THE election fever has hit Malaysia. Everywhere you go, conversations are centred on the upcoming 14th General Election. Malaysia is in an anticipatory mood. Change is imminent, say some. No way the current government will change, say others. Opinions are divided.
The truth of the matter is, who knows. None among us have a crystal ball that they can gaze into to see the future. The best political analyst can only decipher data and make educated guesses. And the best of educated guesses can be wrong as much as they can be right, especially on a volatile matter such as the national elections.
So, it amazes me that people go into a tailspin when they read an article saying that the property market is going to crash and burn this year or the year after. They listen to someone speak on stage or give an interview in the newspapers, and they immediately go into panic mode because it is predicted that a certain class of property is oversupplied and prices therefore are going to plummet.
Why do people believe everything they see or hear? What makes them think these experts or analysts have crystal balls? How is it that they are able to make predictions to such great detail?
I have been writing and speaking on property matters for a long time. I have access to reasonably detailed data which I can use in my analysis. I have access to a slew of fellow professionals whose thoughts I can tap whenever I want. My network among property players is vast. And with all of these resources at my side, the best I can still do is analyse the market and make an educated guess as to where it is heading, in a “general direction” sort of way. No way will I be able to pinpoint which sector will fall or rise by how many per cent or during which month of which year.
A Bank Negara Malaysia report carried in a newspaper on March 28 has once again sent shockwaves throughout the property industry. According to the report, the number of unsold housing units increased last year while houses remained unaffordable in key employment centres. The report said unsold housing units increased on an annual basis by 22.7 per cent last year (41 per cent in 2016) to 129,052 units as at September last year. More than 80 per cent of these unsold units were priced at RM250,000 and above, and comprised high-rise residential properties located far from major economic centres and with limited public transport facilities.
This echoes very much with what I have been saying for a long time. You need to take cognisance of the requirements of the middle class/B40 segment of people when you build properties for them. No matter how price-friendly these properties are, if they do not meet the basic requirements of the purchaser, they will become difficult to sell. Access to facilities and transport are basic needs. Imagine building a condominium block miles away from the closest public transport and trying to sell these to the B40 segment. There is a very high chance that these units will remain unsold for a very long time.
Before the doomsayers descend upon us with fresh news of doom and gloom based on this Bank Negara report, let me assure you that things are generally improving in the property market. This report has to be read in its entirety and digested holistically. You can’t take parts of the report and scream that the sky is going to fall.
As an astute investor, you must learn to read the market in its entirety and make your analysis based on a large criteria of scenarios. Next week, I will write on more parts of this report and help analyse the situation with a “calm mind and steady hand”.
Until then, happy hunting and may the force be with you.
The writer is a real estate practitioner who tries to manage the labyrinth of the property market honestly while consistently maintains a high standard of ethics in his practice of the profession. He welcomes feedback at [email protected].
