6 Property Market Trends to Expect in 2019
Selangor properties recorded an increase in overhang units. Keeping the less-than-rosy residential market prospects in mind, here are some of the likely property trends to emerge this year:
1 – Renter’s market trend
The new supply of the completed units will leads to an increase in overhang units, thus causing a downward pressure in the rental market lead to rental prices to fall.
Now it is the perfect situation for rent-seekers as landlords will most likely be open for price negotiations. In the former, landlords will be on the losing end because the rental will most likely not be able to cover the mortgage and resulting in negative cash flow. Then, the landlords will have to cover the mortgage themselves.
2 – Secondary property buyers will have higher authority to negotiate
The property owners/investors, especially those who have multiple units will be desperate to sell out their properties. The market flooded with so many units, thus buyers will be in a stronger position to bargain. Now, the property market will be more favour sub-sale buyers.
Meanwhile, sellers have the advantages to negotiate on the terms of payment and will likely cut a flexible payment deal via their agents if secondary buyers do not have a sufficient deposit in hand.
In addition, most properties in the secondary market are priced 20% to 30% cheaper than new launches because of the supply overhang. However, do not forget that you will need to fork out a 10% deposit/ down payment.
3 – Watch out for good deals in the auction market
There will also be a few distressed properties, which will be auctioned off in court due to the overhang situation of the housing market. Then, this will be a very good opportunity if you are looking for a below market value (BMV) property.
When buying a BMV, you will need to prepare a bank draft in advance to show interest while attend an auction in court, and it will cost around 10% of the reserve price. For example, if the property is being auctioned off at RM70,000, you will need to prepare a RM7,000 bank draft.
After succeed to bid for the property, you will need to settle the balance of the payment within 120 days. However, there are some hidden costs, for example, quit rent (cukai pintu), legal, unpaid utilities and maintenance fees, assessments and so on.
Perhaps, the biggest risk is this – you may find it hard to evict the tenants or owners although the property is legally yours. Therefore, in order to evict the occupants, you may have to apply for a court order, through a lawyer.
When buying a BMV property, it is best to try to find out beforehand if the property is being occupied by tenants/owners because this process can take up to four weeks and costs you between RM1,500 to RM2,000. Even so, there are no guarantees they can be evicted as Malaysian laws favour occupiers.
4 – Upcoming Transit-oriented developments (TODs) along MRT Line 2
The Sungai Buloh-Serdang-Putrajaya MRT Line (SSP Line) is one of the few major infrastructure projects that will be continued under the newly elected government.
The project is currently under construction and is fast taking shape. Some developers have already acquired land banks along this line to build TODs. The area to watch out consists of Kwasa Damansara, Kwasa Sentral, Sungai Besi, Bandar Malaysia and Cyberjaya City Centre.
5 – Developers to offer more goodies for primary properties
Developers have to move their unsold inventory as each unit means added cost for them. As such, developers will be coming up with creative financing schemes such as zero downpayment schemes and such to entice buyers.
Speak to a good developer and check if they have a good master plan to ensure you are making the best investment.
Refer to the 5Cs guideline below before making a purchasing decision:
-Check the masterplan:
- A master plan would define a township’s development in the coming one to two decades. It would also showcase the different designated land use and transportation plans within that particular township. An area deemed highly desirable will attract businesses and residents.
-Check the transport masterplan:
- Generally, properties nearby to transportation hubs such as MRT or LRT stations can command a premium of between 5-10% over the long term. This demand translates to the property’s higher capital appreciation.
-Check budget allocation from the government:
- Government policies, like a national or state budget allocation, do have an indirect impact on property values. So check where the government is building new hospitals or schools.
-Check for economic drivers:
- The best strategy is to buy in an area where there are plans for various economic drivers that is not yet developed.
-Check for job creation:
- This is like feeling someone’s pulse. You need to check the township as the area becomes highly desirable, people will naturally want to live and work in and around the vicinity.
6 – More restrictions on Airbnb accommodations
The business of Airbnb, which provide short stay for travellers may prove to get harder. This is because security and safety issues, so it become a norm for management committees barring Airbnb-type of accommodation.
It is best to check with management committee if this is allowed before starting Airbnb business. However, if you happen to own a serviced apartment, this will not be an issue as it falls under a commercial title.