth of 27% year-on-year, driven by accelerated progress billings due to the easing of labour shortages.

“Additionally, we expect increased revenue contributions from recently launched projects following aggressive launches by developers in 2023.

“Malaysian property stocks have experienced depressed valuations over the past three years due to negative headwinds, including increased building material costs, labour shortages and rising interest rates,” it said.

However, recent developments, including stabilisation of building material costs and more availability of foreign labour on construction sites, have alleviated these issues, AmInvest Research added.

It also saw a gradual easing of oversupply conditions in the domestic property market and improvement of investor sentiments.

Owing to developers’ proactive strategies on inventory monetisation, the volume of unsold properties has been on a declining trend over the past three years, said AmInvest Research.

The diminishing inventory levels have helped improve cash flows, enabling developers to accelerate new property launches, it said.

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