Some market watchers warn that despite Malaysia’s downtrodden property stocks have risen from the nine-year through, the recovery is most likely impermanent.
The government extreme measures to reduce an oversupply of real estate by lowering foreigner’s threshold rate has gained The Bursa Malaysia Property Index 2.8%, rebounding from four months of losses and yet, may not be sufficient to support the revival.
Danny Wong, chief executive officer at Areca Capital mentioned sentiment will remain subdued as a progression of stricter bank loaning rules which keep on making it difficult for certain purchasers to get mortgages.
“The demand is not as great as before and the end financing cannot help. This is the main contributing factor to overhang units. Developers’ margins are depressed, and liquidity is stuck. To improve this, the end-financing must be revised and the price has to be reasonable”said Wong.
The foreigner’s threshold rate has been lowered from RM1 million to RM600,000 ($145,000) starting next year. This initiative will help to clear inventories however the impact may be limited as the measures will only apply to selected developments, according to The Edge Market Report on Oct. 24
Malaysia is currently addressing the overhang issues after the number of unsold residential spiked up by 1.5% to 32,810 units in the first half from a year earlier.
Finance Minister, Lim Guan Eng warns bank who rejected loan applications without any valid reason and mentioned these banks will be held for responsibility for their action. He also proposed touted crowdfunding as an alternative mode of financing for house buyers.
2019 has been the worst performance year among sector gauges where The Bursa Malaysia Property Index has dropped almost 12%. It’s on track for the second year of declines after falling by the most in a decade in 2018.
Source – The Edge.