Taking Heed of the Wake Up Call
The residential sector continued to be the prime property market mover in 2007, as reported in the Property Market Report First Half 2007. This was expected, given the sector captures over 60% of total transaction volume each year.
Similar sentiments were also expressed in other market reports. The MIER Residential Property Survey Report for Q4 2007 also reflected that the Residential Property Index improved 6.7 points year on year, with current sales and new bookings growing. In tandem with this, the market also saw residential property overhang easing and home loan applications and approvals rising. Undoubtedly, the various government initiatives such as the abolition of RPGT, relaxation of FIC, 50% stamp duty exemption and enhancement of the delivery system have had some positive effects on the sector.
In a recent survey conducted by REHDA, initial findings revealed that expectations for the coming months are also looking up, although there is an overriding sense of cautiousness. Members are cognizant of the subprime, credit crisis and slowing economy in the US and have become more prudent in their outlook. It is good to note that with all the incentives thrown in, industry players are not jumping onto the bandwagon blindly, unlike in the past. Perhaps members have wised up, or it could also be that rising oil prices and construction costs, as well as imminent shortage and escalating prices of building materials, have had a dampening effect on activities in the sector.
The US housing crisis has created enough uncertainty and turbulence that we should take it as a wake up call to avoid similar pitfalls of over exuberance in good times. It is reassuring to hear our economic leadership express that the Malaysian economy will not be too adversely affected by the economic crisis in the US as we are buffered by our trade with other growing and buoyant economies like China & India.